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6 Reasons Your Physical Therapy Claims Are Getting Denied

Physical therapy claim denials are a buzzkill for both therapists and patients. It's like a bad hair day that lasts for months. But fear not! We're here to help you avoid those pesky denials and keep your billing game strong.

In this post, we'll be exploring the top reasons why physical therapy claims get denied and the strategies you can use to prevent them. So, get ready to bid adieu to those denied claims and say hello to a thriving billing system.

Why is my Physical Therapy Claim Denied?

Denied claims not only impact your cash flow, but they also waste time, effort, and resources that could have been used for better things like a well-deserved spa day or some retail therapy.

You you didn't get into the physical therapy business to deal with billing and claim denials, but unfortunately, it's an unavoidable part of the job. So, let's buckle up and get ready to learn about the common reasons for claim denials and the strategies you can use to prevent them.

Reason 1: Verification of Benefits (Eligibility Issues)

Verification of benefits is a crucial step in the physical therapy billing process that ensures that patients are eligible for insurance coverage. It involves checking a patient's insurance policy to determine what services are covered, as well as any limitations or exclusions.

Eligibility issues are the most common reason for claim denials in the physical therapy industry. Put simply, does this patient have coverage for this service?

For example, a patient may have reached their maximum benefits for the year, or their policy may not cover certain services, such as physical or occupational therapy. Other eligibility issues include:

  • Inactive or terminated insurance policies

  • Insufficient coverage for the service provided

  • Family benefits not covered

While its not a denial, patients could also be upset with a surprise bill. Unknowing to them, they had a deductible to meet before therapy services would be reimbursed. This would not result in a claim denial, but would result in responsibility for payment being transferred to the patient.

Insurance Eligibility Check

To avoid eligibility issues and ensure proper verification of benefits, physical therapy practices can take several steps. These include:

  • Verifying benefits prior to the patient's first visit and at regular intervals throughout treatment

  • Collecting accurate patient information and verifying it with the insurance company

  • Examine the patient's copay, coinsurance and deductibles in order to prepare the patient with payment estimates.

  • Working with a electronic benefits verification service in order to capture this information in seconds. (Don’t waste your time with phone calls)

Reason 2: Inaccurate Patient Information (Data Entry Errors)

When it comes to billing for physical therapy services, it is crucial to ensure that patient information is accurately recorded. Inaccurate patient information can lead to claim denials and lost revenue for your practice.

What Constitutes Inaccurate Patient Information?

Inaccurate patient information can take many forms. It could be something as simple as a misspelled name or incorrect date of birth. However, it can also be more complex issues such as incorrect insurance information or incomplete demographic information.

Examples of Common Data Entry Errors

Some of the most common data entry errors that can result in claim denials include:

  • Misspelled patient name or incorrect date of birth

  • Incorrect insurance information or policy number

  • Incomplete demographic information, such as missing or incorrect address, phone number, or email address

Strategies to Avoid Data Entry Errors and Ensure Accurate Patient Information

To avoid data entry errors and ensure accurate patient information, consider the following strategies:

  • Implement a standardized patient registration process that includes verifying patient information at every visit.

  • Train staff on the importance of accurate data entry and ensure that they have the necessary resources to do so.

  • Use online patient forms as part of your electronic health record (EHR) ecosystem to streamline the data entry process and reduce the risk of errors.

Patient Intake Form

Reason 3: Diagnosis Coding Errors

When it comes to physical therapy claim denials, ICD-10 errors are a common culprit. These errors occur when the wrong code is used to describe a patient's condition, treatment, or diagnosis. The code can also be outdated, such as ICD-9. As a result, the claim is denied, and the staff member has to go back and fix the coding issue.

Examples of common diagnosis coding errors that can result in claim denials

One of the most common diagnosis coding errors is using the wrong ICD-10 code. The ICD-10 codes are used to describe a patient's condition or diagnosis. If the wrong code is used, it will lead to claim denials. Many of these complications stem originate with the change from ICD-9 to ICD-10.

The old ICD-9 codes were very basic and general in nature. for example 719.46 - Pain in Knee. You did not have to specify which knee or the condition causing the pain in the coding.

The new ICD-10 codes are much more specific, for example M25.562 for pain in the left knee. There are also ICD-10 codes for pain in the right knee, bilateral knee pain, and pain in the unspecified knee. Unspecified codes, or that are not specific enough are red flags for denials. For example, using a general code like M54.5: low back pain instead of a more specific code like M54.51: Vertebrogenic low back pain, can result in claim denials.

Strategies to avoid diagnosis coding errors and ensure proper coding

To avoid diagnosis coding errors, it's important to ensure that the correct ICD-10 codes are used. Physical therapists and office staff should make sure that they have the latest code set and that they are using the most specific codes possible. It's also essential to ensure that the diagnosis code matches the treatment provided. Using a generic code for a specific treatment can also result in claim denials.

Therapists can also benefit from using technology that automatically checks for coding errors. Electronic health records (EHR) and billing software can flag coding errors before the claim is submitted, allowing therapists to make corrections before the claim is denied.

By ensuring proper coding, therapists can avoid unnecessary claim denials and ensure that they are reimbursed for the services they provide.

Reason 4: Lack of Medical Necessity

Lack of medical necessity refers to situations where the services or treatment provided are not considered reasonable or necessary to treat a patient's medical condition. According to a study published in the NIH, up to 20% of claims are denied due to lack of medical necessity. Insurance companies use this as a reason to deny claims, and it is important for physical therapists to document their services in a way that supports medical necessity.

Examples of situations that can result in lack of medical necessity and claim denials

According to a study by the American Physical Therapy Association (APTA), lack of medical necessity was the second most common reason for claim denials in 2020. Some situations that can result in lack of medical necessity and claim denials include:

  • Unproven treatment methods: Insurance companies typically only cover treatments that are proven to be effective for a particular condition. If a physical therapist uses an unproven or experimental treatment method, insurance companies may deny the claim.

  • Failure to show progress: Physical therapists must be able to show that their treatment is improving the patient's condition. If the patient is not making progress, insurance companies may view the treatment as unnecessary and deny the claim.

  • Lack of detailed documentation: Insurance companies can request detailed documentation of the patient's medical history, diagnosis, and treatment plan. If physical therapists fail to document their services adequately, it can be difficult to prove that the treatment was medically necessary.

Strategies to avoid lack of medical necessity and ensure proper documentation

To avoid lack of medical necessity and ensure proper documentation, physical therapists can:

  • Keep detailed and defensible records: Physical therapists should document the patient's medical history, diagnosis, and treatment plan in detail. They should also document the progress the patient is making during each treatment session.

  • Use evidence-based treatment methods: Physical therapists should use treatment methods that are supported by research and have been proven to be effective for the patient's condition.

  • Educate patients: Physical therapists should educate patients about their condition and treatment plan. Patients who understand the benefits of physical therapy are more likely to comply with their treatment plan and make progress.

According to Dr. Sharon Dunn, President of APTA, "Physical therapists are experts in identifying medical necessity, developing individualized treatment plans, and tracking patient progress. However, proper documentation is crucial to support medical necessity and prevent claim denials." According to Medicare, for a service to be considered medically necessary, it must:

  • “Be safe and effective;

  • “Have a duration and frequency that are appropriate based on standard practices for the diagnosis or treatment;

  • “Meet the medical needs of the patient; and

  • “Require a therapist’s skill.”

Reason 5: Missing Preauthorization or Exceeding Authorized Visits

Preauthorization, also known as prior authorization, is the process of obtaining approval from a patient's insurance company before providing a certain medical treatment or service. This is usually required for high-cost or elective procedures. According to a report by the American Physical Therapy Association (APTA), insurance companies have increasingly required preauthorization for physical therapy services in recent years, with an estimated 90% of private insurance plans now requiring preauthorization.

Examples of situations that can result in missing preauthorization or exceeding authorized visits:

Missing preauthorization or exceeding authorized visits can lead to claim denials, which can be frustrating for both patients and physical therapists. Some situations that can lead to missing preauthorization or exceeding authorized visits include:

  • Failing to obtain preauthorization before providing treatment

  • Continuing treatment beyond the authorized number of visits without obtaining additional authorization

  • Not verifying the patient's benefits and coverage limits before providing treatment

Strategies to avoid missing preauthorization or exceeding authorized visits:

To avoid missing preauthorization or exceeding authorized visits, physical therapists can take the following steps:

PT Dashboard

Reason 6: Overuse of Modifier 59

Modifier 59 is used to identify procedures or services that are considered distinct or independent from other services performed on the same day. It is often used to indicate that a provider performed two services that are usually billed as one, or to distinguish between procedures that may appear to be bundled under a single code. Overuse of Modifier 59 can result in claim denials, as it is often used inappropriately. According to the Centers for Medicare and Medicaid Services (CMS), modifier 59 is among the most widely used modifiers, but it is also frequently used incorrectly, leading to improper payments or denials. CMS has noted that overuse of modifier 59 can result in significant costs to the healthcare system and has provided guidance on proper use and documentation requirements.

Examples of overuse of Modifier 59

Procedures that are always considered bundled, such as a bilateral procedure, or using it to bypass National Correct Coding Initiative (NCCI) edits. Providers may also use Modifier 59 when a more appropriate modifier should be used, such as Modifier 51 to indicate multiple procedures performed during the same session.

How to avoid overuse of Modifier 59.

Providers should carefully review their billing codes and make sure they are using the correct modifiers for each service performed. They should also ensure that their documentation supports the use of Modifier 59, and that they are not using it to bypass NCCI edits or improperly unbundle services. Providers may benefit from regular training on proper coding and billing practices to help prevent errors and claim denials.


Physical therapy claim denials can be a frustrating and costly experience for both providers and patients. As discussed, common reasons for claim denials include verification of benefits, inaccurate patient information, diagnosis coding errors, lack of medical necessity, missing preauthorization or exceeding authorized visits, and overuse of Modifier 59.

According to a report by the American Physical Therapy Association, claim denials have a significant impact on physical therapy practices, resulting in increased administrative costs, decreased revenue, and negative patient outcomes. In fact, the report found that claim denials can cost physical therapy practices up to 30% of their revenue.

To prevent claim denials, it's important to implement strategies such as proper verification of benefits, accurate patient information, thorough documentation of medical necessity, obtaining preauthorization when necessary, and avoiding overuse of Modifier 59. By taking these steps, physical therapy practices can improve their reimbursement rates and provide quality care to their patients.

In conclusion, it's crucial for physical therapy providers to be proactive in preventing claim denials. By staying informed about common reasons for claim denials and implementing best practices, providers can ensure that their claims are processed accurately and efficiently, while providing optimal care to their patients. Let's work together to reduce claim denials and improve the physical therapy industry as a whole.

Still need help managing claims and denials? Let the experts at PatientStudio help! Schedule a call here to learn more about our Outsourced Medical Billing & Revenue Cycle Management (RCM) Services!

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