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  • Writer's picturePatientStudio

Demystifying Physical Therapy Billing: A Handy Checklist to a Healthy Revenue Cycle

The complex world of Physical Therapy Billing can be a daunting one, with its myriad of codes, strict guidelines, and potential pitfalls. However, understanding this process is crucial for any physical therapy practice, not only to ensure appropriate payment for services rendered but also to maintain a healthy revenue cycle. This comprehensive guide aims to demystify the PT billing process, providing you with key concepts, common errors to avoid, and a reliable checklist to optimize your revenue cycle


The Physical Therapy Billing Guide Thumbnail

Understanding the Basics of Physical Therapy Billing

Physical Therapy Billing is the process used by physical therapy owners and practitioners to receive payment for their services. This involves matching the services provided with specific standardized codes that demonstrate the treatments given and their medical necessity. It's a crucial aspect of running a PT practice, affecting the length of the revenue cycle, and ultimately, the financial health of the practice.


The Role of ICD and CPT Codes

Physical therapy billing uses two primary code systems: the International Classification of Diseases (ICD) and the Current Procedural Terminology (CPT).

  • ICD Codes: Developed by the World Health Organization (WHO), ICD codes provide a diagnosis for patients' conditions. The latest version, ICD-10, has been in use since October 2015, with an updated version, ICD-11, expected to become the standard in 2025.

  • CPT Codes: These codes, developed by the American Medical Association (AMA), describe the treatments administered by the practitioner. They are crucial for processing insurance claims and ensuring reimbursement for services rendered.


Location of ICD and CPT codes on CMS-1500 Form


Physical Therapy Billing Units

Physical therapy services (manual therapy, therapeutic activities, etc..) are often billed in units, with one unit representing 15 minutes of service. It's important to accurately document the time spent on each service to ensure proper reimbursement. Misrepresentation of time can lead to claim denials or audits.


What is the 8 Minute Rule?

The 8-minute rule is a guideline that dictates how rehab therapists calculate the number of units to bill Medicare for outpatient therapy services provided on a specific date. This rule is also applicable to other insurance providers that adhere to Medicare's billing guidelines. Per Medicare rules, in order to bill one unit of a timed CPT code, you must perform the associated modality for at least 8 minutes. In simple terms, for a therapist to be eligible for payment from Medicare for a time-based CPT code, they must provide direct treatment for a minimum of eight minutes. To determine the number of billable units for a specific service date, providers need to sum up the total minutes of therapy treatment and divide this total by 15. If the remainder is eight minutes or more, an additional unit can be billed. If not, no further billing is possible.

Mixed Remainders

Heres where it get complicated - Suppose you're dividing your direct time minutes by 15 and the remainder is a combo of residual minutes from multiple services, such as 5 minutes of manual therapy and 3 minutes of ultrasound. How should you bill? One service, all services, or none. According to Medicare, if the total of your remainders is at least eight minutes, you should bill for the service that took up the most time, even if this time is less than eight minutes by itself. (In this case, you'd bill an additional unit of manual therapy).


8 Minute Rule Reference Chart

Modifiers

Physical Therapy Modifiers are alphanumeric codes added to CPT codes during billing. Modifier usage provides additional information on the services provided, which helps in processing claims and ensuring proper reimbursement.

GP Modifier

The GP modifier is used to indicate that a PT's services were provided. The GP modifier is the most common and most important modifier used to ensure physical therapy reimbursement.

Modifier 59

signifies that a distinct service or procedure was performed separately from another non-evaluation and management service. It's vital in ensuring that both services comply with the National Correct Coding Initiative.

KX Modifier

A crucial aspect of physical therapy medicare billing The KX modifier is used when services provided to a patient exceed Medicare’s therapy threshold. This modifier ensures that continued treatment is justified with appropriate documentation in the patient's medical record.

GA Modifier

The GA modifier indicates that a required Advance Beneficiary Notice of Noncoverage (ABN) is on file for a service considered not medically necessary. This allows the provider to bill a secondary insurance for non-Medicare-covered services or bill the patient directly.

CQ Modifier

The CQ modifier is used to indicate that a service was provided in whole or in part by a physical therapist assistant (PTA). This modifier is crucial for Medicare patients, as it allows for proper billing and reimbursement when a PTA is involved in the care.


CMS-1500 Form with GP & KX modifier


Strategies for Optimizing Physical Therapy Billing

Optimizing your physical therapy billing process can lead to a significant increase in revenue and efficiency in your practice. Here are some top strategies to consider:

1. Verify Patient Information and Insurance Eligibility

A recent report found that 61% of denied medical claims were due to eligibility and registration errors, which include failing to verify patient information and insurance eligibility. (Source: American Medical Association) Accurate patient information is the cornerstone of a successful billing process. Make it a practice to verify patient information at every visit. Additionally, always confirm patient insurance eligibility to ensure the services provided will be covered.

2. Understand and Correctly Use Physical Therapy Billing Codes

Understanding and correctly using ICD and CPT codes is crucial. This not only includes choosing the correct codes but also understanding when and how to use modifiers and other billing tools. Training and ongoing education for your billing staff can help ensure this understanding.

3. Implement Technology and Automation

Physical therapy billing software can play a significant role in optimizing your physical therapy billing process. From automating eligibility checks to simplifying code selection and improving claim submission, medical billing software can significantly reduce the time and effort required for billing.

4. Regularly Audit Your Billing Process and Results

Regular audits of your billing process and results can help identify areas of improvement. Dive into denial reasons, denials by payer, collections rates, AP aging, etc...

5. Partner with a Reliable Billing Provider

Partnering with a reliable billing provider can take much of the stress out of physical therapy billing. They can handle the complexity of the process, allowing you to focus on providing excellent patient care. Consider a company like PatientStudio that can manage your physical therapy billing services.


Common Mistakes and Pitfalls in Physical Therapy Billing

Despite your best efforts, mistakes can happen in the physical therapy billing process. However, understanding the most common pitfalls can help you avoid these errors. Here are some common mistakes to watch out for:

  • Inaccurate Patient Information: Ensure your patient's information is correct and up-to-date. Incorrect information can lead to claim denials. 90% of all claim rejections (different than denials) were the direct result of errors such as incorrect ID number, birthday, name spelling, etc..

  • Not Verifying Insurance Coverage: Always verify insurance coverage before providing services. This can prevent surprises later and ensure you get paid for your services. Utilize modern practice management software that offers electronic eligibility checks

  • Incorrect or Incomplete Coding: This is one of the most common reasons for claim denials. Be sure to use the correct and complete ICD and CPT codes for the services provided.

  • Not Following Up on Denied Claims: Denied claims can be a significant source of lost revenue. Always follow up on denied claims, make necessary corrections, and resubmit them. A staggering 65% of all rejected claims are never revised, according to Change Healthcare. This a huge figure in lost revenue! For clinics to receive reimbursement for physical therapy services, they must establish a denial management process.

  • Not Collecting Patient Payments: Often times there will be a certain amount of "patient responsibility" remaining on the claim balance. Depending on their insurance plan and benefits and patient's will have a balance due after insurance has paid their portion. Practices should have an efficient process for collections and payment posting.

The Physical Therapy Billing Checklist: A Guide to Optimizing Your Revenue Cycle

Optimizing your revenue cycle is all about streamlining your physical therapy billing process. This checklist provides a step-by-step guide to help you achieve this:

  1. Collect Patient Information: Gather all necessary patient information, including contact details and medical history. We recommend digital patient intake.

  2. Verify Insurance Benefits: Confirm the patient's insurance coverage and understand what services are covered. We recommend electronic eligibility checks.

  3. Obtain Pre-Authorization: If necessary, obtain pre-authorization for services from the insurance company.

  4. Provide Services: Deliver the necessary therapy services and treatment to the patient. Document the encounter. We recommend physical therapy documentation software or evaluation templates.

  5. Capture Charges: Accurately document the services provided using the correct ICD and CPT codes and units. We recommend physical therapy billing software to automate charge capture and unit calculation.

  6. Submit Claims: Submit the claim to the insurance company, ensuring all information is accurate and complete. We recommend physical therapy practice management software

  7. Post ERA or EOB: Post the Explanation of Remittance (ERA) or Explanation of Benefits (EOB) once received. We recommend PT or medical billing software..

  8. Collect Patient Responsibility: Collect any remaining balance from the patient, offering flexible payment options if possible. We recommend credit card processing that is integrated (auto posting) to your medical billing software.


By following this checklist, you can ensure a smooth and efficient physical therapy billing process, optimize your revenue cycle, and maintain the financial health of your practice.


Conclusion

Physical Therapy Billing may be complex, but understanding its intricacies is essential for the success of any PT practice. From mastering the use of ICD and CPT codes to avoiding common pitfalls and following a reliable checklist, you can optimize your billing process, shorten your revenue cycle, and improve your practice's cash flow. With the right strategies and tools in place, you can navigate the complexities of physical therapy billing with ease and efficiency.

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