A Trilogy of Billing Blunders: Overbilling, Misbilling, and Underbilling

Billing for physical therapy services is tricky, time-consuming, and downright nerve-racking. After all, there are so many rules to follow, and those rules are constantly changing. That makes mistakes hard to avoid—and in many cases, you might not even know you’re making them. While an occasional billing error probably isn’t a huge deal, if you’re unknowingly messing up left and right, you could end up in hot water—putting your practice, reputation, and livelihood at risk.

Whether your physical therapy billing slip-ups are accidental or intentional, actions have consequences—and apologies aren’t going to get you the money you deserve. That’s why you must understand the dos and don’ts of physical therapy billing processes—before those mistakes take a big chunk out of your cash flow. With that, let’s examine three of the most common ways outpatient physical therapy services can monumentally mess up their billing processes: 

• overbilling, which is intentional, 
• misbilling, which is accidental, and 
• underbilling, which is just plain silly.

Overbilling 

Overbilling is an intentional tactic used to obtain higher payments wrongfully. Within the rehab therapy industry, overbilling most often occurs in the following ways:

• Upcoding: This fraudulent and abusive tactic involves a provider billing for codes and diagnoses that are more expensive and/or severe than what was appropriately diagnosed and/or performed. For example, upcoding can occur when a physical therapist bills for therapeutic activity (97530) instead of gait training (97116)—even though their treatment may more closely support gait training—because the former pays out more.
• Overcharging: Similar to upcoding, overcharging is charging additional units of the services the therapist performed or tacking on codes for services the therapist didn’t perform at all. 
• Utilization abuse: Utilization abuse is scheduling extra visits or providing unnecessary services.

How to Avoid it

Here’s the pickle: overbilling is intentional. You know what you’re doing. Maybe you didn’t know it was wrong, but now you do. So, it’s time to put the kibosh on these fraudulent activities—otherwise, denied claims will be the least of your worries.

To shut down overbilling, you must provide medically necessary services specific to the patient’s treatment plan—and only bill for the therapeutic services you provide. Curious about the definition of a “medically necessary” service? Per the American Physical Therapy Association (APTA), the following factors determine if treatment is medically necessary:

• A licensed PT determines it is so based on an evaluation;
• It minimizes or eliminates impairments, activity limitations, and/or participation restrictions;
• It is provided throughout the episode of care by the physical therapist under their direction and supervision;
• It requires the knowledge, clinical judgment, and abilities of the therapist;
• It is not provided exclusively for the patient’s convenience;
• It is provided using evidence of effectiveness and applicable standards of practice; and
• The type, amount, and duration of the treatment help a patient improve function, minimize loss of function, or decrease the risk of injury (or disease).

This list might not align with every single “medically necessary” definition out there—after all, private payers can define it how they see fit—but it does provide more therapy-specific detail than most. It’s also on par with Medicare’s reimbursement requirements and universal claim form.

Physical therapy billing is confusing—but it doesn’t have to be.

Check out our free guide on all things physical therapy billing.

Misbilling

Does your practice currently suffer from a denial rate above 4%? Misbilling might be to blame. Misbilling—which includes manual errors, input oversights, and timing issues—typically occurs when your practice fails to:

• Identify all billable codes.
• Code to the highest level of specificity.
• Create a clean claim. 

Whether it’s due to incorrect electronic claim forms or misplaced billing information, if your billing staff fails to identify all billable codes, then your payer will shortchange you.

Of course, the ability to identify billable codes hinges on the accuracy of the documentation by physical therapists, so this error isn’t solely on your billers—the billing process begins at intake and continues through the course of care. Neither is coding to the highest level of specificity. Specificity continues to be incredibly important with the use of ICD-10, where claim reimbursement depends heavily on the specificity of the diagnosis codes. As for creating a clean claim, you might be wondering what makes an otherwise clean claim dirty. In addition to missing or misused modifiers, consider:

• Is the place of service accurate on the claim?
• Is the claim deficient in certain information, like prior authorization or the effective period within which the pre-approved service must be provided for reimbursement to occur?
• Are there mismatched totals or mutually exclusive codes?
• Are there errors or typos resulting from the data-entry process?
• Are you using outdated CPT codes, or does the claim list diagnosis codes that have since been deleted or truncated?

How to Avoid it

Accidents happen, and if your practice is suffering from any of these misbilling mistakes, then it’s time to clean up your billing workflow. Here’s how to get started on addressing the error of your practice’s misbilling ways:

1. Conduct an internal billing audit.

Monitor the documentation, coding, and claims creation processes. Scrutinize any billing statements or denied claims to determine what caused the denial and correct that problematic area.

2. Look for software or services that can help remedy issues.

The right billing system, software, or service can help you fix your billing woes, including misbilling. If your current billing system allows these problems to happen, start shopping around. If you don’t currently use a billing software or service, you might want to consider it. It can eliminate a lot of these misbilling issues.

3. Level-set your team.

No matter what, meet with your team and get everyone on the same page. Explain the issues that are occurring and how they are affecting the business. Then, outline the consequences of making such mistakes and retrain where necessary.

4. Inspect every single denied claim.

According to the Healthcare Financial Management Association, up to 65% of denied claims are never appealed or resubmitted by providers. That’s unacceptable. Payers often make mistakes and deny claims in error, so make sure you inspect every single denied claim and collect payment that is due. If you use a billing service, your reps should already be battling on your behalf and appealing denied claims. If you don’t use a billing service, then implement a denial management system and task an employee with appeal duties.

Underbilling

Without a billing guru or intuitive billing software, many physical therapists in private practice may unknowingly be leaving money on the table. This can occur when folks don’t have a clear understanding of how the 8-Minute Rule and the rule of eights differ—and can be best utilized.

How to Avoid It

Most therapists have heard of the 8-Minute Rule as it’s the backbone of Medicare reimbursement for rehab therapy. The rule of eights—which applies to commercial insurances that follow AMA’s CPT coding rules—tends to be a little more obscure. While we have several blog posts (not to mention a comprehensive guide) dedicated to this topic, I still think it’s valuable to review the main points.

Let’s start with the 8-Minute Rule. 

The following chart should look familiar to most therapists (as it’s likely their favorite cheat sheet for filling out visit charges for Medicare patients).

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In this chart, the numeric range in the left column represents the total timed minutes therapists spend treating patients, and the sum on the right represents the maximum number of units they can bill according to that time total. This pretty well sums up how to apply the 8-Minute Rule to your treatment—but underbilling can still occur when therapists aren’t utilizing mixed remainders (a.k.a. leftover minutes) as they should. 

For those new to this concept, Medicare allows therapists to compile and bill for any leftover minutes that went: 

• beyond the above-referenced thresholds, but 
• were less than eight minutes. 

For example, if you have an additional five minutes of therapeutic exercise (97110) and an additional three minutes of neuromuscular re-education (97112), these eight leftover minutes can be combined into one unit and applied to the service with the largest time total (in this case 97110 would get two units). Remember that total time still needs to meet the threshold requirements for total units (eight).

Now let’s tackle the rule of eights. 

If the payer follows the rule of eights, then the principle of the mixed remainder does not fly. This rule strictly adheres to the Substantial Portion Methodology (SPM), where cumulating minutes or remainders is a no-go. As we have explained, “in order to charge for a unit of service, you must have performed that service for a ‘substantial portion’ of 15 minutes (i.e., at least 8 minutes). That means that if your leftover minutes come from a combination of services, you cannot bill for any of them unless one individual service totals at least eight minutes.”

At face value, the rule of eights may appear to restrict billable units, but that’s not always the case. Let’s look at two hypothetical examples to learn how to shrewdly and legally define the right CPT code in accordance with the rule of eights to improve reimbursements: 

1. In one instance, if a therapist diversifies a treatment session so that it lasts 50 minutes in total, with five different treatment codes, each totaling 10 minutes apiece, then the rule of eights dictates that the therapist can charge five units. 
2. Another example—and perhaps a more common one—exists where a therapist charges two units for therapeutic exercise (say 23 minutes of 97110) plus three other time-based codes of therapeutic activity (97350), manual therapy (97140), and neuromuscular re-education (97112), each lasting at least eight minutes. In this case, you should receive payment for five units.

Both of these cases show where the rule of eights can yield more billable units than what Medicare’s 8-Minute Rule would allow. How ‘bout that?

Leveling Up Cash Flow with Next-Level Software and Services

Overbilling, misbilling, and underbilling happen more often than we think. In the whirlwind world of private practice outpatient physical therapy services, it’s hard to keep track of every single number, code, rule, or other regulatory factor. But honest, accurate billing is a must to receive reimbursement and keep your cash flow up to snuff. So, if you feel these principles slipping, it may be time to examine your billing workflow to see what adjustments can be made to stop mistakes and keep everyone on the clean billing process path.

Better still, hire a team of experts to be in your corner every step of the way, from scrubbing electronic claim forms to collecting payments for stellar cash flow. Or, if you prefer to go it alone, trust in a billing software solution purpose-built to help you and your clinic achieve greatness in practice.

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