Blog Post
Compliance

Founder Letter: The Audit Odds: Why Every PT Must Prepare for Claims Scrutiny in 2021

With audits ramping up, documentation compliance has never been more important. Learn how to prepare your clinic for claims scrutiny in '21.

Heidi Jannenga
|
5 min read
|
March 31, 2021
image representing founder letter: the audit odds: why every pt must prepare for claims scrutiny in 2021
Authors
Illustrators
Share this post:

Subscribe

Get the latest news and tips directly in your inbox by subscribing to our monthly newsletter

Documentation sucks. I get it. After a long day of working with patients and receiving positive feedback from them about their functional progress, the last thing therapists want to do is sit down and work through the documentation that they weren’t able to finish at the point of care. In these moments, when dinner and a relaxing evening are singing their sweet song, it’s tempting to rush through your notes, using shorthand and including only the most basic of details. To this end, PT clinics are looking for the fastest and simplest documentation solutions—the ones that will get them out the door faster than Dorothy can click her heels to go home to Kansas. 

If that sounds like your clinic, a word of caution: faster doesn’t always mean better. Simple documentation is typically less defensible than thorough documentation—and that will make a world of difference when an auditor comes to call. If you’re thinking, “Wait. I’m a small clinic. My chances of being audited are practically nonexistent”—think again. Contrary to popular belief, audits are on the rise, and even small clinics are liable to be summoned—because while some providers are selected based on billing behaviors, others are chosen completely at random. 

The days of avoiding audits are long past. 

Billing experts are saying that odds are, at some point in your career, you will experience an audit in one form or another—whether it’s through Medicare or a different payer. Yes, it’s true—audits aren’t exclusive to Medicare. Auditors can also swoop in from Medicare Advantage payers, Medicaid, or commercial payers.

Audits are ramping up. 

Additionally, all signs point to audits ramping up in 2021—especially for PT providers. But increased audit risk isn’t anything new in our industry. Check out this article from 1999. In it, the author explains that the prior year was an excessively active audit year. And if you think about it, the logic tracks. 


We know that CMS suspended audits between March 30 and August 3 of last year in order to help reduce the strain of the COVID-19 pandemic. This year, though, audits are back in full swing—and with the expansion of Medicare and the arrival of the Biden administration, some healthcare lawyers predict that providers can expect more audits than before

Auditors may specifically target physical therapists. 

The Office of Inspector General (OIG) is looking at outpatient therapy with a particularly critical eye. In 2018, the OIG conducted a widespread audit of physical therapy services and found that 61% of claims reviewed “did not comply with Medicare medical necessity, coding, or documentation requirements. Specifically, of the 300 claims in our stratified random sample, therapists claimed $12,741 in Medicare reimbursement on 184 claims that did not comply with Medicare requirements.”

While CMS pushed back on the OIG’s report, insisting that the findings more likely represented documentation errors than fraud, CMS did agree to better monitor PT claims. As a result, some healthcare attorneys believe that “physical therapy providers should be on notice that regulators may increase enforcement focusing on these areas of non-compliance.”

Clinics of all sizes get audited. 

There’s a common misconception that only large therapy organizations get audited. That is simply not the case. Consider these OIG audit case studies (all of which are in the public record): 

Sierra Injury & Sports Rehab

In November 2016, the OIG audited Sierra Injury & Sports Rehab, a small clinic that opened in 1999 and employs only a handful of providers. Its reasoning? “Our analysis indicated that one of Sierra’s physical therapists was among the highest Medicare therapy billers in California.”

The OIG reviewed 100 sample claims and found that the clinic had “improperly claimed at least $583,000 in Medicare reimbursement for outpatient physical therapy services over a 2-year period”—insisting that the clinic pay back the sum total within 60 days. The clinic contested this ruling, but as far as we know, there has yet to be a final ruling.

Highlands of Little Rock West Markham Holdings, LLC

In November 2019, the OIG audited the Arkansas SNF Highlands of Little Rock West Markham Holdings, LLC. The OIG claimed it conducted this audit because “[its] previous work found that SNFs billed for higher levels of therapy RUGs than were supported.” 

After reviewing 100 claims, the OIG determined that claims including e-stim were incorrectly paid, and “the SNF was overpaid $25,494 during [the] audit period.”

Missouri Physical Therapy Practice

In May 2017, the OIG audited A Missouri Physical Therapy Practice, another small outpatient therapy clinic—and yes, that is the correct business name. The OIG’s reasoning in this case was that “the Therapy Practice was among the highest Medicare therapy billers in the State of Missouri.”

After reviewing roughly 100 sample claims, it determined that A Missouri Physical Therapy Practice “received at least $151,290 in Medicare reimbursement for outpatient physical therapy services that did not comply with certain Medicare requirements.” The OIG then requested that the clinic make its repayment within 60 days. The clinic contested this ruling, and the outcome is still outstanding for this case.

Failing an audit has serious consequences. 

As the previous case studies demonstrate, a failed audit can be catastrophic for a clinic of any size. No matter how good your finances are, I’d wager a bet that you don’t have hundreds of thousands of dollars lying around—especially coming out of a pandemic year. And though the numbers cited above may seem big, they could have run much higher. For instance, this practice owed Medicare $829,916, and this one was told to pay $4 million. Luckily, in both of those cases, defensible documentation, excellent records, and a good attorney helped the practices negotiate down their payments. But the process was costly and took years to resolve. 

Audits don’t have to be your clinic’s death knell.

Now, I want to clarify that I’m not sharing this information to scare you. (Well, maybe just a little.) Audits certainly aren’t fun, but they don’t all end in catastrophe. In fact, there’s quite a lot you can do to prepare your practice for the smoothest possible audit experience—and thus, dramatically reduce your chances of receiving an unfavorable ruling. Creating a culture of compliance within your clinic—by holding consistent discussions, providing educational sessions, and frequently updating practice protocols—is the key. You can start by following these simple steps: 

1. Audit yourself. 

I know; voluntarily auditing your practice sounds like a big chore—and potentially a costly one at that. But regular self-audits have some serious benefits. Obviously, they can turn up billing and coding inaccuracies, compliance gaps, and holes in your documentation—all of which could prove detrimental during an official audit. But they can also reveal areas where “[clinicians] might be billing services at a lower level because they don’t understand the coding guidelines.”

In the above-linked source, a practice management consultant said they “typically find that many ancillary services and procedures are performed but are not billed.” Additionally, the consultant said that regular audits can uncover billing trends: “Often established patients are under coded and new patients and consults are over coded...A practice with a lot of established patients may be missing revenue.” Finding these billing errors provides teaching moments for your clinicians, where you can provide feedback to help them improve clinical and documentation compliance.

Frequency

If you do audit yourself, be sure to do so at a regular cadence (this source specifically recommends auditing your billing practices “more than once a year”). Of course, if you do find problems during your audit, you may want to ramp up your self-audit frequency until your problems are all ironed out. 

Method

When self-auditing, you can either hire a third-party service or complete everything in-house. In-house auditing is cheaper, but it’s typically less thorough than a third-party audit. It may behoove you, then, to employ a mix of methods: audit your clinic in-house semi-regularly, and hire a third-party auditor occasionally—kind of like spring cleaning! If you choose to complete your audits in-house, be sure to check out this CMS resource and this APTA resource

2. Establish policies and procedures that support compliance. 

When compliance is written into the bedrock of your clinic’s policies and procedures, you’re positioning yourself for success. New hires will know exactly what they need to do to remain compliant and bill correctly, and there will be less confusion in general. Here are some specific tips compiled from these three sources:

  • Appoint a compliance officer or committee that’s the go-to for all things compliance. 
  • Establish a formal training and education program that teaches employees proper coding and documentation standards. 
  • Investigate compliance and/or billing issues that are brought to your attention by your employees.
  • Adhere to state practice act standards regarding scope of practice for therapy assistants and aides. 

Remember that the more clarity you can provide your employees, the better.

{{inline-form}}

3. Know what triggers a PT audit. 

Finally, it’s critical to know the red flags auditors are looking for when they review PT claims. These are great areas to reinforce during training (and to review during self-audits). Specifically, CMS often looks for

  • billing habits that are far above or below the national average;
  • higher-than-average claim error rates;
  • large numbers of codes billed on a single date of service; 
  • insufficient proof of medical necessity
  • excessive or improper use of modifiers (e.g., KX, 59);  
  • multiple therapists billing under a single provider;
  • missing plan-of-care certifications or recertifications; 
  • failure to adhere to the 8-minute rule or NCCI edits;
  • illegible, reproduced (e.g., with a stamp), or missing signatures; 
  • noncompliance with Local Coverage Decision (LCD) frequency and duration rules; and
  • incomplete documentation.

Though every healthcare provider will likely be the focus of an auditor’s watchful eye at least once during their career, it doesn’t have to be a terrible experience. With the right preparation (and with thorough and defensible documentation), each and every therapist has the potential to emerge from an audit unscathed. Are you prepared?  

Download the Defensible Documentation Toolkit.

Enter your email below to learn how to keep your documentation in tip-top shape.

Awards

KLAS award logo for 2024 Best-in-KLAS Outpatient Therapy/Rehab
Best in KLAS  2024
G2 rating official logo
Momentum Leader Winter 2024
Capterra logo
Most Loved Workplace 2023
TrustRadius logo
Top Rated 2023
Join the PXM revolution!

Learn how WebPT’s PXM platform can catapult your practice to new heights.

Get Started
two patients holding a physical therapist on their shoulders