Billing for physical therapy services is tricky, time-consuming, and nerve-wracking. After all, there are so many rules to follow, and it seems like those rules are constantly changing. That makes mistakes tough to avoid. And in many cases, you might not even know you’re making them. And 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. And if you’re purposely messing up, then you’re putting your practice, your reputation, and your livelihood at risk—big time.

Whether your billing slip-ups are accidental or intentional, actions have consequences. And when it comes to billing for the services you provide, apologies aren’t going to get you the money you deserve. That’s why it’s crucial that you understand the dos and don’ts of billing—before those don’ts end up taking a big chunk out of your bottom line. With that, let’s examine two of the most common ways rehab therapy practices can monumentally mess up their billing: overbilling, which is intentional, and misbilling, which is accidental.

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

  • Upcoding: According to LifeHealthPro, upcoding happens when clinics “charge for more extensive and costly services than they’ve delivered, entering incorrect billing codes that lead to overcharges.”  
  • Overcharging: Similar to upcoding, overcharging is the act of charging additional units of the services the therapist performed or tacking on codes for services the therapist didn’t perform at all.
  • Utilization abuse: This is the practice of 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 services you actually provide. Curious about the definition of a “medically necessary” service? According to the APTA, “physical therapy is considered medically necessary as determined by the licensed physical therapist based on the results of a physical therapy evaluation and when provided for the purpose of preventing, minimizing, or eliminating impairments, activity limitations, or participation restrictions.” Furthermore, therapy treatment is considered medically necessary “if the type, amount, and duration of services outlined in the plan of care increase the likelihood of meeting one or more of these stated goals: to improve function, minimize loss of function, or decrease risk of injury and disease.”

This description might not fall in line with every single “medically necessary” definition out there—after all, private payers can define it how they see fit—but it does provide a better level of therapy-specific detail than most. It also seems to be on par with Medicare’s reimbursement requirements, especially considering the recent elimination of patient improvement as a condition of payment.


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.

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, so this error isn’t solely on your billers. Neither is coding to the highest level of specificity. This will be incredibly important when the healthcare industry transitions to ICD-10, as claim reimbursement will depend 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. Besides 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 of time 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 deleted or truncated diagnosis codes?

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 denied claims to determine what caused the denial, and correct that problematic area.

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

Billing software or services can help you fix your billing woes, including misbilling. If your current billing service or software is allowing these problems to happen, then you might want to 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 Medical Group Management Association, only 35% of providers appeal denied claims. That’s unacceptable. Payers often make mistakes and deny claims in error, so make sure you inspect every single denied claim. 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.

Overbilling and misbilling happen way more than we think. In the whirlwind world of private practice rehab therapy, it’s hard to keep track of every single thing. But when your livelihood is so closely connected to something, being busy or caught up in the whirlwind is no excuse. Honest, accurate billing is the only way to go, so start thoroughly examining your billing workflow, stop mistakes and downright fraudulent behaviors in their tracks, and adopt policies and procedures that’ll keep everyone on the clean-claim path.

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