Hello, readers. Over the past several weeks, I’ve enjoyed answering a number of your questions regarding billing for PT services, so I’m excited to address the topic right here on the WebPT Blog.

On June 19, 2015, the Office of the Inspector General (OIG) released a report involving an outpatient private practice physical therapy provider. In case you weren’t aware, the OIG—which is part of the US Department of Health and Human Services (HHS)—is basically the CMS watchdog. Its mission is to ensure Medicare correctly pays for services in accordance with current law and regulations, and it works with the US Department of Justice (DOJ) to investigate fraud, waste, and abuse of federally funded programs. So, when the OIG speaks, we should listen.

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Here are the nitty-gritty details of the report:

  • The provider was identified as one of the largest providers of outpatient physical therapy services in its state.
  • The OIG randomly selected 100 claims between January 1, 2011, and December 31, 2012, to determine whether the provider’s documentation supported the claims submitted to Medicare for payment.
  • The OIG determined an error rate of 62%, meaning that 62 out of the 100 claims had issues that should have prevented Medicare from paying those claims.
  • The OIG extrapolated the 62% error rate over all claims the provider submitted to Medicare during the two-year review period.
  • The OIG instructed CMS to recoup $1.4 million from the provider. Yes, that’s $1.4 million.

What were the documentation issues that the OIG Identified?

Well, of the 100 claims: 

  • 34 were tied to treatment notes that did not meet Medicare requirements.
  • 29 had plans of care that were either missing or not up to Medicare’s standards.
  • 22 contained outpatient therapy services that did not meet Medicare’s physician certification requirements.
  • Four contained outpatient therapy services that were not medically necessary.
  • Two contained services that were not performed or supervised by the treating therapist.

Please note that these totals add up to more than 62; this is because there were claims with multiple issues.

So, let’s define the various issues associated with these claims:

Treatment notes did not meet Medicare requirements.

This could mean that:

  1. Treatment notes did not meet Medicare’s signature requirements. Medicare requires providers to include in their signatures, full name, professional credentials (PT, OT, SLP, etc.), and the date of signature.
  2. Treatment notes did not support the volume of services billed. To support the number of units billed, providers must document the total timed code minutes as well as the total treatment time. If a provider documents time on a flow sheet, that time must match the time he or she documented on the treatment note.

The plan of care did not meet Medicare requirements.

This could mean that:

  1. The services provided were not included on the plan of care. Medicare requires providers to document the type, volume, frequency, and duration of services on the plan of care. Even if an intervention is medically necessary, Medicare might not pay for it if the provider does not include it on the plan of care. For example, let’s say you provided manual therapy but forgot to include manual therapy on the plan of care.  Medicare could deny any manual therapy charges you submit.
  2. The plan of care was missing. Having a certified plan of care is a condition of payment for Medicare. Simply put: no plan of care, no payment.
  3. The plan of care was not dated. Medicare requires providers to establish a plan of care before beginning treatment. The plan is considered “established” when the provider writes or dictates it. If the plan is not dated, Medicare cannot determine whether it was established prior to the onset of treatment.

Medicare’s physician certification requirements were not met.

This could mean that:

  1. Physician signature requirements were not met. Physicians’ signature requirements are the same as those that apply to physical therapists: signature, full name, credentials, and date of signature.
  2. Plans of care were not certified in a timely manner. Medicare requires plan of care certification within 30 days of the first treatment. Plans of care certified after the first 30 days are considered “delayed” and must include both an explanation for the delay and a signature by the referring provider.

Services were not medically necessary.

This means that claims exceeding the therapy cap contained services that did not meet Medicare’s definition of medical necessity. When it is medically necessary for physical therapy services to exceed the therapy cap, Medicare requires providers to apply the KX modifier to the corresponding claims and include a statement of medical necessity within the medical record.

Key takeaways:

First, it’s important to remember that this provider did not break the law. The provider is not facing accusations of fraud or submitting false claims to Medicare. This is merely a case of not following Medicare’s requirements.

Second, these claim denials are technical in nature—meaning the provider’s documentation did not meet the technical requirements for payment. These types of denials are fairly cut-and dried; they’re easy to make and can be very difficult to appeal.

Third, these kinds of claim denials are easy to avoid!


Thankfully, an electronic documentation system like WebPT can assist you in meeting the technical documentation requirements and thus, avoiding the issues discussed above. But it’s important to remember that systems like WebPT can only cue you; you also need to know what the requirements are and implement the processes and policies necessary to ensure your staff stays compliant. Finally, you must hold your staff accountable for following the rules—and sanction employees who fail to do so. A compliance plan can help with processes, policies, and accountability. Visit me at ptcompliancegroup.com to learn more.

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