At this point, the majority of physical therapy clinics are using some type of software to document, schedule, and bill for patient treatment. Thanks to ever-increasing compliance regulations, paper had to go the way of the VHS, becoming nearly obsolete. When your practice switched from paper to software, it was a big change.
When it comes to ICD-10, physical therapists must code for medical necessity or risk claim denials.
It’s a mad, mad, mad, mad Medicare world, and unfortunately, just about every regulation requires a modifier. If you apply the wrong modifier—or forget one entirely—then your clinic suffers decreased payments or flat-out denials. Even worse, if you amass enough modifier mistakes, you make your practice vulnerable to an audit.
Overbilling is intentional; misbilling is not. Read on to learn if you’re making mistakes in either PT billing category.
No, by having your patient sign an ABN, you are acknowledging that you do not believe that the services you are providing are either medically necessary or covered by Medicare. If you have an ABN on file, you should include a modifier GA or GX modifier on your claim so Medicare knows to deny the claim and assign financial responsibility to the patient.
For many physical therapists, the phrase “medically necessary” sounds worse than nails on a chalkboard. On the one hand, it’s vague, subjective, and open to infinite interpretation. And on the other, it’s often the determining factor in whether payers—perhaps most notably, Medicare—will provide reimbursement for rehab therapy services.
A Bit of History
The history of the “medically necessary” reimbursement requirement stretches all the way back to the 1960s. As E. Haavi Morreim explains in this article, it was around that time that soaring healthcare costs prompted insurers to create some kind of standard for payment. Up until that point, claim approval was based almost entirely on “physicians’ judgments about what care a patient needed.” When insurers realized they needed to define limits for coverage in order to control costs, they introduced the term “medically necessary” to combat the reimbursement of services that were “excessive, experimental, or merely convenient.”
While early guidelines as to what, exactly, made a service “medically necessary” were based on the collective clinical judgment of medical providers, the tables have since turned so that the health plans “tell physicians, rather than ask them, what is necessary and what is not,” Morreim writes. The pickle therapists run into is that the core meaning of the word “necessary”—whose synonyms include “essential” and “indispensable”—implicates a life-or-death situation in which the absence of care could directly result in loss of life. Of course, that’s not the standard most insurers adhere to when deciding whether to deny a claim; otherwise, the vast majority of medical care—including rehab therapy—would not warrant coverage.
The Necessity Umbrella
Without a clear definition as to what falls under the umbrella of “medical necessity,” payers have resorted to creating their own definitions based on their own cost-benefit analyses. Essentially, they ask:
- whether the cost of treatment justifies the chances that the patient will reach a desired level of relief or functional improvement.
- whether the treatment will mitigate the patient’s risk of suffering an even worse outcome if the current condition is left untreated.
The problem, Morreim writes, is that “a huge array of treatments fits that description: more or less worthwhile, but the patient will not die without it and other alternatives (that might have some drawbacks) exist.” Furthermore, definitions of medical necessity can vary from one health plan to the next, though most share a decidedly vague set of conditions. This is particularly frustrating for rehab therapy professionals because, as Morreim points out, “the vague concept of ‘necessary’ does not fit quality of life-oriented interventions very well,” which makes it “easy for health plans to dub those interventions discretionary and unnecessary.”
Defining Necessity for Physical Therapy
To help both physical therapists and payers better understand and apply the concept of medical necessity as it relates to therapy services, the APTA adopted the Defining Medically Necessary Physical Therapy Services position in 2011. According to this statement, “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, 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 court decision that definitively eliminated patient improvement as a condition of payment.
The Therapy Cap and ABNs
Speaking of Medicare, as you’re probably well aware, Medicare caps the total amount of reimbursement it will provide annually for each patient’s rehabilitation services. For 2014, that amount is $1,920 for occupational therapy and $1,920 for physical therapy and speech-language pathology combined. Therapists can treat above the cap—at least, they can until March 31, 2014. However, Medicare’s reimbursement above the cap hinges on the medical necessity of continued therapy treatment. Per the APTA, “an automatic exception to the therapy cap may be made when the patient’s condition is justified by documentation indicating that the beneficiary requires continued skilled therapy, i.e., therapy beyond the amount payable under the therapy cap, to achieve their prior functional status or maximum expected functional status within a reasonable amount of time.” (For an in-depth discussion of the therapy cap, check out this blog post.)
Over the last several months, we focused much of our content on the significance of documentation. Not simply because of its importance in remaining compliant and receiving reimbursements but also because of the bigger picture—it’s crucial in elevating our profession; achieving autonomy, direct access, and respect; and receiving the recognition we deserve as the musculoskeletal experts.
The Middle Class Tax Relief and Job Creation Act of 2012 (HR3630) impacted physical therapists in private practice in terms of the Medicare therapy cap. First and foremost, HR3630 extended the therapy cap exception process through the 2012 calendar year. Secondly, it requires that the Centers for Medicare and Medicaid Services (CMS) apply the therapy cap limitations to hospital outpatient departments no later than October 1, 2012. The therapy cap for hospital outpatient departments concludes at the end of 2012 unless Congress passes additional legislation extending it into 2013.