What is Medicare?

Administered by the Centers for Medicare and Medicaid Services (CMS)—a component of the Department of Health and Human Services (HHS)—the Medicare program covers Americans aged 65 and older who have worked and paid into the system as well as younger people with disabilities and those with end-stage renal disease or amyotrophic lateral sclerosis (ALS).

According to the authors of this article, “Medicare is designed to absorb risk,” whereas “commercial insurers will always seek to minimize their exposure to risk.” As a government program, Medicare provides coverage to healthy individuals as well as those who currently have—or may develop—expensive or complex medical issues that require a significant amount of medical intervention. Commercial insurers, on the other hand, must “protect [their] business interests by avoiding those most likely to use medical care.”

On its 50th anniversary (July 28, 2015), Medicare was providing coverage to more than 55 million Americans. In 1996, this number was only 19.1 million. According to this report published by The Commonwealth Fund, on the whole, Medicare covers about 75% of its beneficiaries’ healthcare costs and about 70% of beneficiaries are between the ages of 65 and 85. To view Medicare eligibility requirements for enrollees, click here.

What are Medicare’s Four Parts?

Medicare has four parts:

  1. Part A is hospital insurance (inpatient).
  2. Part B is supplementary medical insurance. Outpatient therapy practices bill under Medicare Part B.
  3. Part C is a private health plan (often called a Medicare Advantage Plan) that Medicare has approved.
  4. Part D is a prescription drug plan.

What is Medical Necessity?

All Medicare benefits are determined by medical necessity, which means that clinicians must provide care that is justifiably reasonable and necessary according to evidence-based clinical standards of care. The definition of “reasonable and necessary” varies based on both National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs). Each provider is responsible for knowing the current NCDs and LCDs governing his or her practice. However, in most cases, the medical necessity of services is determined based on:

  • Whether the cost of treatment is reasonable considering the patient’s chances of reaching 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.

You can download the Medicare NCD Manual here and identify the LCDs associated with your particular geographic region by using the search tool found on the right side of this page.

To learn more about providing Medicare patients with services that are not medically necessary, click here.

What was the Ruling on the Medicare Improvement Standard?

In January 2013, the US District Court for the District of Vermont ordered CMS to clarify sections of its Medicare Benefit Policy Manual—which, as it turns out, does not require improvement as a condition of coverage. As part of this settlement, CMS also had to create and distribute new educational materials to correct long-standing and widespread misunderstandings about the Improvement Standard. While the settlement went into effect immediately for Medicare and Medicare Advantage plans, CMS had until January 2014 to comply with this order.

Here are some important things to note:

  • This ruling did not produce any new regulations; it simply mandated clarification of existing standards.
  • Medicare coverage for outpatient physical, occupational, and speech therapy services does not depend on a patient’s “potential for improvement from the therapy but rather on the beneficiary’s need for skilled care.”
  • Medicare covers therapy that takes place in a patient’s home as long as the patient is homebound (although the patient does not necessarily have to be confined to his or her bed).
  • Medicare covers skilled therapy services—including home health services, outpatient therapy services, and services provided within a skilled nursing facility—if the services are “necessary to maintain the patient’s current condition or prevent or slow further deterioration.”
  • Medicare will reimburse therapists for “the establishment or design of a maintenance program,” “the instruction of the beneficiary or appropriate caregiver,” and the “necessary periodic re-evaluations...of the beneficiary and maintenance program.”
  • Even if nursing home residents do not qualify for Medicare to cover their stay in the facility, Medicare still may cover rehab therapy services for residents who meet the requirements for outpatient therapy.
  • The coverage standards clarified in this ruling do not apply to therapy services provided in inpatient rehabilitation facilities (IRFs) or comprehensive outpatient rehabilitation facilities (CORFs).
  • CMS is implementing a special review process to reimburse patients whose claims Medicare denied due to lack of improvement after the lawsuit was filed on January 18, 2011.
  • The Center for Medicare Advocacy offers self-help packets for outpatient therapy patients who wish to appeal coverage denial.

You can read the settlement agreement in full here and the two-page fact sheet that CMS compiled here.

How Do I Treat Medicare Patients?

A rehab therapy clinic must accept Medicare in order to treat Medicare patients. Furthermore, per Chapter 15, Section 40.4 of the Medicare Benefit Policy Manual, physical and occupational therapists in private practice cannot “opt-out” of Medicare and therefore may not enter into private contracts with Medicare beneficiaries. In other words, rehab therapists can’t accept cash payments from Medicare patients for medically necessary physical therapy services.

According to a 2012 statement from the Social Security Administration, “nearly 80 million baby boomers will file for retirement benefits over the next 20 years.” That includes Medicare, making this a potentially huge business opportunity for outpatient practices. That being said, there are successful outpatient clinics that are 100% cash-based. For more information on how one Austin clinic successfully—and legally—navigates Medicare and cash-pay physical therapy, click here.

How Do I Enroll in Medicare?

If you’re interested in accepting Medicare Part B patients, use the below instructions to enroll online:

  1. Read the Internet-based Provider Enrollment, Chain and Ownership System (Internet-based PECOS) document, which outlines the enrollment process, provides an overview of Medicare’s terminology, and details the information you’ll need to provide to enroll.
  2. Ensure you have a National Provider Identifier (NPI), which is a user ID and password from the National Plan and Provider Enumeration System.
  3. Log in to Internet-based PECOS using your NPI.
  4. Complete, review, and submit an electronic enrollment application. You’ll then receive a Certification Statement.
  5. Sign and date the original Certification Statement in blue ink and mail it, along with any requested supporting documents, to the designated Medicare contractor within 15 days of your electronic submission. Your effective date of filing is the date the Medicare contractor receives the Certification Statement. Please note that a Medicare contractor will not process the online application without a signed and dated Certification Statement.

If you’d rather go the paper route, click here to download the paper application and its instructions.


What are the Medicare Documentation Requirements for Physical and Occupational Therapy?

Medicare reimburses therapists when the documentation and claim forms accurately report the provision of medically necessary covered services. So, in addition to being legible and relevant, documentation must defend the services a therapist bills. Furthermore, documentation must comply with all applicable Medicare regulations and support included CPT codes.

Please note that therapists also should follow any state or local laws regarding documentation as well as the professional guidelines of the American Physical Therapy Association (APTA) or the American Occupational Therapy Association—even if Medicare does not require it.

Elements of Patient Care

For Medicare Part B beneficiaries, the therapist must complete and document the following elements of patient care:

  • Evaluation: Before treatment can begin, the therapist must complete an initial evaluation of the patient. This evaluation should include:
    • Medical diagnosis
    • Treatment impairment or dysfunction
    • Subjective observation
    • Objective observation (e.g., identified impairments; severity or complexity of patient)
    • Assessment (includes rehab potential)
    • Plan (information pertinent to the plan of care)
  • Plan of Care (POC): Based on the assessment, the therapist will develop a plan of care, which includes details of treatment, estimated time frame for treatment, and anticipated results. At minimum, Medicare requires the POC to include:
    • Medical diagnosis
    • Long-term functional goals
    • Type of services or interventions
    • Quantity of services or interventions (number of times per day the therapist provides treatment; if the therapist does not specify a quantity, Medicare will assume one treatment session per day)
    • Frequency of treatment (number of times per week; do not use ranges)
    • Duration of treatment (length of treatment; do not include ranges)

Please note that if a patient is receiving treatment in multiple disciplines (PT, OT, SLP), then there must be a POC for each specialty, and each therapist must independently establish what impairment or dysfunction he or she is treating as well as the associated goals.

Furthermore, POCs require the dated signature of the referring licensed physician within 30 calendar days.

  • Daily/Treatment Notes: The therapist must update the patient file for every therapy visit. Daily notes include such details as:
    • whether the patient showed up for the session;
    • what took place at that appointment;
    • how much time was spent performing services; and
    • any observations that the therapist made while working with the patient.

Regarding how specific physical therapy daily notes should be, the Coverage Manual, IOM Pub. 100-02, Chapter 15, §220.3. E. Treatment Note reads: "The purpose of these notes is simply to create a record of all treatments and skilled interventions that are provided and to record the time of the services in order to justify the use of the billing codes on the claim form. Documentation is required for every treatment day and every therapy service. The format shall not be dictated by the contractor and may vary depending on the practice of the responsible clinician and/or clinical setting...The Treatment Note is not required to document medical necessity or appropriateness of the ongoing therapy services. Descriptions of skilled interventions should be included in the plan or progress note and are allowed, but not required daily."

  • Progress Reports: Therapists must complete this note type at minimum every tenth visit. This note:
    • provides an evaluation of progress toward current goals;
    • includes a professional judgment about continued care;
    • modifies goals and/or treatment, if necessary; and
    • terminates services if necessary (see discharge note below).
  • Discharge Note: This note type is similar to a progress note; however, this note details the conclusion of a patient’s care and his or her subsequent discharge.
  • Certification (physician/NPP approval of the plan): This denotes the time period in which a patient can achieve his or her functional goals based on the therapist’s assessment. However, there are times when progress is slower than initially anticipated. When this occurs, therapists must document it and complete a recertification. Medicare may require some additional documentation to verify that the patient truly needs the additional therapy. Medicare also requires recertification after 90 days of treatment.

For greater detail on documentation guidelines, please refer to this guide from the APTA as well as this slide deck from Kaiser Permanente. Click here to learn more about documentation requirements for speech language pathology. For details on Medicare Part A therapy documentation requirements, click here.

Authorization by Licensed Physician

Medicare will not pay for physical therapy services unless the claim and documentation prove that a licensed physician has authorized the plan of care. Authorization from a licensed physician must include the physician’s full name, location, and contact phone number as well as a doctor’s order that explains the diagnosis and level of treatment intensity. This authorization certifies that only a physical therapist can offer the type of care the patient needs. If the patient can do exercises at home on his or her own at no cost, Medicare will not cover physical therapy services.


Dictation is compliant with Medicare’s guidelines as long as dictation occurs on the date of the patient visit and the therapist creates written documentation based on the dictation.

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What are Medicare’s Certification Requirements for Therapy Plans of Care?

It’s important to note that some state practice acts have different referral requirements than Medicare—and providers must adhere to the strictest applicable rule. You can learn more about the direct access laws in your state here.

Treating without a Referral

As a result of direct access, in most cases, Medicare patients may receive physical therapy services without seeing a physician or obtaining a referral first. That means that a therapist may perform—and bill for—an evaluation to determine whether therapy is medically necessary for that patient without involving a physician or other approved non-physician provider (NPP). However, once a therapist determines that therapy is, in fact, necessary, then that patient must be under the care of a physician or NPP. As such, the therapist must obtain a signed POC certification within 30 days of a patient’s first visit. While Medicare doesn’t require that patients visit their physician, some physicians may require an office visit prior to signing a POC.

According to this resource, Medicare also doesn’t require that the plan of care be certified before treatment begins, which means therapists may begin treatment before obtaining certification. However, therapists should do so only if they are extremely confident that they can secure the necessary certification within the month. Otherwise, the POC is considered “delayed,” which means the provider will have to complete additional work in order to remain compliant.

Here are a few more tips to help ensure you get paid:

  1. Get a real or electronic signature and date—not a stamp.
  2. Recertify the plan of care within 90 days.
  3. Include the certifying provider’s name and NPI on the claim.

To learn more about Medicare’s certification requirements for therapy plans of care—including how developing relationships with providers can make the whole process easier—click here. If you’re a WebPT Member, keep in mind that WebPT’s Plan of Care Report shows you which plans of care are still pending certification. It will also remind you to complete your recerts before time runs out. Talk about a POC easy button.

What are the Most Relevant Therapy-Related Medicare Compliance Rules?

Maintaining Medicare compliance is no easy feat. Read on to learn about the most asked-about Medicare regulations.

Use of Physical Therapy Assistants

Physical therapists (PTs) are licensed providers in all states and physical therapist assistants (PTAs) are licensed providers in the majority of states. Per the APTA, “as licensed providers, the state practice act governs supervision requirements. Some state practice acts mandate more stringent supervision standards than Medicare laws and regulations. In those cases, the physical therapist and physical therapist assistants must comply with their state practice act.”

In outpatient private practices, physical therapy assistants can provide physical therapy services, as long as they do so under the direct supervision of the physical therapist. CMS generally defines “direct supervision” as a situation in which the supervising private practice therapist is physically present in the office suite at the time the PTA performs the service. To learn more about Medicare’s supervision levels, check out this blog post. For guidance on the use of PTAs in other settings, please refer to this APTA page.

Billing for Services Provided by PTAs

Per Medicare rule 42 C.F.R. §410.26(b)(1)-(7) and the CMS Medicare Benefit Policy Manual, Pub. 100-4, Ch. 15, §60.1 - §60.5, in order to bill for outpatient services provided by a PTA in a non-institutional setting, the claim must meet the following conditions:

  1. The supervising therapist performs the evaluation and establishes the plan of care.
  2. The services the PTA provides are medically necessary.
  3. The supervising therapist provides direct onsite supervision (i.e., he or she is in the same building, but not necessarily in the same room).
  4. The supervising therapist is immediately available to intervene (i.e., he or she cannot be doing something that is uninterruptable).
  5. The supervising therapist has active ongoing involvement in the management and control of the patient's condition.
  6. If the patient presents with a new condition, the supervising therapist sees the patient.
  7. The PTA providing the service under the direct onsite supervision of the therapist is an employee or an independent contractor of the practice.

Here are four tips to help you ensure your documentation demonstrates that you’ve met the aforementioned conditions:

  1. Include language that affirms you reviewed your plan of care with the PTA who is providing the service under your direction.
  2. Document regular meetings with the PTA where you review the patient's progress.
  3. Indicate when the treatment has advanced to the next, more complex or more sophisticated task.
  4. Cosign the daily note, but also have the PTA document that he or she “provided services under the direct supervision of (name of the supervising therapist).”

For information on how to bill within WebPT or with one of our integrated billers, click here.

Use of Physical Therapy Techs

Medicare will not reimburse for services provided by physical therapy techs, regardless of the level of supervision. Therapy techs may assist the professional therapist or therapist assistant in performing a specific therapy service; however, the tech can never provide the service.

Use of PT Students

Similar to what we mentioned above for techs, Medicare Part B will not pay for services provided by a therapy student, because students are not licensed providers. Thus, even if the therapist is in the treatment room with the student while the student is treating a patient, only the services provided by the therapist are billable. To learn more about the exceptions to this rule as well as the APTA’s recommended considerations with regard to billing for student-assisted services, click here.

Use of Non-Credentialed Therapists


During the holiday season and summer vacation, private practices may need to hire substitutes, or contractors, to cover for their regularly employed therapists. But, when bringing in another therapist to treat patients, many practices face the “bill as” problem: to receive reimbursement from insurance companies, hired contractors must be fully credentialed with the same insurance companies whose beneficiaries the hiring practice treats.

One of the best ways to ensure this is to seek out contractors from qualified agencies with vetted insurance credentials. This may be a slightly more costly way of doing things compared to simply hiring a friend or associate, but in order to “bill as” correctly, you’re better off hiring a fully credentialed contractor. This is important for all insurance companies, especially Medicare. The contractor stepping in for an on-vacation therapist who treats Medicare patients must also be Medicare-credentialed.

Locum Tenens means “placeholder” in Latin. It refers to a person who temporarily fulfills the duties of another. While physicians have the luxury of simply adding a Q6 modifier to the treatment claim to indicate that a replacement physician provided the services on a particular day, PTs, OTs, and SLPs do not.

New Hires and Graduates

Let’s say you recently hired a new graduate or new employee, and he or she is still waiting to be credentialed. For Medicare, as long as the practice has sent in that therapist’s paperwork and that paperwork is pending CMS approval, the therapist can begin to treat patients. However, your practice must hold all claims for that new therapist (up to one year from the visit date of service, based on timely filing rules) until he or she receives credentialing approval. Medicare does not allow a co-signer on claims for non-Medicare credentialed contractors or employees. The uncredentialed therapist would need to reassign his or her individual Provider Transaction Access Number (PTAN) to your group, and you would then hold the claims until he or she receives approval.


A re-exam, re-evaluation, or reassessment (CPT code 97164) is completely different than a progress note, and therapists should not bill a 97164 for a progress note. In fact, you should only ever bill for a re-evaluation if one of the following situations applies:

  • The professional assessment indicates a significant and unanticipated improvement, decline, or change in the patient’s condition or functional status
  • New clinical findings come to light
  • The patient fails to respond to the treatment outlined in the current POC

Copay Collection

Medicare helps pay for medically necessary outpatient physical, occupational, and speech-language therapy services when the licensed physician or therapist establishes a plan of care and the licensed physician periodically reviews the plan to see how the patient is progressing. Regarding copayment, the patient pays 20% of the Medicare-approved amounts. However, the patient must first pay an annual deductible ($183 in 2017) before Medicare pays its share.

According to AAP.org, “Waiver of co-pays is generally illegal, at least in the case of beneficiaries of federal programs (including Medicare or Medicaid), including waiver of copays to physicians and family, as a professional courtesy.” Medicare and Medicaid view waiving copays or deductibles as a misrepresentation of the true charge for your services. Although Medicare may permit waiving copays in very select circumstances, you should never assume that this will be the case. Click here for greater detail on copayment collection for Medicare and third-party insurance beneficiaries.

Financial Hardship

As mentioned above, Medicare will allow for waivers of copayments or deductibles under very special circumstances. One such circumstance is financial hardship. However, waiving under the claim of financial hardship is easier said than done. First, a practice should rarely extend such waivers. Second, the practice must apply the same hardship criteria to all financial hardship cases. Practices should establish a financial hardship policy, which details the type of documentation a patient must supply (e.g., tax returns or unemployment compensation information) for the practice to consider the patient for financial hardship. Third, financial hardship is a last resort, and therapists should make all attempts to collect copayment or deductibles at the time of service. Ultimately, if a Medicare patient asks about waiving copayments or deductibles, the therapist should inform the patient that such a practice is illegal. Learn more about financial hardship here.


Co-treatment may be appropriate when therapists of different disciplines determine that they can better address a patient’s treatment goals if they provide their various individual treatments during a single session. (Check out these examples.) Medicare has different rules regarding co-treatment. For Part A, the rules deal with services provided in skilled nursing facilities, and for Part B, the rules apply to outpatient services provided in clinics, private practices, hospital outpatient facilities and, in some cases, skilled nursing facilities.

  • Part A: When two therapists from different disciplines provide different treatments to one patient at the same time, each therapist may bill the full treatment session with that patient separately. The therapists must follow all policies regarding mode, modalities, and student supervision as well as all other federal, state, practice, and facility policies.  
  • Part B: Therapists cannot bill separately for the same or different service provided to the same patient at the same time. Essentially, therapists must limit total billing time to the exact length of the session, so a therapist of one discipline may bill for the entire service or co-treating therapists of different disciplines may divide the service units. Per the ASHA Leader, “Because SLPs usually bill treatment codes that represent a session (rather than an amount of time), and because Medicare has no published minimum/maximum session length, the SLP would bill for one untimed session.” The OT or PT would then bill “the timed treatment codes for the occupational or physical therapy.”

According to joint guidelines developed by the American Speech-Language-Hearing Association (ASHA), American Occupational Therapy Association (AOTA), and American Physical Therapy Association (APTA), for both Medicare Part A and B, therapists should only co-treat a patient when coordination between two disciplines benefits the patient. Therapists should never co-treat for “scheduling convenience.” Furthermore, documentation must clearly indicate the rationale for co-treatment and specify the goals each therapist will address through this method of intervention. Each therapist should document co-treatment sessions as such, specifically detailing which goals the team of therapists addressed and how the patient progresses. Lastly, therapists should limit therapy services performed during one treatment session to two disciplines.


According to compliance expert and WebPT guest author Tom Ambury, concerns about holiday gift-giving often revolve around the Anti-Kickback Statute (AKS)—mostly because the AKS has “a broad definition of who is considered a referral source.” Essentially, the AKS prevents practitioners from providing any incentive designed to generate Medicare patient referrals, and anyone—healthcare practitioner or not—who refers a Medicare patient to your clinic is considered a referral source, according to the AKS. This means that giving gifts to patients can even be tricky, especially if they’ve referred patients to you and those patients happen to be Medicare beneficiaries.


To stay in the clear on all gift-giving endeavors, Tom recommends following the below Office of Inspector General (OIG) Guidelines for Gifts—and maintaining crystal clear documentation:

  • No more than $10 per gift
  • No more than $50 in aggregate over the course of a calendar year

Many states have their own statutes, and it’s your responsibility to know the laws and guidelines that apply to the state in which you practice. To learn more about AKS rules in your state, click here.

What is MPPR?

As we discussed in this blog post, in 2011, CMS rolled out its multiple procedure payment reduction (MPPR) program, at which time Medicare stopped paying claims in full when a PT, OT, or SLP performed more than one related procedure on a patient during the same visit. As it stands now, therapists who perform more than one “always therapy” service on a patient during the same visit see a 50% reduction in practice expense (PE) billed to Medicare (the reduction was 20% from Jan 1, 2011 to March 31, 2013). MPPR also extends across disciplines, which means that when two or more rehab therapists of different disciplines treat the same patient during the same date of service, CMS only pays the highest procedure value in full. CMS then reduces all subsequent procedures performed that day by half. According to the APTA, MPPR averages a 6 to 7% reduction in provider reimbursements (based on an average of 3.7 billed units per visit). That’s a lot.

So, why did CMS implement such a program? Apparently, part of the reason was to reduce the amount of money the Center was spending on rehab therapy prep time when more than one procedure was performed for the same patient on the same day. Remember that MPPR only affects practice expenses; however, each therapy service also includes work expenses and malpractice expenses. Thus, before MPPR, if more than one therapy service was billed at a time, CMS was paying more than once for pre and post-service activities—in addition to the actual service being provided.

That’s not to say the program is justified in its current form. Since the beginning, the APTA has asserted that MPPR is flawed—mostly because provider PE rates have already been reduced to avoid duplication. According to the APTA, “The fact that certain efficiencies exist when multiple therapy services are provided in a single session was explicitly taken into account when relative values were established for these codes. Therefore, an additional cut to the practice expense of therapy service codes is arbitrary and likely to restrict patient access to vital physical therapy services.” As a result, the APTA has advised providers to vary their payer mixes and review their contracts closely to ensure they know the terms they’re agreeing to.

If you’re an APTA member, you can use this updated Medicare reimbursement calculator to determine how MPPR will impact reimbursements for your clinic.

How Should I Handle Medicare Audits?

Therapists must adhere to all Medicare documentation and billing regulations. These regulations include the therapy cap, functional limitation reporting, the 8-minute rule, and MPPR. Failure to comply with Medicare regulations can result in penalties, denied reimbursements for provided services, and audits.

Avoid Major Red Flags

Here are the top three compliance red flags:

  • Frequent use of the KX modifier (divergent from the norm)
  • Billing under one PT provider number rather than each separate enrolled PT’s provider number
  • Billing an excessive number of codes per session

Know Your Audit Risks


Furthermore, failure to do the following puts therapists at risk for Medicare audits:

  • Including certifications on a plan of care
  • Providing adequate PTA supervision
  • Complying with the 8-minute rule and/or CCI edits
  • Including legible signatures (be it the physician’s or the PT’s)
  • Physically signing documents (stamped signatures are a no-no)
  • Having the physician sign the plan of care
  • Re-certifying the plan of care
  • Ensuring duration/frequency are compliant with the Local Coverage Determination (LCD)
  • Documenting sufficiently

Another documentation pitfall that could put you at risk? Modifying documentation following a denial or not supplying documentation when Medicare requests it.


On the billing side of things, avoid these risky behaviors:

  • Billing for services furnished by aides or techs, using one‐on‐one codes instead of group therapy codes when therapy was not provided one-on-one, or billing for co‐treatment when co-treatment hasn’t occurred
  • Submitting claims for services that you know are not reasonable and necessary
  • Code-gaming, like unbundling (e.g., billing separately for hot pack and dressings) and upcoding (i.e., billing for a more expensive service than the one provided)
  • Billing for “not medically necessary” services without an Advanced Beneficiary Notice of Noncoverage (ABN)
  • Billing for excessive duration and frequency of services, services not furnished, or student services

Protect Your Practice

Obtain a copy of Medicare’s Local and National Coverage Policies and familiarize yourself with the coverage criteria pertinent to your practice. Additionally, take advantage of any CEU opportunities regarding Medicare, and get acquainted with Medicare’s website to learn how to access key Medicare reference documents, like the program’s Claims Processing Manual. For more Medicare compliance training, check out PT Compliance Group’s webinars, seminars, and “Compliance Chat” blog posts as well as Gawenda Seminars' webinars, blog, and resources.

In addition to educating yourself, it’s imperative that the rest of your practice’s staff understand and abide by Medicare’s regulations. We recommend conducting a self-audit and appointing at least one dedicated compliance officer within your practice who will implement a compliance plan. This plan should encourage therapists and staff to report any and all potential compliance issues, provide procedures for prompt and thorough investigation of possible misconduct, and detail appropriate responses to non-compliance scenarios. Compliance plans typically include the following:

  • Mission or purpose of the plan
  • Standards of conduct for the clinic
    • New employee information
    • Disciplinary actions for misconduct/non-compliance
  • Duties of the compliance officer or compliance committee
  • Process for conducting internal audits
    • Procedures for reporting violations
    • Corrective action for confirmed violations
  • Review of training and communication specific to your services
  • Content for education around risk areas and reducing red flags

Understand Audit Types

CERT Audits

CERT stands for Certified Error Rate Testing. According to the CMS website and the PT Compliance Group, CMS instituted the CERT program to produce a national Medicare fee-for-service (FFS) error rate compliant with the Improper Payments Information Act. “CERT randomly selects a sample of Medicare FFS claims, requests medical records from providers who submitted the claims, and reviews the claims and medical records for compliance with Medicare coverage, coding, and billing rules. The results of the reviews are published in an annual report.”

CMS Probe Audits

A probe audit is a pre-payment review of claims. As explained in this article, probe audits target “either particular services or particular specialties.” If you meet the criteria for a particular probe, auditors will pull a sample of your submitted claims for review prior to payment. You will then receive a request for additional documentation, along with a deadline for supplying the information. If you fail to comply, you will not receive reimbursement for the claim. If you do comply, but your documentation does not support what you billed, you will not receive reimbursement for the claim. Furthermore, if the audit uncovers any actions deemed fraudulent, your Medicare Administrative Contractor (MAC) will refer your case to the appropriate agency for further investigation.

Review These Resources

What was Meaningful Use?

According to this Oracle whitepaper, “The Health Information Technology for Economic and Clinical Health Act (HITECH) forces health care providers and their business associates to bring a sense of urgency to the security of protected health information (PHI). The act brings both pressures and incentives into play in its mandate to convert PHI to electronic health records (EHR), and puts teeth into the enforcement of the privacy and security rules of the Health Insurance Portability and Accountability Act (HIPAA).”

Part of the $787 billion American Recovery and Reinvestment Act (ARRA) of 2009, the HITECH Act aims to digitize US healthcare records, thus simplifying the exchange of health information, which will improve health care and increase operational efficiency (i.e., save money). To facilitate this digitization, the act mandates that eligible healthcare professionals switch from paper claims to electronic health record (EHR) systems. “The act provides $19.2 billion to promote the conversion, most of it going to Medicare and Medicaid reimbursement as incentives to make what the act refers to as ‘meaningful use’ (MU) of EHR, starting in 2011,” says Oracle. Essentially, to qualify for the incentive, these practitioners had to implement a certified electronic health record—that is, one that “offers the necessary technological capability, functionality, and security to help them meet the meaningful use criteria.”

Physical Therapists Did Not Qualify for Meaningful Use

By CMS standards, physical therapists, occupational therapists, and speech-language pathologists weren’t considered “eligible professionals” when it came to meaningful use. Thus, rehab therapists couldn’t earn the incentive associated with demonstrating meaningful use of an EMR—even if they implemented a system that had been certified for meaningful use. Therefore, rehab therapists never needed to concern themselves with deadline requirements for EMR or EHR. Instead, they should focus on acquiring a rehab therapy-specific EMR solution for their practice. Here’s why.


What is Replacing Meaningful Use?

In 2016, CMS’s acting administrator, Andy Slavitt, announced the end of MU as we know it: “The Meaningful Use program as it has existed will now be effectively over and replaced with something better,” he said at the JP Morgan Annual Health Care Conference. Instead of continuing MU as a standalone program, CMS is consolidating it—along with PQRS and the Value-Based Payment Modifier (VM) program—into the Merit-based Incentive Payment System (MIPS). This program will go into effect in 2019, with reporting beginning in 2017. While rehab therapists are considered eligible professionals under MIPS—and its umbrella program, the Medicare Access and CHIP Reauthorization Act—they are not required to participate in MIPS until 2019 at the earliest (although CMS has hinted that there may be opportunities for rehab therapists to voluntarily participate in the meantime). "At its most basic level,” Slavitt said, “[MACRA] is a program that brings pay for value into the mainstream through something called the Merit-based Incentive Program, which compels us to measure [providers] on four categories: quality, cost, the use of technology, and practice improvement.”

As we explained in this article, “Whereas MU required all eligible professionals to use an EHR that was Meaningful-Use certified, MIPS is taking the focus off of the technology itself and placing it on the outcomes clinicians are able to achieve through the use of technology.” With that in mind, while rehab therapists still don’t need a Meaningful-Use certified software system, they absolutely do need to adopt a software platform that enables them to collect, monitor, and—most importantly—use meaningful outcomes in order to convey the effects of therapeutic intervention.

To read more about the end of Meaningful Use—and the beginning of MIPS and MACRA—check out this article, this one, or this one.

What was in the 2017 Final Rule?

In November 2016, Medicare released its Final Rule, at which point we learned the following:

There are New CPT Codes

On January 1, 2017, eight new CPT codes for PT and OT evaluations and re-evaluations replaced codes 97001–97004. While these codes require therapists to select the complexity of each patient evaluation (low, medium, and high), Medicare will apply the same valuation regardless of the level. Check out this blog post—and/or watch this webinar—to learn more.

There’s no Update About the Misvalued Codes

A few years ago, CMS began working to identify and investigate 10 rehab therapy codes that may have been misvalued. Unfortunately, this is still a work in progress—one that CMS expects to continue through 2017. To see the full list of codes, head to Table 24 on page 620 of the Final Rule.

The Therapy Cap Increased Slightly—and the Review Process is Different

In 2017, the therapy cap is $1,980 for OT services and $1,980 for PT and SLP services combined. As in previous years, the rule extends the therapy cap exceptions process through the rest of the year. However, the manual medical review process—the process by which providers can request an exception for patients who have exceeded the $3,700 threshold—is different this year. Specifically, CMS explained that “not all claims exceeding the therapy thresholds are subject to a manual medical review process as they were before. Instead...we are [now] permitted to do a more targeted medical review on these claims using factors specified in section 1833(g)(5)(E)(ii) of the Act as amended by section 202(b) of the MACRA, including targeting those therapy providers with a high claims denial rate for therapy services or with aberrant billing practices compared to their peers.”

PQRS is Being Replaced by MIPS

While this announcement actually came about before the Final Rule, we were expecting the Rule to include information about how rehab therapists can complete quality reporting on a volunteer basis until they are actually required to participate in the Merit-Based Incentive Payment System (MIPS). Unfortunately, CMS had nothing to share on the subject, as this was “out of scope for this final rule.” (Please note that while PQRS is no more, functional limitation reporting (FLR) remains in effect.)

Maintaining Medicare compliance is no easy feat—unless you have WebPT.

Heidi Jannenga

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