OIG Report Reminds PT Service Providers to Review Billing Practices

A recent report issued by the U.S. Department of Health and Human Services, Office of Inspector General (OIG), estimates that 61% of claims submitted to Medicare for outpatient physical therapy (PT) services failed to comply with Medicare requirements. The OIG report serves as a reminder to PT providers about the importance of accurate billing and compliance with Medicare requirements for the services they provide.

OIG reviewed a sample of claims submitted between July 1, 2013 and Dec. 31, 2013 and found that, during the six month audit period, approximately $367 million was improperly paid by Medicare for such PT services. The most common errors found in the OIG audit with respect to Medicare claims for PT services were lack of medical necessity, improper coding and insufficient documentation of services provided. With respect to coding for PT services, the most common errors found by OIG involve the use of the wrong modifier or a time unit that does not match the units in the medical record.

Based on its findings, OIG has recommended that the Centers for Medicare and Medicaid Services (CMS): (i) notify health care providers of potential overpayments, who are in turn expected to make a reasonable and diligent effort to identify and repay any amounts that were improperly received by the provider; (ii) establish mechanisms to ensure appropriateness of PT claims that are submitted to Medicare; and (iii) educate providers about the Medicare billing requirements for PT services.

Outpatient PT services are covered under Medicare Part B. In order to receive reimbursement under Medicare, the PT services must be (i) medically reasonable and necessary and (ii) provided in accordance with a plan of care established by a physician or qualified physical therapist, and periodically reviewed by a physician. Also, the need for such services must be certified by a physician.

For a service to be considered medically reasonable and necessary, the following conditions must be satisfied: (i) the service must be considered an effective treatment for the patient’s condition under accepted medical standards; (ii) the level of complexity of the service must not exceed what is considered safe and effective when performed by a physical therapist or under the supervision of a physical therapist; (iii) there must be an expectation that the patient’s condition will significantly improve within a reasonable period of time, or the service must be considered necessary to establish a safe and effective maintenance program for the patient’s condition; and (iv) the amount, frequency and duration of the service must be considered reasonable under acceptable medical standards.

Accurate and complete documentation of services provided is important to prove that all billing requirements are met and that a provider is entitled to reimbursement. Under Medicare requirements, a patient’s medical record should include, at a minimum: (i) the date of service; (ii) the specific service provided and billed; (iii) total minutes that the service was provided with respect to each timed code that is billed and the total minutes for the entire PT session; and (iv) the signature of the provider who furnished or supervised the service.

In light of OIG’s findings, PT providers are encouraged to review their billing practices and ensure compliance with Medicare requirements, as well as other requirements that may be applicable to other types of payors.

It is also important to note that Medicare providers have an obligation to use reasonable diligence to investigate any potential Medicare overpayments and return such overpayments within 60 days of when they are identified. There is a six-year lookback period on this obligation, meaning that Medicare providers may be liable for any overpayment they may have received from Medicare in the immediately preceding six years.