Many orthopaedic surgeons are adding physical and occupational therapy services to their practices. This can be daunting for in-house billing teams, as they may lack experience with the new services, therapy terminology, and associated Current Procedural Terminology (CPT) codes.

This article seeks to educate staff about therapy services and the components required for billing. A small investment of time to clarify the codes and the treatment continuum can improve a team’s ability to optimize therapy revenue and prevent billing errors.

Therapy terms and CPT codes

Often, staff members don’t understand terms such as modality or iontophoresis in the physical medicine and rehabilitation section of CPT (97XXX). Have a therapist explain the evaluation and treatment protocols and modality terms.

Ideally, hold the tutorial in the therapy space, so staff can see the tools and equipment used. Use the information herein to create a handout that outlines the physical and occupational therapy service categories in CPT.

Evaluations and reevaluations: An evaluation includes assessment and documentation of a patient’s history, level of function, systems review, specific tests and measures, diagnosis, and prognosis. Unique evaluation and reevaluation codes are used for physical and occupational therapy.

This category of CPT codes was significantly revised in 2017 and now contains three codes (no longer one code for evaluation) for each therapy type. The evaluation codes have defined criteria for history, examination elements, clinical presentation, decision-making complexity, and typical time.

Modalities—supervised and constant attendance: CPT defines a modality as “any physical agent applied to produce therapeutic changes to biologic tissue; includes but not limited to thermal, acoustic, light, mechanical, or electric energy.”

Some modalities are “supervised” by a therapy provider but do not require one-on-one contact during modality delivery, such as traction, unattended electrical stimulation, and whirlpool treatment. As defined by CPT, supervised modalities are not timed services.

Other modalities are defined as “constant attendance” services and do require one-on-one contact with a provider, such as manual electrical stimulation, ultrasound, and iontophoresis (using an electrical charge to deliver medication to inflamed tissue). The constant attendance codes are timed and billable in 15-minute increments.

Therapeutic procedures: These services are also timed and require direct, one-on-one patient contact, such as therapeutic exercises and activities, neuromuscular reeducation, aquatic therapy, gait training, and manual therapy. Therapeutic exercises and activities typically involve the use of gym-style equipment, stairs, TheraBands, etc.

Active wound-care management: Wound-care services promote healing by removing devitalized and/or necrotic tissue from a patient’s body. The provider has one-on-one contact with the patient, and codes are determined by the type of débridement and wound surface size.

Tests and measurements: Tests and measurements are components of evaluation and reevaluation; however, employers or insurance carriers may request specialized testing or assessment, which is then reported with these codes.

Orthotic management and prosthetic management: Therapists may provide specialized training in the use of orthotics and prosthetics, which is reported as a unique service.

The therapy episode

After staff understands key terms, explain the chronology of therapy care, which contributes to appropriate billing. The information that follows comes from Medicare’s guidelines because they are well defined and published and are often utilized by other payers. Medicare’s coverage guidelines are outlined in Chapter 15, section 220, of the Medicare Benefit Policy Manual (publication 100–02).

Although Medicare allows qualified nonphysician providers to order and certify therapy services, this article focuses on physicians. Use the steps below to create a handout for staff.

Step 1: order/referral: Therapy treatment begins with a physician order or referral, which includes a diagnosis and may include directions for types, durations, and intervals of treatment.

Step 2: evaluation and plan of care: As a first step, the therapist performs an evaluation and defines a plan of care, which builds on the physician’s order and details the patient’s long-term treatment goals and planned therapy services.

Reevaluation may be necessary when the plan of care or patient’s status changes, and this is potentially reportable with a reevaluation code. Note that Medicare has a National Correct Coding Initiative edit between reevaluation and several modalities and therapeutic procedures and will require modifier-59 when both services are supported and documented. If the reevaluation code is not modified when it is needed, denials will occur.

Step 3: certification: Medicare guidelines call for the ordering physician to approve or certify the plan of care via signature in a timely manner (at most within 30 days of the evaluation). The initial certification covers 90 days or less of treatment, after which the plan of care must be recertified.

When setting up therapy services, confirm that your certification process is working properly. In one practice, the group relied on its electronic health record (EHR) to relay the plan of care to the physician for certification, but the documents were not getting through the system. As a result, numerous services were flagged during a carrier audit.

Step 4: treatment: Treatment may begin on the day the plan of care is set. The treatment notes describe the patient’s care at each visit (e.g., modalities and therapeutic procedures). Documentation should include assessment of improvement, modifications to the patient’s goals, and both timed code minutes and total time with the patient. Interventions and modalities should be documented in terms that correspond with billing codes.

Step 5: progress report: Medicare requires that a therapist provide a progress report for the ordering provider after the tenth treatment encounter or within 30 calendar days of the first treatment—whichever is less. A therapist may include elements of the progress report within the treatment notes or a revised plan of care.

At the conclusion of a therapy episode, the therapist prepares a discharge note that details the patient’s treatment and status since the last progress note. Writing a progress report and writing a discharge note are not separately billable services for the therapist but are required for Medicare documentation.

A therapy assistant, under the supervision of a therapist, may perform selected therapy services. Review your state’s guidelines and the Medicare Benefit Policy Manual for additional information.

Reporting timed services

Practices typically rely on a therapist or assistant to document required time elements within the progress note or EHR system. Billing staff members can use such documentation to confirm the number of service units reported. Understanding time-reporting rules can prevent them from billing too many or too few service units.

The Medicare guidelines for reporting timed services are detailed in Chapter 5, section 20.2, of the Medicare Claims Processing Manual (publication 100–04). Non-Medicare payers also may adhere to the time guidelines, and requirements should be confirmed during contracting.

Key elements for reporting timed services include:

• When only one service is provided in a day, a provider should not bill for services performed for less than eight minutes.
• Time intervals are assigned in increments of 15 minutes, beginning with a base of at least eight minutes (one unit = ≥ eight to 22 minutes; two units = ≥ 23–37 minutes; three units = ≥ 38–52 minutes, etc.).
• When more than one service represented by 15-minute timed codes is performed in a single day, the total number of minutes of service determines the number of timed units billed.

Medicare’s policy includes the following example:

If a therapist provides 24 minutes of neuromuscular education and 23 minutes of therapeutic exercise, the total timed minutes, 47, corresponds with [three] units of service. The provider would report [two] units of neuromuscular reeducation (the lengthier service) and [one] unit of therapeutic exercises.

Refer to section 20.2 for additional examples.

Keep in mind, some managed care plans limit payment to a defined number of services or modalities per visit, regardless of what was performed and billed. Such claims might appear as if unpaid items need to be appealed; thus, billing staff members must be advised of such contract terms so they can use their time appropriately. If a claim is paid according to contract terms, staff would accept the discount. If no contractual limitations exist, staff would appeal the denial.

Medical necessity and local coverage determination policies

Medical necessity is an essential element of therapy services. Medicare carriers may establish unique local coverage determination (LCD) policies for medical necessity, and they affect reimbursements. Refer to your Medicare administrative carrier’s website for LCD policy information for more information.

Another significant change occurred in 2018, when a legislative cap on therapy services was removed. Under the Bipartisan Budget Act of 2018, providers are required to designate that services are medically necessary by utilizing modifier KX when the value of therapy services exceeds a specific amount. This year, the KX modifier threshold is $2,040 for physical and speech-language therapy services combined and $2,040 for occupational therapy services. It is not necessary or appropriate to use modifier KX on therapy services prior to meeting the threshold.

Be sure the billing team understands the proper way to append therapy claims with modifier KX.

Multiple procedure reductions

Since 2011, the Centers for Medicare & Medicaid Services has applied a multiple procedure payment reduction (MPPR) to therapy services, and the reduction method has been adopted by other payers. The codes that are subject to reduction are designated with a No. 5 in the Medicare Fee Schedule Database in the column used to designate multiple procedure modifier applicability.

Under the MPPR for therapy, a 50 percent reduction is applied to the practice expense component of subsequent units and procedures of therapy services—whether they are performed in an office or institutional setting. The reduction is not applied to the total allowable for the therapy service.

For example, if a patient had an encounter with two units of therapeutic exercises (CPT code 97110) and one unit of manual therapy (CPT code 97132), the first unit of 97110 would be allowed at the standard rate, but the practice-expense reduction would be applied to the second unit of 97110 and the single unit of 97132. Train staff to validate that payers have calculated reductions accurately and to appeal if they have not.

Sarah Wiskerchen, MBA, CPC, is a senior consultant with KarenZupko & Associates, Inc., and works extensively with orthopaedic practices. She develops and delivers the AAOS national coding and reimbursement workshops.