The Bottom Line of Physical Therapy Billing

PT, physical therapy, software, billing, notesby Nina Silberstein @ Physical Therapy Products, January 2011

Whether you keep it in-house or outsource, navigating billing and reimbursement procedures can be a tricky process

As much as you enjoy treating your patients, billing and claim reimbursement are most likely not on the top of your list of pleasurable tasks. You probably didn’t learn a lot about running a practice and keeping your finances in order in physical therapy school. But understanding the business side of your job is just as important as seeing clients. Here are two questions to consider: Do you assign the billing/reimbursement duties to a member of your office staff, or do you send things out to a medical billing company? We’ll discuss the pros and cons of these decisions as well as effective billing and documentation practices.


There are advantages and disadvantages to this, but “The answer depends on the volume of the insurance claims,” says Yuval Lirov, PhD, co-founder of Bellmore, NY-based bestPT, which specializes in billing services and practice-management software. “The payers make profit on the float, so they hold onto the money that must be paid to the provider for as long as possible. The payers have developed solid processes, built state-of-the-art technology, and hired Harvard MBAs to accomplish their business goals,” he says.

Lirov believes that if the volume of your insurance claims is small, then you can process your billing in-house. But as soon as you start seeing many insurance patients, your billing process, technology, and follow-up team must be able to match the payors’ process, technology, and personnel. Lirov has five patents in artificial intelligence and computer security, and has authored three books.

For physical therapy practices, his company integrates a single technology infrastructure that includes scheduling, documentation, and electronic billing; a shared billing knowledge base; and disciplined claims processing. It will track payer performance from a single point of control, share payer compliance rules globally, and match its physical therapy and rehabilitation billing rules to the evolving payer’s environment.

If you plan to do your billing yourself, there are many things you’ll either need to know or to have: good licensed billing software; proper billing, diagnosis, and CPT codes; correct insurance terminology; your state’s laws; easy-to-understand patient forms; and knowing when to bill/collect from the patient. There’s much more, according to Lirov. “You need to build a process to discover delays and underpayments, to follow-up on every delay and underpayment until it’s paid in full and on time,” he says.

Then you need to continuously monitor and perfect that process. “Depending on the nature of the claim, the payor, and the quality of your follow-up process, the time frame may vary between 14 days and never,” he says. “You need to measure that delay and act aggressively when it starts growing.”

Consider that when you have high insurance claim volumes, you need a very high degree of process transparency and control to make sure that you submitted a claim for every patient visit, that the claim includes correct patient demographics and charges, that your notes support the charges in case you get audited, and that it was accepted by the insurance company and paid in full and on time.

“There are certain reasons why it becomes more cost-effective to have it internally in your practice or clinic,” adds Lynn Steffes, PT, president/consultant at Steffes & Associates Consulting Group in New Berlin, Wis. “The capabilities of that have increased, there is a move toward electronic medical records, and many of those [systems] also generate bills.” The other element is managing the process on the front end. It becomes so important when patients’ responsibility is growing. “For example,” Steffes says, “Twenty years ago, a patient might have had a $5 co-pay. Now there’s a $50 co-pay, and you’re only collecting $40 from the insurance.”

Because such a high percentage of collections are patient-related, Steffes recommends you have a process for gathering insurance information, verifying benefits and eligibility in a customer-friendly way, and setting up payment expectations. “That’s important,” she says. “Part of taking care of people is the financial equation.”

Steffes’ consulting group offers rehab providers services nationwide to improve reimbursement results and conform to compliance guidelines, including rehab documentation, payer relations and contracting, billing and coding, compliance, rehab agency management, and application of the guide to physical therapy practice. She is also network administrator for a group of more than 50 private-practice clinics and is the Wisconsin Physical Therapy Association Reimbursement Specialist.

Steffes is in and out of about 100 clinics per year and finds that if they aren’t being carefully managed at the front end, they are losing money. Or, patients may come in, get billed on the back end, become upset with their bills, neglect payment, and then resist returning to therapy when they need it because of large outstanding balances.

“Therapists have to understand what the eligibility is; they have to be able to negotiate a plan of care with the patient,” Steffes says. “There are good reasons to bring it in-house—the technology we’re currently using, informed consumers, cash flow, all of that. The flip side, if you do that, you need someone who is skilled and knows to stay up-to-date. A lot of practices hire someone with minimal experience and then provide them with no supportive training. That’s a huge problem.” Steffes thinks where practices tend to stumble is not having the tools and training for doing it right.

In practices of all sizes, often the person responsible for billing and collections also wears one or many other hats within the practice. This person is usually found at the front desk—doing registration, answering patient inquiries, filing, faxing, keeping referrals up-to-date, corresponding with physicians—and that can leave billing to be just one more thing on the plate that needs to get done. Things inevitably fall through the cracks and can’t get done as quickly due to the demands in the office.


“I think the very top of the list would have to be whether or not the outside source has any experience doing physical therapy billing,” says Dave Stuart, president and COO of Syncopation Revenue Solutions Inc, a full-service medical billing company in New Gloucester, Me. “If so, do they focus exclusively on PT? Do they have dedicated people who do just PT billing? Those would be the most pressing questions.”

Stuart also suggests that your practice consider what the effectiveness of your current system is and what the cost of continuing your in-house process is versus sending the process to an outside company (along with the potential improvement in cash flow). “Sometimes, cash flow may be improved enough to justify any additional cost that an outside agency might involve,” he adds. “Often, outsourcing can help to control costs and provide for peace of mind in not having to deal with the human resources-related issues—ie, sick time, vacation time, corrective action, management of the process, etc.”

In addition, you might also consider if any of the principals of the billing firm have any direct experience in owning/managing a privately owned PT practice. PT billing is different from other specialties and should be handled accordingly.

“If you plan to outsource your billing, you must make sure that the billing company you hire is able to level the playing field with the payors,” Lirov says. “That it has the required level of transparency and control as well as the ability to adjust its processes and technology in step with the changes continuously inflicted by the payors.”

Full article here.

Physical Therapy Billing | Service Outsourcing | Zero-Sum Argument and Cost-Benefit Analysis

Over 17 percent of accounts receivable for an average physical therapy practice are beyond 120 days since the date of service. Although this may not seem to be a problem, as it would be expected that the money will come eventually, in fact an unpaid claim that is 180 days overdue has less than 1% chance of ever being paid. In other words, the average rehab practice delivers almost one fifth of its services for free. Would billing outsourcing be an appropriate solution for this problem?

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Extra Time and Reduced Cost Benefits

Traditionally, advocates of outsourced physical therapy billing bring up extra time and cost gains as two main arguments in their favor. The rehab practice owner uses the extra time for patient care, family, or practice development. Cost gains are typically measured in terms of salaries and benefits of reduced billing personnel. However, the first argument (extra time) is often irrelevant to therapists satisfied with their schedules and practice sizes, and the second argument too often turns into a wash in light of commission-based fees typically charged by the billing services.

Zero-Sum Argument Against Outsourcing

Opponents of outsourced rehab billing often use the deficient denial follow up argument, which is a variation of a zero-sum argument. It is based on an assumption that physical therapy billing service has a limited capacity for follow up and physical therapists receive selective follow up based on arbitrary criteria, such as unpaid balance. A win in terms of follow up effort for one physical therapist is a loss for another. The rehab billing service provider may skip follow up entirely, collecting the fee only on claims that were paid without any manual intervention and causing the payments to each physical therapist to shrink because of forfeited erroneous or delayed claims. But the rehab practice owner with in-house billing operation has all of its follow up capacity focused on a single practice and so, the argument goes, the in-house billing service must deliver better results than the outsourced service.

Measuring physical therapy billing quality, i.e., the percent of accounts receivable beyond one hundred and twenty days, exposes the fallacy of this argument. Note that ten percent improvement in overall billing quality means ten times more to the bottom line than one percent reduction in billing costs. Therefore, an outsourced physical therapy billing service provider charging a percentage of total collections has a larger incentive to improve overall payment performance and maintain better client loyalty than to sell a deficient service to another physical therapist.

In conclusion, rehab practice owners must establish objective performance and compliance criteria and use them systematically and within individual practice context when deciding about billing service outsourcing. Note that billing quality is a key component of the billing cost computation and the decision to outsource the billing service is based on a multi-fold improvement in billing quality. The rule of thumb is that the new combined percentage of fees and uncollected revenue outperforms in-house costs and A/R, and such performance improvement can be verified independently and continuously.

Caps on Physical Therapy Sessions Detrimental to Business Growth

This year has been a year of many changes to the medical system. While some of these changes have been beneficiary, a few have been detrimental to professions such as physical therapy. Many physical therapists are facing tough times today. The market is saturated with physical therapists but not enough patients. Laid off physical therapist Jessica Summers explains why.

A few years ago, patients had a cap on how many sessions were covered by their insurance. Medicare made exceptions for patients that suffered from physical ailments such as osteoporosis, Parkinson’s disease and stroke victims and granted them extensions because they were more likely to need more physical therapy sessions. However, as of October 2012, this is no longer the case.

On October 1, 2012, The Middle Class Tax Relief and Job Creation Act of 2012 (H.R. 3630) amendment was passed which states:

In applying this paragraph with respect to a request for an exception with respect to expenses that would be incurred for outpatient therapy services (including services described in sub- section (a)(8)(B)) that would exceed the threshold described in clause (ii) for a year, the request for such an exception, for services furnished on or after October 1, 2012, shall be subject to a manual medical review process that is similar to the manual medical review process used for certain exceptions under this paragraph in 2006. Middle Class Tax Relief and Job Creation Act of 2012

Because of this new amendment, patients that previously had extensions on their therapy sessions were cancelled and their insurance would no longer cover it. Additionally, patients who had exceeded their session limit had to be denied treatment because they could not afford the care.

According to Summers, patients can file an appeal to extend their coverage but because filing the claim and getting it through takes so long, most have been denied. Additionally, there is a typo in the law that makes Speech Therapy and Physical Therapy share a budget. This places a lot of physical therapists and patients in a tough situation. Summers posed the example of a stroke victim who can have multiple issues such as swallowing, walking and speech deficits. Because of the limit, she has to restrict which therapies she can provide and would have to decide which of these would be priority. Based on the previous example a patient would receive treatment for swallowing problem, but the walking and talking deficits would have to wait for another year.

Fortunately, the amendment which enforced the cap is up for vote in January. Jessica, along with many others in the medical profession are hoping for an extension. This would help bring more patients in and create a bigger demand and more jobs for physical therapists.