physical therapy billing reimbursement

Reimbursement in Physical Therapy

On April 16, 2015 Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This act is intended to repeal the flawed sustainable growth rate (SGR) formula, and is the final and permanent piece of legislation in a long line of annual temporary adjustments since 2003 that had prevented the SGR from activating a large payment cut for physical therapists and other healthcare professionals. Most importantly, MACRA further extends the Medicare therapy cap exceptions process to December 31, 2017, and includes numerous other provisions that will impact physical therapy. With the passage of this law, Congress has laid the groundwork for significant changes to Medicare reimbursement for physical therapists and other health care professionals1.

Active immediately, physical therapists can expect to see a positive payment update of 0.5% from July of 2015-2019. Physical therapists and other health care professionals who participate in alternative payment models (APM) will receive a 5% bonus annually from 2019-2024, and the fee for service model is retained. In 2026 and beyond, physicians, physical therapists, and other health care professionals in APMs may qualify for a 0.75% annual update. PT’s participating in all other payment plans will receive a 0.25% annual update. Perhaps the most exciting upcoming advancement is the fact that technical support is provided for smaller practices, funded at $20 million per year from 2016 to 2020, to help them participate in APMs or the new fee-for-service incentive program1.

The rumblings surrounding fee for performance reimbursement will be realized in 2019. Specifically, current quality incentive and payment programs such as the Physician Quality Reporting System (PQRS) will be consolidated and streamlined into a program called the Merit-Based Incentive Payment System (MIPS) beginning in 2019. This change will be best undertaken with early implementation and use of electronic medical records to assist in tracking appropriate reporting2. A detailed list of physical therapy outcomes tools and procedures for PQRS reporting can be found at:, and

Notably, changes have also been made to the infamous Medicare Cap. MACRA provisions to the Medicare therapy cap include an annual amount of $1,940 for physical therapy and speech language pathology combined in 2015, with a separate $1,940 cap for occupational therapy.  Hospital outpatient claims for therapy services with dates of service through December 31, 2017 will continue to apply to the therapy caps. In the event that further physical therapy is deemed medically necessary, providers may obtain an exception to the therapy cap until December 31, 2017. The manual medical review process at $3,700 has been replaced with a new medical review process that becomes effective 90 days after enactment of the law, which will be right around the corner in mid-July, 2015. This new annual review process applies to exception requests for which a medical review had not been conducted by the July date.1

In the private practice domain, physical therapists can expect to continue to report in the PQRS program in 2015, however changes to to the quality reporting system will take place in 2019. Beginning in 2019, the current quality programs under Medicare part B for physicians (PQRS, Value-Based Modifier, EHR Meaningful Use) will be consolidated and replaced with a new program called the Merit-Based Incentive Payment System (MIPS)1. Performance in MIPS will be based on 4 domains: quality, resource use, meaningful use, and clinical practice improvement activities.  MIPS will implement penalties for low performing clinicians and incentives for high-performing providers and practices. Bonuses and penalties under MIPS begin at 4% in 2019 and increase to 9% in 2022.  Data-reporting under MIPS will be via electronic reporting mechanisms (such as registries). Participation in a qualified clinical data registry would also count as a clinical practice improvement activity1. It is again here where we see the value in early adoption of electronic medical record use.

All of these changes and reform should result in better and more accurate reimbursement according to the American Physical Therapy Association (APTA). “It’s an exciting time, to have this finally happening,” Helene Fearon, PT, FAPTA, said at the conclusion of the June 6, 2015 APTA session titled “Payment for Physical Therapy Care Is Changing.” The session looked at the past, present, and future of efforts to shift payment for physical therapist services under Medicare from a fee-for-service model to what another speaker, APTA Senior Director of Payment and Practice Management Carmen Elliott, called a “value mindset.”4

A look back at the Department of Health and Human Services’ mandate under the Affordable Act to meet the “triple aim” of payment reform “better quality of care, improved public health, and lower cost”and APTA’s development of the Physical Therapy Classification and Payment System (PTCPS). The PTCPS differentiates Current Procedural Terminology (CPT) evaluation codes by level of complexity for the physical therapist (PT), and further differentiates intervention codes by severity of patient condition and intensity of PT services provided. Fearon, considered one of the profession’s preeminent experts on documentation, coding, billing, and payment-related policy issues, provides greater detail on the changes for which APTA has been working, listed in full at

These revisions are intended to change the payment model from isolated visit to episodic, and considers the clinical judgment of the PT, while taking into account the severity of the condition and intensity of PT’s involvement in care. In addition to APTA’s PTCPS page, two additional documents on alternative payment methodology as particularly relevant for PT’s the Medicare Benefit Policy Manual and the ICF (International Classification of Function, Disease, and Health) “beginners guide” Toward a Common Language for Functioning, Disability, and Health.4

  1. Highlights of the Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10). American Physical Therapy Association. Available at: Accessed on June 24, 2015.
  2. Medicare Physician Quaility Reporting System. American Physical Therapy Association. Available at: . Accessed on June 24,2015.
  3. Outocmes Measurement. American Physical Therapy Association. Available at: Accessed on June 24, 2015.
  4. Reform Efforts soon will pay off-literally- experts say. American Physical Therapy Association. Available at: Accessed on June 25th, 2015. -Amanda Olson, DPT