Navigating the Challenges of Medical Billing and Coding for Physical Therapy Practices

One of the most complex aspects of operating a physical therapy clinic isn’t working with patients, it’s understanding the medical billing system. Physical therapy billing is the process of correlating provided services with standardized codes. These codes communicate to insurers and determine your rightful reimbursement. 

In order to ensure your claims are accepted and your practice can get paid, we’re breaking down the billing challenges that many physical therapy practices face. We’ll also provide you with some of our experienced insights to help you navigate these complexities.

Understanding Medical Billing and Coding Is Essential

Did you know that approximately one-third of the overall costs in the U.S. healthcare industry are attributed to administrative needs? 

Medical billing and coding are crucial components as they directly impact the reimbursement process for practices and hospitals. Accurate coding ensures that the services provided are appropriately documented, enabling you to receive the financial worth of your services.

The Primary Challenges of Physical Therapy Billing and Coding


Knowing the Difference between One-on-One vs. Group Sessions

Physical therapists may conduct both one-on-one and group therapy sessions. Billing group sessions as individual ones can lead to mandatory audits and claim denials. To prevent this from occurring, it is essential for your medical billing and coding operator to understand the distinction and use the appropriate CPT codes for each type of session.

A CPT code, or Current Procedural Terminology code, is a five-digit numeric code used in medical billing and coding to describe medical procedures and services provided by healthcare professionals. These codes are maintained and updated by the American Medical Association (AMA) and are universally recognized by healthcare providers and insurance companies. 

Note: In some instances, you may be able to charge one-on-one rates during group sessions when individual attention is provided.

Understanding the Complexity of Service Rendered

Physical therapy coding involves specific code groups that vary based on the complexity of the service provided. 

For physical therapy, there are three complexity levels:

  • low complexity (97161)
  • moderate complexity (97162)
  • high complexity (97163)

Occupational Therapy (OT) also follows similar code categories:

  • low complexity (97165)
  • moderate complexity (97166)
  • high complexity (97167)

Additionally, many specific therapeutic procedures require separate codes (97110–97546). 

Keep in mind that various modifiers and specific coding rules also apply, emphasizing the need for expert medical coders. For example if billing for manual therapy, you need to affix a 59 modifier to bill with an initial evaluation. 

If these details are not taken into account, there’s a good chance your claim will get rejected or held up for medical records review. 

>> For more information, check out MEG’s billing resource toolkit to help you streamline your billing and coding processes. 

Adhering to Medicare’s 8 Minute Rule

Medicare’s 8 Minute Rule is a critical guideline that affects the billing and reimbursement process for timed therapy services in physical therapy. This rule outlines how the duration of therapy services determines the number of billable units.

Here’s how the 8-Minute Rule works:

Total Time Spent Performing Time-Based CPT Codes Number of Billable Units
8-22 Minutes 1 Unit
23-37 Minutes 2 Units
38-52 Minutes 3 Units
52-67 Minutes 4 Units
68-82 Minutes 5 Units
83 Minutes or more 6 Units
  • According to this rule, your therapy services must meet or exceed an eight-minute threshold to be considered for billing purposes. If the total time falls within the specified ranges, the corresponding number of billable units should be assigned (see above table).
  • It’s crucial to accurately document and track the time spent on each timed therapy service to comply with Medicare’s 8 Minute Rule. Using reliable time-tracking systems or electronic medical billing software can help simplify this process and ensure accurate billing. Adhering to Medicare’s 8 Minute Rule is essential for proper reimbursement and avoiding claim denials. 

Staying Up-to-Date with Changing Payer Regulations

Medicare, Medicaid and other insurance payers frequently update their terms and conditions. It is vital for billers and coders to stay updated with these changes to ensure compliance and maximize reimbursements. 

If you are hiring out for billing, make sure the company involved is well-staffed with expert coders that understand changes in regulations. If you are doing billing in-house, set up a system to educate you and your billing team about these changes. 

Optimizing Your Physical Therapy Billing Cycle in 5 Essential Steps


Step 1: Pre-Authorization and Insurance Eligibility Verification

Gather your patient’s information and verify their insurance eligibility, establishing a payment arrangement. Transparent pricing policies and automated insurance verification tools can streamline this step.

Step 2: Rendering Services and Capturing Charges

Record services using CPT and ICD codes to ensure accurate charge capture. Even though medical billing software may be more costly, it’s essential for this process and improves coding accuracy. Choosing a third-party billing company that already has advanced software can also be an easy alternative.

Step 3: Claims Submission

Submit properly coded claims electronically for reimbursement. Choose a solution with claims scrubbing and an in-house clearinghouse to achieve a high clean claims rate. Promptly resubmit denied claims to prevent revenue loss.

Step 4: Payment

Collecting patient payments often involves out-of-pocket costs. Utilize an integrated billing solution with online payment options and automated billing reminders for convenience and prompt payments.

Step 5: Data Reporting

Analyze relevant data through a digital dashboard to measure performance and identify areas for improvement. Focus on each step of the revenue cycle to enhance efficiency and accelerate your payments. At MEG, we are constantly streamlining and innovating our billing process to help our physical therapy clinics get paid faster.

How to Outsource Your Medical Billing

Outsourcing your billing can be an immense relief for PT business. By investing in a third-party company, clinic owners can reclaim their time and use their mental bandwidth to continue growing their practice instead of worrying about admin.

However, it’s important to identify the right billing company. Many outsourced billing teams will extract data from your EMR software and put it privately into their own in order to submit claims. This means you don’t have access to your own billing data. 

At MEG, we believe it’s important to have full transparency and own your patient’s data. We only access data within your system that you allow us to have.

When searching for a billing company, also look out for their rate policies. Compared to some outsourcing companies which will increase rates after a year, MEG billing contracts will never increase rates.

Mastering PT Billing Is Essential for Consistent Revenue

Understanding and effectively navigating the unique challenges faced in physical therapy billing and coding are essential. However for many physical therapy clinics, billing and coding is a time-consuming process and many clinics just don’t have the time to manage their revenue cycle. 

Thankfully third-party companies, like MEG, are able to efficiently and effectively handle medical billing and coding for your practice. This can help you optimize your stream of revenue and maintain financial stability. 

Reach out to MEG for a billing consultation and discover how we can enhance your revenue cycle management.

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