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Billing for services of physical therapists

By Michael R. Burke, Esq.

Given today’s health care climate, physicians welcome the opportunity to generate additional income within their practices. In searching for ways to generate income, physicians often look to sources of revenue generated from the provision of services ancillary to their own, since most physicians cannot pack any more patient care hours into the day than they already provide now.

One of the ancillary revenue streams that continues to receive attention from physicians is the use of physical therapists within a physician’s practice. This article will provide an up-to-date primer on billing Medicare for services rendered on behalf of physical therapists, and focuses on the Medicare rules and regulations governing the use of physical therapists. Please note that third party payors may or may not follow Medicare’s rules in this regard.

There are two basic ways in which a physician practice may bill Medicare for services rendered by a physical therapist on behalf of the practice: (1) bill for physical therapy services using the name and provider identification number (PIN) of the physical therapist and (2) bill for physical therapy services as “incident to” services (if the requirements for such billing are satisfied).

When billing for “incident to” services, Medicare’s rules governing the payment of “incident to” services must be strictly followed. Under Medicare’s “incident to” billing rules, Medicare will pay for services and supplies that are furnished incident to a physician’s or other practitioner’s services, that are are commonly included in the physician’s or practitioner’s bills, and for which payment is not made under a separate Medicare benefit category.

While an extensive discussion of Medicare’s “incident to” billing rules is beyond the scope of this article, several key points about utilizing “incident to” billing for the performance of physical therapy services must be understood. The following conditions must be met to allow (any) services to be billed to Medicare as services “incident to” the services of a physician:

· The “incident to” services must be an integral, although incidental, part of the physician’s professional service.

· The “incident to” services must be commonly rendered without charge or included in the physician’s bills.

· The “incident to” services must be of a type that are commonly furnished in physician’s offices or clinics.

· The “incident to” services must be furnished by the physician or by auxiliary personnel under the physician’s direct supervision.

“Direct supervision” is defined as having the physician present in the office suite and immediately available to provide assistance and direction throughout the time that the auxiliary personnel are performing services. This does not mean that the physician must be present in the same room, but must be present in the office suite. This is a key factor that many physician practices overlook – if the physician group intends to bill for physical therapy services during times in which no physicians are present on the premises, such services must be billed to Medicare using the name and provider number of the physical therapist providing the service.

“Incident to” services cannot be rendered by a physical therapist on the first visit to the physician practice. As such, if a patient is referred to a physician practice solely for the performance of physical therapy services and the patient does not receive services from the physician prior to such physical therapy services, the services of the physical therapist cannot be billed as “incident to” services (since a physician service has not yet been rendered within the practice). Such physical therapy services would have to be billed to Medicare designating the physical therapist as the provider of the service.

Medicare pays for the performance of “incident to” services in the same manner as if the physician had provided them directly. As such, these services are reimbursed at 100 percent of the Medicare fee schedule.

Medicare also allows physician practices to bill for services provided by a physical therapists as a “physical therapist in private practice” on behalf of the group under the group’s provider number by designating the name and PIN of the physical therapist on such bill. The definition of a “physical therapist in private practice” was clarified in the 2003 Medicare fee schedule published by CMS. This regulatory change explicitly provided that physical therapists may be enrolled as therapists in private practice and receive a Medicare PIN when they are employed by physician groups or groups that are not professional corporations. As such, the services of the physical therapists would not need to be billed as an “incident to” service (although they can be so billed if the requirements set forth above are met) with direct supervision of such services by a physician not required by Medicare (unless required by the law of the state in which the physical therapist practices).

Prior to this clarification, Medicare carriers in some states would permit physical therapists to receive Medicare PINs and be added to the assignment accounts of physicians and physician groups, while Medicare carriers in other states would only permit physicians and physician groups to bill for the services of physical therapists as “incident to” services.

To receive a Medicare PIN as a privately practicing physical therapist, the physical therapist must have graduated from a physical therapy curriculum approved by the American Physical Therapy Association or by certain other organizations defined by regulation and must be appropriately licensed by state law. Different requirements may apply to a physical therapist who was initially licensed by a state or graduated from a physical therapy program prior to 1977; please check the Medicare regulations with regard to any specific questions that you would have in this area.

In general, Medicare covers physical therapy services when:

· The patient is under the care of a physician (a medical doctor, osteopath or podiatrist).

· They are furnished under a written plan of treatment that meets specified regulatory requirements (e.g., the plan prescribes the type, amount, frequency and duration of the physical therapy services to be provided and indicates the diagnosis and anticipated goals), with any changes to the plan being made in writing and signed by the physician or the physical therapist.

· The therapy is reasonable and medically necessary for the treatment of a patient’s condition.

· There is expectation that the patient’s condition will improve significantly in a reasonable and generally predictable period of time. The written plan of treatment must be reviewed by the physician treating the patient as often as the patient’s condition requires, but at least every 30 days.

Services related to the general good and welfare of a patient or palliative services provided solely for pain relief are not considered physical therapy. If a physician group intends to hire a physical therapist to provide physical therapy services, it should consult the Medicare Claims Processing Manual and other applicable manuals published by the Centers for Medicare & Medicaid Services (which can be found at www.cms.gov), the Code of Federal Regulations and guidance published by your carrier, e.g., in Pennsylvania, the Physical Therapy Billing Guide published by HGSAdministrators (www.hgsa.com), for further information and limitations on the scope of physical therapy practice.

Payment for services of a physical therapist in private practice who is employed by a physician or physician group may only be made for services provided in the office of the physician or physician group or the beneficiary’s home. Per Medicare regulations, a patient’s home does not include any institution that is a hospital or a skilled nursing facility.

Medicare payment for physical therapist services is made at 100 percent of the Medicare physician fee schedule. As such, there is no difference in the amount of Medicare payment where physical therapy services are billed as “incident to” services or where using the PIN of the physical therapist in private practice.

Please note that the continued application of the Medicare “fee caps” on outpatient physical therapy services (which briefly applied to the provision of outpatient physical therapy services during the period from September 1, 2003 through December 7, 2003) has been delayed through December 31, 2005. Also note that, if these fee caps were currently effective, (i) they would impose an annual per beneficiary limit of $1,590 to physical therapy (including speech-language pathology) services provided to a Medicare outpatient and a separate $1,590 annual per beneficiary limit to occupational therapy services provided to a Medicare outpatient (which are based on the amount of such services that a beneficiary receives, and not the practitioner who provides the services), (ii) services provided in excess of these fee caps would not be reimbursable by Medicare, and (iii) these caps would apply in all settings except for services performed in hospital outpatient departments. The Medicare Prescription Drug and Modernization Act of 2003, however, renewed the moratorium on these fee caps through December 31, 2005, during which time the continued existence of these caps will be examined.

Private third party payors are not required to, and do not always, follow Medicare’s rules on the reimbursement of physical therapy services, so physicians must inquire with their respective payors as to their ability to obtain reimbursement for such services. We represent clients who have had difficulty receiving appropriate credentialing to provide physical therapy (and other “ancillary”) services within their groups, so a physician practice should attempt to ensure that it will be reimbursed for these services before a decision to hire a specific individual is made.

The foregoing provides a basic summary of Medicare’s rules and regulations with regard to the ability of physician groups to bill for services rendered by physical therapists. However, there are specific issues related to the provision of such services that are beyond the scope of this article. If you have any specific questions with regard to billing for services of physical therapists, please check the informational sources cited earlier in this article. If you have any questions that cannot be answered by reviewing these sources of information, you should consult a health care attorney who is versed in Medicare reimbursement matters.

Michael R. Burke, Esq., is a shareholder in the health care law firm of Kalogredis, Sansweet, Dearden and Burke, Ltd. located in Wayne, Pa.

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