Deeper Than the Headlines: Outpatient Physical Therapy

If your organization provides outpatient physical therapy services, it’s probably a good idea to become familiar with the OIG’s latest work in this area. In March of 2018, the OIG posted a report entitled, “MANY MEDICARE CLAIMS FOR OUTPATIENT PHYSICAL THERAPY SERVICES DID NOT COMPLY WITH MEDICARE REQUIREMENTS.”

The OIG reviewed 300 claims in a stratified random sample and found that 61% of Medicare claims for outpatient physical therapy services did not comply with Medicare medical necessity, coding, or documentation requirements. Specifically, therapists claimed $12,741 in Medicare reimbursement on 184 claims that did not comply with Medicare requirements. Therapists properly claimed Medicare reimbursement on the remaining 116 claims. The OIG estimated that during the 6-month audit period, Medicare paid $367 million for outpatient physical therapy services that did not comply with Medicare requirements. The OIG concluded these overpayments occurred because the Centers for Medicare & Medicaid Services’ controls were not effective in preventing improper payments for outpatient physical therapy services.

The Medicare Part B program pays approximately $1.8 billion a year for outpatient physical therapy services provided to beneficiaries. The OIG review was performed because past OIG reviews showed this area to have some vulnerabilities. Generally speaking, Medicare only covers outpatient physical therapy services when the services are:

• Medically reasonable and necessary
• Provided in accordance with a plan of care established by a physician or qualified physical therapist
• Periodically reviewed by a physician, and
• Certified by a physician

For outpatient physical therapy services to be considered reasonable and necessary, each of the following conditions must be met:

• The services shall be considered under accepted standards of medical practice to be a specific and effective treatment for the patient’s condition.
• The services shall be of such a level of complexity and sophistication or the condition of the patient shall be such that the services required can be safely and effectively performed only by a therapist, or under the supervision of a therapist.
• There must be an expectation that the patient’s condition will improve significantly in a reasonable (and generally predictable) period of time, or the services must be necessary for the establishment of a safe and effective maintenance program required in connection with a specific disease state.

If a beneficiary is receiving rehabilitative therapy (rather than being on a maintenance program), physical therapy services would not be covered if the beneficiary’s expected rehabilitation potential would be insignificant in relation to the extent and duration of physical therapy services required to achieve that potential. There must be an expectation that the patient’s condition will improve significantly in a reasonable (and generally predictable) period of time.

The OIG found errors in three major areas and then subcategorized the types of errors within each of those three major areas. The three major areas were:

1. Services that were considered not to be reasonable and necessary
2. Coding errors
3. Documentations errors

Not reasonable and Necessary

For services that were considered not to be reasonable and necessary, the OIG subcategorized the errors into four types of errors:

1. Services Were Not Reasonable

   For 89 claims, medical reviewers determined that the amount, frequency, and duration of the physical therapy services were not reasonable and consistent with standards of practice.

2. No Evidence Services Would Be Effective

   For 30 claims, OIG did not find any evidence that the medical records showed that the services provided would have been effective. For example, a Medicare beneficiary was receiving therapy for lumbago and spinal stenosis. However, the medical review determined that the patient had already reached a functional plateau before the date of the service reviewed.

3. Services Did Not Require the Skills of a Therapist

   For 28 claims, the therapy services did not require the skills of a therapist. For example, a Medicare beneficiary’s medical record failed to substantiate that skilled intervention by a physical therapist was necessary. The medical reviewer determined that the beneficiary was performing redundant and repetitive exercises that could have been performed as part of a home exercise program that did not require the skills of a therapist.

4. No Expectation of Significant Improvement

   For 26 claims, all of which were for beneficiaries who were on rehabilitative programs, the medical reviewers determined that the expected rehabilitation potential was insignificant in relation to the extent and duration of the physical therapy services required to achieve that potential or that the beneficiary did not improve significantly enough in a reasonable period of time to justify continued treatment. For example, the evidence in a Medicare beneficiary’s medical record (including a review of a plan of care, progress reports, and notes) showed no expectation of significant improvement to warrant that claim or further therapy.

Coding Errors

Coding was another area where the OIG found errors. For timed procedures, providers report units in 15-minute intervals based on the number of times the procedure is performed. For untimed procedures, one unit of service is appropriately reported by a provider regardless of the number of minutes spent providing this service. Additional Medicare coding requirements in effect as of January 1, 2013, require providers to use certain functional reporting codes, commonly referred to as “G-codes,” and severity modifiers that provide information about the beneficiary’s functional status. These coding requirements are a condition of payment; without the proper functional reporting, claims should not be paid. The types of coding errors the OIG found included:

1. Timed Units Claimed Did Not Match Units in Treatment Notes
2. Missing Modifiers (G-codes or modifiers).
3. Incorrect Codes (For example, a Medicare beneficiary received four units of therapy services and had a reevaluation. Rather than billing four units of HCPCS code 97530 (therapeutic activities) and one unit of HCPCS code 97002 (reevaluation), the provider billed for five units of HCPCS code 97530.)

Documentation Errors

The last major type of error included errors where the documentation did not meet Medicare requirements. This category was also subcategorized by the OIG:

1. Plan-of-Care Deficiencies

   For 80 claims, there were plan-of-care deficiencies. For example, the medical reviewer deemed a Medicare beneficiary’s plan of care to contain vague goals, to not be signed by a physician or a non-physician practitioner, and to not list the duration and frequency of the therapies.

2. Treatment Note Deficiencies

   For 74 claims, there were treatment note deficiencies. For example, a Medicare beneficiary’s treatment notes did not contain total treatment minutes for timed codes or total minutes for the entire therapy session.

3. Recertification Deficiencies

   For nine claims, there were recertification deficiencies. For example, a Medicare beneficiary’s medical record did not contain a recertification justifying the need for additional therapy after the initial therapy phase under the original plan of care. However, the beneficiary received the therapy anyway.

As mentioned at the beginning, if your organization provides outpatient physical therapy services, you should become familiar with these findings and perform similar reviews within your own compliance program. As always, call or email me (cwolf@healthicity.com) if you need help.