8 Medicare Billing Mistakes to Avoid

Operating an occupational therapy, physical therapy, or speech language pathology private practice comes with a lot of unique policies. This is especially true if you work with adults and Medicare-eligible beneficiaries. The three specialities have been the subject of multiple investigations and identified as areas for consistent oversight by the federal government.

Understanding what Medicare does and doesn’t require is essential to improve compliance and decrease Medicare billing mistakes and risks in your practice. 

This article has essential tips to improve compliance in your practice and improve your understanding of Medicare policy. 

Common Medicare Billing Mistakes

Much of Medicare policy is published and interpreted by the Centers for Medicare & Medicaid Services (CMS). CMS has strict guidelines on how therapy practitioners should provide and bill for services, specifically when it comes to private practice and Medicare Part B. 

There is also a lot of misinformation, especially on social media, surrounding cash-based practices, providing free services or incentive programs, and what Medicare does or doesn’t cover. 

Aim to avoid these Medicare billing mistakes…

1. Billing a Patient Out-of-Pocket or Cash for a Covered Medicare Service

The idea of running a cash-based practice is popular, especially in our side-hustle-obsessed culture. But if the goal is to work with adults in the home, running an all-cash-based practice can be difficult—especially if your business serves Medicare patients. This is because of the mandatory claims submission requirement as stated by the Social Security Act Section 1848(g)(4). 

This requirement states that physicians and suppliers (which includes therapy practitioners) must bill Medicare for covered services rendered to Medicare beneficiaries unless they are eligible to opt-out of Medicare. But therapy practitioners (like OTs, PTs, and SLPs) can’t opt-out as currently defined under the Social Security Act. 

It’s also worth noting that opting-out is not the same as being a non-participating provider. Consequently, even if you are a non-participating provider, you must still submit the claim.

The bottom line? If you provide therapy to Medicare beneficiaries, you must submit the claim if you’re offering a covered service.

2. Offering Free Evaluations or Screenings

Offering free evaluations or screenings may seem like a good marketing strategy, and for some people, it can be.

Unfortunately, if you treat Medicare beneficiaries, this is a no-go.

Providing a free evaluation that Medicare would otherwise cover may violate the mandatory claims submission requirement—since you wouldn’t be billing Medicare for an otherwise covered service. 

Providing free services would may be a violation of the Anti-Kickback Statute. The Office of Inspector General (OIG) issued specific guidance against offering free services due to concerns that such incentives would influence a patient’s choice about where to receive care.

Additionally, OIG is concerned that offering discounted services could incentivize the provider to provide more services than is necessary, or services of a lower quality.

Some free and discounted services fall under an “exemptions” and safe harbors process, which is laid out in the linked guidance above. But in general, it’s a good idea to avoid offering free or discounted services to your Medicare patients. 

Generally, OIG allows gifts of a “nominal value,” meaning gifts of no more than $15 per item, and no more than $75 each year.

So, if your business offers a free or complimentary screening, is your screening worth only $15?

Chances are it’s a lot higher than that, so you want to be careful when offering free services. 

3. Assuming Medicare Covers Therapy Because of the Patient’s Diagnosis

CMS explicitly states in their guidance that Medicare conditions for coverage aren’t based on a patient’s diagnosis.

Although a patient’s diagnosis can inform a plan of care and the need for therapy, it can’t be the sole reason to justify the need for therapy. Therapy coverage primarily depends on whether the services are skilled, reasonable, and necessary. 

Additionally, just because someone doesn’t have a diagnosis that would typically indicate a need for therapy doesn’t mean they aren’t eligible for therapy coverage by Medicare.

Clinicians should utilize their clinical judgment to assess if patients, with or without a typical therapy diagnosis, still meet the other coverage criteria listed above. 

4. Using the KX modifier as Your Justification for Medical Necessity 

The KX Modifier is a billing modifier used as a confirmation of medical necessity is documented in the patient’s chart once the patient has reached a certain threshold of spending, called the “KX Modifier Threshold.” The KX modifier is only meant to confirm that the medical necessity is documented—not justify it. 

Think of the KX modifier as your signal to Medicare that you double-checked your work and found the services still meet coverage criteria.

Every note you write, especially those with the KX modifier applied, should include language that identifies why services are reasonable, necessary, and skilled to support the need for coverage.

The 2022 threshold for the KX modifier is $2150 for OT services and $2150 for SLP + PT services

5. Neglecting to Read Medicare Guidance Documents 

Reading Medicare policy can seem overwhelming and confusing at times. There’s a lot of jargon, and you may need to look at multiple sources before fully understanding the topic.

To help clarify Medicare policy, billing, and claims processing, there are a couple of documents in particular that all therapy practitioners should be familiar with. They are the Medicare Benefit Policy Manual – Chapter 15 and the Medicare Claims Processing Manual – Chapter 5. Note that if you’re providing Medicare Part B services in other settings, like a skilled nursing facility or rehab agency, there are other claims processing manuals that you should also reference. 

These two manuals are the go-to resource for understanding how to bill Medicare for therapy services and guidance on therapy coverage. Chapter 15 is an excellent resource for understanding under what circumstances therapy services are covered, documentation requirements, and the rules surrounding the certification of a plan of care. Chapter 5 has guidance for CORFs and outpatient billing, use of the KX modifier, etc. 

6. Forgetting OTA and PTA Specific Considerations, Like Supervision and the OTA/PTA Modifier

The first consideration here is supervision requirements. Private practice is the only setting where Medicare requires direct supervision for occupational therapy assistants (OTA) and physical therapist assistants (PTA). In the Medicare definition of supervision, the supervising therapist must be in the office suite and available for supervision. This definition applies unless the state has more stringent requirements, so make sure you read up on the requirements in your specific state. 

However, under the current national COVID-19 Public Health Emergency, the direct supervision requirement for Medicare is adjusted to include virtual presence. This adjustment only lasts until the end of the calendar year in which the COVID-19 Public Health Emergency expires.

At the time of this writing, the public health emergency is currently active through April 2023. Not providing the correct level of supervision and still filing a claim may be considered a false claim submission. 

The second consideration is the OTA/PTA modifier. If the OTA or PTA provides a service, the claim must be submitted with the appropriate modifier as of January 1, 2020. As of January 1, 2022, this modifier carries a payment differential of 15%. Meaning, Medicare reimburses 15% less of the 80% they pay for services provided by an OTA or PTA. So, overall, reimbursement is 12% less. 

When to apply the OTA and PTA modifier has specific guidance, especially if the OT/OTA or PT/PTA split the treatment time.

A careful review of CMS guidance is recommended if splitting time or having the therapist and assistant see the same patient on the same day. 

 7. Stopping Providing Services Because of the Medicare Cap 

Medicare doesn’t limit medically necessary outpatient therapy services.

The former therapy financial cap was implemented as part of the Balanced Budget Act of 1997. It placed a firm spending limit on OT, PT, and SLP services. But after many years of advocacy from stakeholders and practitioners, Section 50202 of the Balanced Budget Act (BBA) of 2018 permanently repealed the therapy cap and exceptions process. 

The former cap was replaced with a threshold system.

The KX Modifier threshold is the first level as discussed above, and the second review threshold is the Targeted Medical Review, which is set at $3000 for OTs and $3000 for PTs and SLPs. This method searches to identify billing outliers and identify possible misuse of services.

Suppose your practice routinely surpasses these thresholds or has unusual billing patterns due to the clients you serve. In that case, frequent chart audits for quality and defensive documentation will help support your Medicare claims if they come under review. 

8. Giving or Receiving Incentives for Referrals

This is another popular marketing strategy, but entering into arrangements where you give or receive referral incentives is considered a kickback, and it’s not allowed with any beneficiary of a federal health care program.

A kickback is any remuneration or “anything of value” in exchange for services. 

Kickbacks can include giving away free services or discounts, giving referral bonuses to patients, receiving a bonus for referring a patient to specific companies or contractors for home modifications or equipment like a stairlift or ramp, or selling a patient equipment you purchased as a profit.

Although this law primarily applies to federal health care programs, keep in mind that some states and other insurers may have their own laws or policies about kickbacks.

Additionally, you may have to consider provisions in your state practice act and Code of Ethics. 

Tips for Staying Compliant With Medicare Billing

Keep in mind that some of these policies apply only to Medicare beneficiaries, and others apply to all federal health care programs—such as Medicaid and Tricare.

Private insurers may sometimes follow certain Medicare guidelines as written, while others may only follow a portion of the policy. For example, some private insurers utilize the OTA/PTA modifier but have not implemented a payment differential. 

Additionally, there may be some differences in policy between traditional Medicare plans and Medicare Advantage plans. When in doubt about a certain regulation, the best practice is to always go to the source, whether that be CMS, your state practice act, or insurance policies.

Having a compliance program in place in your practice is essential as well, so if you have employees they have a trusted resource to refer to. (It’s also a helpful refresher for yourself to have it documented somewhere.)

If you need help interpreting policies, never hesitate to contact experts, a lawyer, or your professional association for assistance.

I recommend keeping a list of these policies and others like them in a note or document where you can quickly locate them later. By including links to the sites of all the relevant policies you may need to check, you have a better chance of staying on top of any updates or changes to those policies.

It’s also a good idea to subscribe to CMS updates or to your professional association’s emails, as these groups can help you stay up-to-date as things change as well. 

As overwhelming as all this may sound, it’s absolutely possible to run a successful private practice and change lives while navigating Medicare policy.

Medicare policy often operates in the gray, so developing a working knowledge of regulation helps you make thoughtful decisions and establish policies that protect you, your practice, and your patients. 

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