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The rehab industry has been on its toes since the inception of these denials with the California Hospital Association (Center for Medical Rehabilitation Services) and the American Medical Rehabilitation Providers Association (AMRPA) aggressively attacking the systems and methodologies utilized by the California RAC contractor in the demonstration.

Appeals on rehab RAC denials are still working their way through the system, and the FAIR fund (Fund for Access to Inpatient Rehabilitation), which has been reported on the in the RACMonitor, has been established.  The Fair Fund is a common legal defense fund comprised mainly of inpatient rehab hospitals and units.

It is probably “fair” to say that rehab hospitals and hospitals based rehab units have a great deal of information on which to project prospective RAC audits.  Attention all hospitals with outpatient therapy departments:  have you taken a peek at the potential RAC treat that looms for outpatient rehab services?

The Larger Threat

While most of the rehab industry has focused their RAC preparedness with a focus on the documentation in the medical record, a larger threat looms electronically.  The propriety data mining software of each RAC is designed to catch errors of this type, and to also catch errors that slipped by the FI/MAC payment algorithms.

Let’s take a look at some likely targets for automated review, medical records not required!


  1. Billing a service based code as a time based code.  Physical therapy, occupational therapy or speech therapy evaluations may take anywhere from 30 minutes to over an hour, but the reimbursement for the respective therapy evaluation codes of 97001, 97003 and 92506 is not time based, but rather service based.  The evaluation CPT code may only be billed as a unit of 1 on the claim.  This is an important distinction.  In the California and New York RAC demonstrations this represented a substantial error rate for speech-language pathology.  This should have been caught in an edit table in the hospital’s billing program, and when it missed that edit, it should have been denied at the MAC/FI level – but these billings snuck through both security systems and were nabbed by the RAC with ease.  Like shooting fish in a barrel.

    Hospitals often require therapy billing to be done in 15 minutes increments based on the line item detail in the charge master (CDM). However, an edit table decision algorithm will generally instruct how to bill this out based on rules in the database needed for the various related payer tables.

    Therapy services, in addition to evaluations, that are NOT timed based that should be on your compliance billing radar screen include muscle testing, electrical stimulation, whirlpool, mechanical traction, paraffin bath, group therapy and wound care.

    In nearly 25,000 claims with overpayments related to billing a speech therapy evaluation based on time, rather than as a service, this amounted to $3.2 in overpayments in the California and NY RAC demonstration.  If the RAC contractor has a contingency fee of 10%, this would result in a nifty and easy $320,000.  And not one medical record need be requested or reviewed!

  2. Billing code pairs not in compliance with the NCCI edits. The current Correct Coding Initiative Edits for all therapy settings (except private practice) is CCI version 15.1 (effective 7/1/2009 – 9/30/2009).  The edits for both the Column 1/Column 2 Table as well as the Mutually Exclusive Table apply across therapy disciplines.  Certain code pairs may be bypassed with the proper use of the -59 modifier and certain coding pairs may not be bypassed, even with the use of a modifier.  For example it is not possible to bill for wound care selective debridement and also bill for wound care non-selective debridement in the same day by the same provider, even if a modifier is applied on the claim, as these code pairs appear on the mutually exclusive table with the specification that they a modifier may not be applied.
  3. Billing for therapy codes that are excluded for coverage by the LCD. The local coverage determinations (LCD) issued by the MAC/FI may exclude certain therapy procedures, with iontophoresis being particularly vulnerable to this exclusion.  For example WPS and Highmark allow for iontophoresis, but Trailblazer and NGS exclude it from payment.  Therapists often elect to do this procedure, irrespective of Medicare reimbursement, because they believe it to be effective in the treatment plan for the patient’s condition, or the referring physician has specifically requested the procedure.  Several recent incidents have been reported where the Medicare contractor has reimbursed for this procedure, even though it was excluded by LCD, or billed with an ABN (and proper modifier).

    Check your FI/MAC local coverage determination for either a master list of allowable diagnosis codes or an ICD-9 code list that is mapped to specific procedure codes.  Manual therapy and neuromuscular rehabilitation techniques as well as gait training, are often excluded as payable unless a specific diagnosis is present.

  4. Billing for therapy procedures or modalities without the correct ICD-9 code per the LCD of the MAC/FI.The Rehab Therapy Caps and the KX Modifier. For hospitals with non-provider based outpatient rehab clinics (most likely certified as a rehab agency) the therapy caps apply, as well as the therapy caps exception process.   In 2009 there is a $1840 cap on physical therapy services, including speech-language pathology services, and a separate $1840 cap on occupational therapy services.  Once the patient reaches the cap a KX modifier can be utilized to indicate that services beyond the therapy cap are supported by an approved list of diagnosis codes published by CMS that qualify for an automatic exception to the therapy caps.  If the diagnosis code is not on the list, medical necessity may be documented in the chart.

    Ensure that services that qualify for the cap are billed with the KX modifier.  If they have been billed without the modifier and paid, they are subject to recoupment.   Keep in mind that this is an area that providers often resubmit a claim just for the purpose of adding the KX modifier.


Lower Your Risk

All the risk areas mentioned above could be lowered in risk through the proper review of your therapy coding and billing policies and procedures in accordance with both local coverage determinations and the CCI therapy edits.  Once confirmed at the therapy departmental level it is time to confer with the hospital billing department to ensure that the billing systems have the proper safeguards to prevent improper coding and billing.

As an ending note, hospitals are urged to pay special attention to speech language pathology services – most MAC/FIs have updated their LCDs effective July 1, 2009 to coincide with the July 1st start date for Speech-Language Pathologists in Private Practice.


About the Author

Nancy Beckley is a co-founder and President of Bloomingdale Consulting Group, Inc., providing consulting services to the rehab professional.  Nancy is certified in Healthcare Compliance by the Healthcare Compliance Board, and serves on the Part A and Part B Provider Outreach Education and Advisory Panel for First Coast Services Options (Florida Medicare).  She previously served on the CMS Professional Expert Technical Panel for Comprehensive Outpatient Rehabilitation Facilities

Contact the Author – nancy@bloomingdaleconsulting.com




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