How to Master Medicare Physical Therapy Billing for Better Reimbursement
Medicare physical therapy billing is a critical yet often confusing part of running a successful physical therapy practice. Between understanding the rules, coding accurately, and documenting everything properly, many therapists find it challenging to keep up. However, mastering this process is key to ensuring smooth reimbursements, avoiding audits, and maintaining a healthy cash flow.
Medicare covers physical therapy services under Part B, which includes outpatient rehabilitation and therapeutic care. The goal is to help patients regain strength, balance, or mobility after an injury, surgery, or illness. But before billing begins, the therapist must prove that the services are medically necessary. Medicare will not pay for general fitness or wellness exercises—it only reimburses treatments required to improve or restore function.
The first step in Medicare physical therapy billing is establishing a plan of care. This plan acts as the roadmap for treatment. It outlines the diagnosis, therapy goals, type of interventions, and expected duration. Importantly, it must be approved and signed by a physician or qualified healthcare provider. Without this certification, Medicare won’t reimburse the claim, even if the services were appropriate.
Once treatment begins, documentation becomes the backbone of the billing process. Every visit must have detailed notes, including date, type of therapy, treatment time, and patient progress. Medicare auditors look for proof that therapy is effective and necessary. For example, if a patient is recovering from knee surgery, the notes should show measurable improvements in strength, flexibility, or function. If the records show no progress, Medicare may deny future sessions as “not medically necessary.”
Each service must be billed using the correct CPT (Current Procedural Terminology) code. Common examples include 97110 for therapeutic exercise, 97112 for neuromuscular re-education, and 97140 for manual therapy. These codes tell Medicare exactly what kind of treatment was performed. Additionally, ICD-10 codes describe the patient’s medical diagnosis, such as M54.2 for neck pain or M25.561 for right knee pain. Both codes must be accurate and logically related for the claim to be accepted.
A major part of Medicare physical therapy billing is understanding the 8-minute rule. This rule applies to time-based services and determines how many billing units a therapist can claim. For one unit, the therapist must perform at least eight minutes of the service. For example, if the therapist spends 22 minutes on therapeutic exercises and 15 minutes on manual therapy, that equals two billable units. Accurate time tracking ensures fair payment and compliance with Medicare’s standards.