5 Common Reasons Physical Therapy Claims Are Denied

By: Jennifer Heiligman, PT, MPT

“Denials for my physical therapy claims are no big deal”, said no one ever!  Physical Therapy has one of the highest percentages of specialist claim denials.  Denials of claims can put a drain on your physical therapy practice in terms of both clinic resources and cash flow.  The best way to handle denials is to prevent them from occurring in the first place. 

Before we list the denial reasons it’s important to recognize the difference between a claim denial and a claim rejection.  A rejection occurs when a claim is submitted without all the required elements.  A rejected claim is sent back to the provider for correction.   A denied claim undergoes a review by the payer and is deemed inadequate at that time resulting in no reimbursement being given.   Providers do have the ability to appeal a denial.  Whether the claim is rejected or flat out denied, either way the result for the practice is negative.  They either have a delay in payment or no payment at all for services that have already been rendered.

Below are 5 common reasons why physical therapy claims get denied.  Reviewing these errors and setting a strategic plan to avoid them could significantly decrease your claim rejections and denials.

Data Entry Errors

A significant percentage of claim denials are the result of entry errors.  Whether it be an incorrect ID number, wrong date of birth or a misspelled name, the result leads to incorrect information being included on the claim and the claim is denied.  Another entry error causing denials is the submission of duplicate claims.  Be careful not to submit multiple claims for the same services.  When this happens the payer will deny the claim.  Submitting clean claims the first time and only once is key to decreasing denials.

Eligibility Issues

Eligibility issues also account for a significant number of physical therapy claim denials. This issue arises when the patient was not eligible for the services at the time they were rendered.  This could be because the patient’s coverage had not yet started or coverage had already been terminated.  Insurance coverage can fluctuate often especially because 49% of Americans receive health insurance through their employers.   Eligibility should be verified prior to the patient’s first visit and then again at regular intervals to be sure coverage is still active.

Diagnosis Coding Errors

Since the introduction of the ICD-10 code set, claim denials have increased.  ICD-10 diagnosis codes are much more specific than ICD-9 codes were.  For example, when submitting ICD-10 codes you must accurately reflect the laterality (right, left or bilateral) of the body region being treated.  The code must accurately represent the service being provided or the claim could be denied.  In addition, if an unspecified code is submitted with the claim, but a more specific code is available the result could be a denial.  The main diagnosis should always be submitted in the first position on the claim to decrease the chance of denial.  Checking the most current ICD-10 Tabular Index is a good way to verify the usage of the most appropriate diagnosis codes.

Misuse of the 59 Modifier

The 59 modifier is used when a specific combination of CPT codes are submitted on a claim for the same patient on the same day.  The modifier is essentially stating that the code pairs being used together are currently appropriate for the treatment being rendered and the services are separate and distinct.  To avoid denial, this should be supported by your documentation.  You can find a list of the code pairs on the National Correct Coding Initiative Edits page on CMS.gov.  In addition, CMS has also published a MLN Fact Sheet regarding Proper Use of Modifiers 59 & X{EPSU}.  It is extremely important to use the 59 modifier accurately.  Inaccurate use or overuse can send a red flag to payers resulting in claim denials and possibly even make you subject to an audit. 

Failing to Establish Medical Necessity

Per Medicare, the definition of medical necessity is “healthcare services or supplies needed to diagnose or treat an illness, injury, condition, disease, or its symptoms and that meet accepted standards of medicine”.  In addition, medically necessary services also have to meet these requirements:

  • The service requires the skills of a therapist
  • The service must meet the medical needs of the patient
  • The established frequency and duration meet the standard practices for the treatment or diagnosis
  • The service is safe and effective

This definition can lend itself to a very broad interpretation which some payers use to their advantage.  The best way to prevent a denial based on lack of medical necessity is to consistently complete thorough documentation.  The therapist should document specifically what skilled services are being provided and the clinical reasoning used to establish that plan of care.  Documenting the patient’s functional progress often during the episode of care will also help to support the medical necessity of the treatment that was rendered. 

Claim denials are not good for any practice. Identifying the denial reasons on the claims will help you recognize your areas of weakness and allow you to drill down to the root cause.  This could include front office re-education regarding checking eligibility or proofreading entries for accuracy.  You may also need to complete chart reviews to be sure your therapists are establishing the medical necessity of the services being rendered.  By recognizing some of the most common errors that lead to denials, you can establish checks and balances to help mitigate your denial percentage, improving your practice’s bottom line.

OptimisPT assists therapists in supporting the medical necessity of the treatments being rendered throughout their documentation.  Our software contains embedded compliantly structured templates illustrating medical necessity available for use throughout the episode of care.  Want to learn more? Schedule a Demo