Does Physical Therapy Cost Too Much?

Some physical therapists over-treat their patients.

The most expensive Medicare physical therapy patient in America received $114,799 in services in 2004.

By 2006, the most expensive Medicare physical therapy patient in America only cost $37,543.

The difference in 2006 vs. 2004 was the implementation of the 'per beneficiary caps' on outpatient rehabilitative services.

The chart header below reads 'Annual Per Beneficiary Payment Threshold Change Per Percentile' and it shows the amount of physical therapy received, in dollars, broken down by percentile.
The next chart is the same data set, with the 100th percentile removed.

Notice how the chart scale shifts and the differences between 2006 vs. 2004 are made apparent.
These two charts are taken from data provided by the Outpatient Therapy Alternative Payment Study 2 (OTAPS 2)

The data for these charts is available in the OTAPS 2 report as Table 3.

I extracted and re-formatted the data as two separate charts to illustrate the impact of the 100th percentile cost outliers.

If these charts are too hard to read I have put them as PDF files at www.BulletproofPT.com.

Falling Costs

Note how costs for physical therapy have fallen across the board.

The exceptions to falling costs are those patients whose costs are below the 50th percentile (median).

Their costs are rising.

At the 50% percentile costs increased at about the same rate of growth as the overall Medicare population (3.5%).

At the 25% percentile costs increased at double the rate of growth of the overall Medicare population.

Why?

Who cares?

At $227 per beneficiary per year Medicare can afford lots and and lots of physical therapy for these people.

At $37,543 per beneficiary per year Medicare can't afford much physical therapy.

The problem is this:

How can Medicare get physical therapy to those patients who need it most while preventing egregious cost outliers like in the first chart?

What to do?

Current legislation has the caps (and their exceptions process) in place until December 31st, 2009.

An alternative payment system is expected to replace the Medicare therapy cap within the next five years.

A pilot study will get underway in May 2009.

Current patients are facing hardships when their $1,810 physical therapy dollar limit is met.

Many physical therapists are uncomfortable appending the -kx modifier if they believe it raises the risk of a Medicare audit (it does).

Do the right thing

If your patient needs therapy and you can show they get better in a timely manner, do it.

If you are unsure or scared about how to document your findings then check out some of the free resources at www.BulletproofPT.com, your source for outpatient Medicare documentation and compliance knowledge.

Is Ultrasound Medically Necessary for Physical Therapy?

Do you use ultrasound on your patients?

Why?

How often or how much?

When do you stop ultrasound treatments?

What are the bases for your decisions?

Do you go with the flow?

Many physical therapists choose to use ultrasound for their patients.

Patients often demand ultrasound and physicians often request ultrasound.

Ultrasound is often criticized for its poor evidence base despite widespread anecdotal reports of it's benefit.

Show your work

Here'e the easy way to demonstrate medical necessity (need) for ultrasound.

Create a simple checklist or chart template that you or your staff could fill out every time you or they select ultrasound.

Copy the template or checklist and make it part of the initial evaluation.

Have extra copies ready for those patients who request ultrasound mid-way through their treatment.

Use the checklist to describe the findings that indicate ultrasound is necessary.

Findings: Inflammation

For example, pulsed ultrasound may be used as an anti-inflammatory modality.

This chart checklist, filled out at the initial evaluation, may support the medical necessity (need) for ultrasound when used as an anti-inflammatory modality.

You may also create a template to check off the findings that support ultrasound's thermal effects for scar tissue, etc.

(YES/NO)	CONDITION	Dimensions
	Swelling
	Redness
	Tenderness
	Palpable heat
	Loss of Function

One or more of these conditions present, with the dimensions noted, could provide a basis for ultrasound.

Properly filled out initially, and at subsequent intervals for Progress Notes, this chart checklist is a decision-making tool that can help the therapist understand when certain interventions are, and are not, indicated.

As a physical therapy clinical manager it is your responsibility to provide these tools to your clinical staff to ensure a Medicare compliant chart.

When it is so easy to do - why not?

Good for the patient, the therapist and the Medicare auditor

A Medicare auditor could look at this checklist to clearly and quickly see why the physical therapist had charged for sessions of ultrasound in the physical therapy plan of care.

Some therapists have used this pen-and paper tool to explain to their patients when ultrasound, a modality with a strong placebo effect, may no longer be indicated.

Bottom line, simple tools that demonstrate your skilled physical therapy decisions and show the need for your valuable treatments are essential in today's clinical environment.

For more free tools, templates and tips on physical therapy Medicare compliance go to www.BulletproofPT.com . 

Did error rates decline for physical therapists, too?

Modern Healthcare.com posted the news that the Medicare error rate declined in 2008 for fee-for-service providers.

"Improper payments to fee-for-service Medicare amounted to $10.4 billion in fiscal 2008, decreasing to a rate of 3.6% from 3.9% in 2007, the CMS reported."

FierceHealthcare.com reported that the lower error rate was due to the Medicare Recovery Audit Contractors (RAC).

You can read about the RAC impact on physical therapists here, here, and here.

AIS Health.com reports that the RACs will be delayed a few months (probably February 2009) while some of the government contractors work through a grievance process that is related to selection of RACs, not to health care providers.

As I've previously posted there is evidence to indicate that RACs preferentially targeted large, inpatient hospitals in the 'temporary' 3-year phase.

More restrictive audit rules for the permanent RACs increase the chance that the permanent RACs will continue to target large, institutional providers and leave small ones (eg: physical therapists) alone.

Can Physical Therapists go over the PT Cap with an X-Ray?

Does an X-ray demonstrate medical necessity for physical therapy?


...or does an axial CT myelogram?


These images are examples that have in common a clear pathology that many patients and physical therapists confuse with medical necessity for physical therapy.

Right now (November 17th 2008) I have several physical therapy patients who have exceeded their $1,810 Medicare benefit and are asking me for continued physical therapy services in my outpatient clinic.

Many of these patients have chronic conditions such as the following:

• degenerative spinal stenosis
  
• massive rotator cuff tears
  
• knee osteoarthritis

These conditions show up well on sophisticated imaging scans such as X-ray, CT scans and MRI.

These conditions often require extended courses of physical therapy or multiple episodes of physical therapy in the course of a calendar year.

In my clinic, the $1,810 Medicare cap is usually reached by 16-18 visits.

It would not be unusual for degenerative spinal stenosis to take 20 visits. I'm pretty sure my experience is typical.

Who needs PT?

For an exception to the Medicare cap the physical therapist would have to show three criteria:

• Need
  
• Progress
  
• Skill

Need is often shown with physical findings.

The above X-ray and CT myelogram show physical findings based on anatomy.

Physical therapists should show physical findings based on function.

Diagnosis: Process or Label?

An epiphany in own my practice has been the use of disablement models: most recently the International Classification of Function (ICF Model) that describes the link between Body Structure and Function and Activity Limitations.

The ICF classification framework is to physical therapists what the ICD-9 diagnostic labels are to physicians.

Note the ICF model describes any health condition - for instance, your patient with degenerative spinal stenosis who has 'run out' of Medicare physical therapy benefits but asks you to append the -KX modifier to continue their care.

What do you do?

Do you ask the doctor for another script?

Perhaps you consider using another diagnosis from the old 'diagnosis list' from 2006.

Don't.

The Therapy Cap

The purpose of the therapy cap is to cut costs without limiting patient access to necessary care.

There is a large POPTs in my town that automatically cuts off therapy to every patient approaching the $1,810 Medicare Cap - regardless of need or progress.

They perceive that, as a POPTs, they are in the Medicare audit crosshairs and they refuse to add 'risk' to their caseload by appending the -KX modifier.

They are limiting care to their patients.

The Caps Work

Data for this table comes from the Outpatient Therapy Alternative Payment Study 2 (OTAPS 2) Task Order - Utilization Report.

Outpatient Physical Therapy
	2004	2006	Per cent change
Mean dollars paid per user	$864	$788.06	-8.8%
Mean dollars paid per episode	$748	$682	-8.9%
Standard deviation paid per episode	$1,047	$782	-25.4%

"The Balanced Budget Act of 1997 enacted financial limitations (therapy caps) on outpatient physical therapy (PT) and speech-language pathology (SLP) combined... In 2006 the Automatic Exceptions Process to the caps began, enacted by the Deficit Reduction Act of 2005." (OTAPS 2)

The result of the caps has been the observed decrease in per user and per episode dollars paid.

Read the full blog entry here.

Note that cost reductions occurred from 2004 to 2006.

There was no cap in 2004. The cap exceptions process began in 2006.

The Caps work - so, work with the Caps

Get better at showing need.

Show that your patients have Activity Limitations using a functional scale.

I recommend the OPTIMAL scale (free) or the AM-PAC (small $$).

Show Progress.

I've designed a neat pen-and-paper graph that easily and quickly shows functional progress over 1, 2 or 3 months.

No more discharges after 20 visits whether the patient is better or not.

Now, patients come back to me because they know I can 'go to bat' for them.

If they are getting better I can prove it.

Get a copy of the Functional Progress Graph here.

Make skilled decisions.

Use the ICF model to link impairments in Body Structure and Function with the measured Activity Limitations.

The link is your Physical Therapist's Diagnosis.

What do YOU need to go to bat for your patients?

Not fancy x-rays or 'alphabet soup' imaging.

Get better at describing your own skills using simple tools.

Get the free tools I've described in this post.

Also, get a free tutorial called Bulletproof PT to learn more.

Medicare RACs, snakes in the toilet and other urban myths

Snakes, swimming in your toilet bowl, are the sorts of things that keep eight year old boys awake at night.

Somehow, in 1976, word got around that it was possible for slithery snakes to sneak into sewer pipes and wind up in my bathroom.

I didn't sleep for weeks.

Also, I had, ahem,  other issues with snakes as a result.

Fortunately, snakes in sewer pipes turned out to be a baseless urban myth and no eight year old boys were harmed in the myth's dissemination.

Medicare RACs and physical therapists

Now, in 2008, physical therapist private practices are worried about Medicare Recovery Audit Contractors.

Maybe we have good reason.

Maybe we don't.

Recently, I was a 'fly-on-the-wall' at the Government Affairs meeting of the Private Practice Section of the American Physical Therapy Association.

Among the agenda items was a short discussion of Medicare RACs and their impact on physical therapist private practices.  The Medicare RACs were due to go nationwide in October 2008 but were delayed.

At this point, February 2009 is the expected kickoff date.

Many of the Government Affairs Committee members were from states other than the following...

• Florida
  
• California
  
• New York
  
• South Carolina
  
• Arizona
  
• Massachusetts
  

This list is the states selected in 2006 and 2007 as part of the RAC demonstration project.

Physical therapists in these states should be very familiar with the impact of the RACs.

One of the biggest 'hot buttons' among the PPS Government Affairs Committee members was the contingency fee structure used to pay the Medicare RACs.

The RAC contingency fee is paid based on...

"...detecting and collecting overpayments plus the fees paid for detecting and refunding underpayments."

Underpayments! What underpayments?

"As of March 27th 2008, RACs succeeded in correcting more than $1.03 billion in Medicare improper payments. Approximately 96 percent ($992.7 million) of the improper payments were overpayments collected from providers, while the remaining 4 percent ($37.8 million) were underpayments repaid to providers."

Regardless of whether you did or did not receive any refunded underpayments I believe the RAC contingency fee structure could be a very good thing for private practice physical therapists.

Contengency payments align risks faced by the provider and the auditor

Right now, if you are audited by a Medicare Administrative Contractor (MAC)  your claim is likely read by an employee or a consultant paid a salary or a flat rate.

If you appeal, your appeal is read by that same employee or consultant.

You must appeal to the third level, the Administrative Law Judge, before your appeal gets read by a fresh face.

Meanwhile, the auditor bears no risk.

The MAC auditor gets paid even if you prevail in your appeal.

The RAC auditor does not.

"In the RAC permanent program, CMS will require all RACs to refund any contingency fees they received if an overpayment determination is overturned at any level in the appeals process."

Why are RAC contingency payments good for private practice PTs?

Most of the overpayment determinations were made against inpatient hospitals.

Of the $992.7 million in overpayments approximately 85% were made to inpatient hospitals.

Overpayments Collected by Provider Type (in millions)

Skilled Nursing	$16.3	2%
Inpatient Rehab	$59.7	6%
Outpatient Hospital	$44.0	4%
Physician (& PT)	$19.9	2%
Ambulance/Lab/Other	$5.4	<1%
Durable Medical Equipment	$6.3	1%
Inpatient Hospital	$828.3	85%

"Because the Claim RACs were paid on a contingency fee basis, they establish their claim review strategies to focus on high-dollar improper payments, like inpatient hospital claims, which give then the highest return with regard to the expense of reviewing the claim and/or medical record.

CMS anticipates that the permanent RACs will adopt a similar strategy at first."

My experience in Florida since 2006 has been about $80 in overpayments over the four-year 'look back period' of the demonstration RAC project.

The permanent RAC is only allowed a three-year 'look back'.

My overpayments were due to charging multiple units of Traction or Electrical Stimulation (Supervised Modalities) to the same patient on the same day.

Now I know you can't do that.

There is some evidence that the Medicare RAC audit selection process differs from that of the Medicare MACs.

	% denials appealed	% appealed denials in provider's favor
MACs	4.0%	59.0%
RACs	14.0%	33.3%

The Medicare RACs appear to be more selective (eg: Inpatient Hospitals) thereby improving their percentage of provider unfavorable appeals.

Nevertheless, if you do get denied and you think you have a case, I recommend that you appeal.

Of the $19.9 million in overpayments paid by the 'Physician' category, the majority, 54%, were because of 'Excessive/Multiple Units".

I've made changes to my practice based on what I've learned in the last three years.

Get the RAC Evaluation Report here and get the facts.

If you are a small practice, like mine, you probably understand your business at the 'molecular level', that is, you do most of the work, you know most of your patients and you write or at least review most of your charts.

You are better positioned than Inpatient Hospitals to resist or defend a Medicare audit by a RAC or a MAC.

What about the Snakes?

John F. Kennedy said this...

"The enemy of the truth is not the lie, but the myth."

What you know is always less scary than what you don't know.

Now, I know that snakes won't get me when I go to the bathroom.

Now, I'm ready for the RACs as well.

Older physical therapy patients are worried

Every day I answer questions from older Americans about their physical therapy.

"Will I run out of Medicare physical therapy benefits?"

"What will happen to me - will I have to go into a nursing home?"

Medicare provides physical therapy treatment up to $1,810 in billed charges for the purpose of preventing a loss of independance in older Americans.

Americans living at home, cared for by their loved ones, consume fewer healthcare dollars than Americans living in institutions.

Medicare pays for much of the institutional care in the United States.

Sarah

Today, I treated Sarah, an 86-year old lady with arthritis.  

Sarah is legally blind and cannot walk far because of pain in her back and legs due to a condition called spinal stenosis.

Sarah's husband died a few years ago and now she is alone. 

Sarah can clean her home and care for herself with minor accomodations - she rides the handy bus to church, groceries and physical therapy.  

She doesn't go out much but she lives in a trailer park where neighbors are close by.

But, Sarah is not far from needing more help.

She has been in physical therapy for her spinal stenosis for a month now and we have gotten her back to walking and single-stair climbing (we live in Florida). 

Sarah is much more comfortablenow moving around and doing light lifting.

Friday, November 7th is Sarah's projected discharge date and she is worried that physical therapy will not continue.

She is afraid that she will decline without therapy and require more help to live alone.

Soon, she believes, she will need to move out of her trailer and into a nursing home.

Sarah believes physical therapy can help prevent this decline.

So do I.

Medicare depends on me to prevent Sarah from losing her independance and going to live in a nursing home.  But, for that, I have to make decisions that expose me to the threat of a Medicare audit if it is determined that I gave Sarah 'too much' physical therapy.

What do I do?

I must show that I can help Sarah, that Sarah needs my help and that only a physical therapist, such as I, could help Sarah.

For that I need help.  I need two tools.  Both are free tools.

The first tool is the OPTIMAL.

I use the OPTIMAL to show that Sarah needs physical therapy.

The OPTIMAL also shows that Sarah can now walk further and move around better than she did one month ago.  It shows she makes progress in physcal therapy.

But, I also need one more tool.  I need to append a '-kx modifier' to my physical therapy charges that I send to Medicare.  

I want to show any Medicare auditor that my decision to append that modifier is based on results, not just a one-time event or measurement.

So, I graph my OPTIMAL scores.

Here is the graph template.

What happens to Sarah?

Friday I take my follow-up measurements.  

Sarah's need and progress is evident.

My skill and decisions are well-documented with the graph template.

This time, I think she will qualify for the extra month of physical therapy.

Physical Therapists use the ABN too much

Are you using the Medicare Advance Beneficiary Notice (ABN) too much?

How much is too much?

Most physical therapists' practices, in my opinion, would need infrequent use of the ABN.

I often use the the -KX but I seldom use the ABN.

How about an example?

I usually hit the physical therapy cap in 16 visits.

But now, in November 2008, I have some patients coming back to see me with multiple conditions.

They need to know if their physical therapy is a Medicare covered benefit.

So, I face the same problem you face.

I think that I might be able to help you.

What should the physical therapist do?

The routine use of the Advance Beneficiary Notice (ABN) with EVERY
patient who has $1,810 in billed charges may be inconsistent with the
design of the ABN.

With the ABN, you are saying to the patient (and Medicare):

"These services are not a Medicare covered benefit".

For example, maintenance exercise is not a Medicare benefit.

However, PT services above the annual cap ARE a Medicare benefit, if
the patient qualifies for the cap (-kx) exception.

You are the only professional in the position to determine if the patient
qualifies for the benefit.

You make your determination based on three criteria:

1) Need

2) Progress

3) Skill

In other words, does the patient need your services, can you get them
better and can you demonstrate your clinical decision-making was
necessary for their care?

Now, in November 2008, I have many patients coming back to me who have
exceeded their cap.

They may have had their rotator cuff done in February and now they
have hip pain in November.

Note: you cannot use the list of diagnoses from 2006 as the sole basis
for an automatic exception.

I usually hit the cap in 16-18 visits so patient with complex
conditions or multiple conditions will often exceed $1,810 over the
full year.

I face the same problem you face - how do I get my patients treated
and comply with Medicare rules?

Medicare doesn't know how much better patients get with PT, how bad
they were to start with or what their outcomes are.

So, I figured out a way to show Medicare.

I also made it simple for clinical physical therapists.

I designed a graph that plots all 2008 OPTIMAL functional scores on
one page. That way, when the patient comes back in October I have
their prior level of function.

I can use the graph to show a decline in function in the absence of
skilled physical therapy - that demonstrates need (medical necessity
for physical therapy).

The graph can also show the improvement from the last session of
therapy in February (expected improvement in a reasonable time frame).

Skilled decision-making is, I believe, self-evident to anyone who can
figure out the PT cap exceptions process. If not, then I have also
designed a note-writing format for my charts that prompts skilled
decisions at each visit.

Every billed charge needs to be skilled, whether you have hit the cap
or not.

Finally, the graph is simple to use, even for those of us who still
use pen and paper charts.

You can get the graph, for free, at www.BulletproofPT.com

Medicare wants you to treat patients who demonstrate need, who get
will get better and who can't do it without your skills.

The ABN is not your answer.

Try the graph and let me know what you think.