Can our ancillary PT/OT clinic except referrals from outside physicians?

Many orthopaedic groups are under the incorrect assumption that their physical and occupational therapists cannot accept referrals from outside physicians or that there is a limit on the percentage of patients that can come from outside referrals.

Your physical and occupational therapists can accept outside referrals, including referrals of Medicare patients. However, to accept outside Medicare referrals, your therapists need to be enrolled with Medicare (in the same manner as your physicians), their receipts reassigned to the group, and you should be billing under Medicare’s therapist in private practice (TPP) rules (which are expressly permitted for therapists employed by physician groups). Most orthopaedic groups are already billing Medicare for therapy under the TPP rules, rather than the alternative “incident to” rules. You cannot accept outside referrals of Medicare patients if you are billing under the incident to rules because incident to patients must be under the care of one of your physicians.

In addition, the percentage of therapy patients that can come from outside referrals is not limited. In the past, most orthopaedic groups have not been able to attract a significant number of outside therapy referrals. However, as orthopaedic groups have expanded their therapy practice at main and multiple satellite offices and private therapy practices have shrunk or disappeared, outside referrals have increased and are more commonly becoming a significant source of therapy patients.

Increasing therapy referrals is key to maintaining and even growing PT/OT profitability. This is especially the case given that the average number of visits per patient has been steadily trending downward as deductibles and co-pays have increased and payers have adopted more stringent authorization requirements.  For example, if your average visits per patient decreases from 10 to 9 (which is not unusual), you will need to increase the number of new patients by 11% to avoid a decrease in total visits. If your average visits per patient is decreasing and you are not offsetting this decrease by an increase in referrals from your physicians or outside physicians, the decrease in your total PT/OT visits will almost undoubtedly result in a substantial decrease in profitability.

Visit us at www.pt-management.com

PT/OT Use of Advanced Beneficiary Notice of Noncoverage (ABN)

The following is an explanation of when you can and cannot use an ABN for outpatient physical and occupational therapy patients.[1]

Therapists are required to issue an ABN to Medicare patients prior to providing therapy that is not medically necessary. For example, if a patient has been receiving PT and has achieved all of her PT goals, but still requests continued PT even though it is no longer medically necessary, you must issue an ABN prior to providing the services that will not be covered by Medicare to hold the patient personally liable for payment.

We often field questions as to whether an ABN should be used in connection with the Medicare therapy cap.  As background, prior to 2013, a Medicare beneficiary was financially liable for therapy services above the cap regardless of whether he or she received an ABN.  CMS encouraged providers to alert Medicare patients to potential financial liability; however, an ABN was not required.  Under these pre-2013 rules, if a provider submitted a claim that he or she believed qualified for a cap exception and that claim was denied because the carrier ultimately determined that the services were not medically necessary, the provider could collect from the patient regardless of whether an ABN was issued.

This is no longer the case.  Now you must issue a valid ABN to a patient before providing services above the cap to hold that patient personally responsible for payment.  However, you are faced with a “Catch-22” situation in that if you believe that services above the cap are medically necessary, you cannot issue an ABN to the patient because an ABN can only be used in connection with services that you determine are not medically necessary. CMS has expressly stated that providers should not issue an ABN to all Medicare patients who receive services that exceed the cap.  In other words, you can no longer issue an ABN to a patient on a back-up basis to allow collection from the patient if the carrier determines that the services were not medically necessary and denies payment.

If you issue an ABN to a patient for therapy services above the cap because the services are not medically necessary, a GA modifier should be attached to the claim. If you did not issue an ABN for these services, the GA modifier cannot be added to any claim and you cannot collect from the patient.

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[1] CMS, Therapy Caps and Advanced Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131, FAQs April 2013 (hereinafter, “ABN FAQs”) (http://www.cms.gov/Medicare/Billing/TherapyServices/Downloads/ABN-Noncoverage-FAQ.pdf, accessed 3/23/15).

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Physical Therapy Benchmarking

What is the most important PT/OT productivity benchmark?

If you are trying to gauge the productivity of physical and occupational therapists, we recommend using procedures (preferably weighted procedures) per provider work hour. This is the benchmark that most closely translates into profitability for two primary reasons. First, the vast majority of outpatient PT/OT is still paid on a per procedure basis, so more procedures typically equates to more revenue. Second, provider staff costs are the highest variable costs so more procedures generated per provider hour generally results in increased profits. You could measure procedures/gross compensation (and we do use this measure on a group basis); however, when you are measuring individual providers and comparing provider-to-provider, you can place everybody on a level playing field by measuring procedures/provider work hour.

Many PT/OT clinics measure provider productivity in terms of visits/day or visits as a percentage of available time. We find that the procedures/provider work hour metric is much more useful because visits/day is not necessarily a true indicator of productivity. For example, some providers see a relatively large number of patient visits/day, but are billing a relatively low number of procedures/visit because they are either not spending a sufficient amount of time with each patient or not capturing all of their appropriate charges. As a simple example, a PT provider who is seeing 18 visits/day and billing an average of only 2 timed procedures (or 30 minutes) per visit is billing 36 procedures/day which is the same as another provider seeing 12 visits/day and billing 3 procedures/visits. Both providers are generating the same amount of revenue from their 36 procedures/day, but the provider seeing 12 visits/day is able to spend more time with each patient, almost certainly has higher patient satisfaction and better outcomes, has less documentation time, and the lower number of visits is reducing the workload on the front desk and business office.

To measure procedures/provider work hour, you can simply use the total number of procedures as the numerator; however, because not every procedure involves the same level of effort, skill and revenue (e.g., initial evaluation as compared to e-stim), we typically recommend using a very simple weighting system. In this weighting system, initial evals and custom splints have weight of 3, re-evals have a weight of 2, all timed codes have a weight of 1, and modalities have a weight of 0.5 (with the exception of H/C packs which have a weight of 0.25. These weights are basically in proportion to work RVUs and roughly in proportion most payer rates. In addition, because all timed procedures have a weight of 1, a weighted procedure typically translates into 15 minutes of charges which is easy for providers to translate into every day reference and use. A simple Excel spreadsheet that has a column for each provider’s number of units by CPT code, a column with the weight for each CPT code, and use of the “Sum Product” function will quickly calculate each provider’s weighted procedures for a month or whatever period you choose. You can also use RVUs or work RVUs as the numerator, but PT/OT providers think in terms of 15-minute units, so we find that weighted procedures translates relatively easily into everyday use.

For the denominator, we use regular plus overtime hours for each hourly provider. For salaried providers, we use the regular hours they work each month up to a maximum of the FTE hours for the month because they do not receive overtime. For example, if a salaried provider is regularly scheduled for 8 hours/day and works 20 days during a month, we will use 160 hours for the denominator regardless of whether the provider may have actually worked more hours because this provider is not being paid for overtime.

For providers with significant administrative responsibilities, such as a PT Director, we typically deduct a fixed amount of time each month to recognize the fact that they are not available to treat patients every hour they work.  We will typically use an allowance of .75 hours/week for every FTE provider supervised by the PT Director.  For example, if a PT Director is supervising 6 FTE staff providers, we will typically use of an administrative allowance of 4.5 hours/week. In this example, if the PT director is working a 40 hour week, 35.5 hours is designated for patient care and used for the procedures/work hour measurement and 4.5 hours is used for administrative tasks.

We typically do not provide any adjustments for documentation time because we want to encourage therapists to document while they are treating patients and also available time from typical cancellations and no-shows during a day should allow PT/OT providers to complete documentation without blocking time.

The benchmark for weighted procedures/provider work hour in better-performing practices is 4.7. For example, a physical therapist who generates 790 weighted procedures during a month that she works 168 hours, is averaging 4.7 weighted procedures/hour. Because a weighted procedure roughly translates into 15 minutes of charges, 4.7 weighted procedures/hour translates into about 70 minutes of charges/hour. The charges exceed actual time during an hour because most patients can be overlapped to a certain extent.

Visit us at www.pt-management.com 

Medicare PT/OT Claims

As we get closer to the end of the year, more of your Medicare patients are likely to be close to or above the $3,700 annual cap that triggers a mandatory manual medical review of each claim above the cap. (This $3,700 cap covers about 40 visits.)

The mandatory review will require you to provide an extensive amount of documentation.  Also, because the review will likely be done by a nurse with little therapy expertise and involve patients who have been seen for 40+ therapy visits during 2014, the likelihood of denial is very high.

Therefore, we recommend a close review of the chart for any patient who is above or likely to go above the $3,700 cap because, for all practical purposes, your likelihood of being paid for visits above this cap is very low.

Email cedgar@pt-management.com for more information 

Using Outpatient Physical Therapy Benchmarks to Measure and Improve Productivity, Profits

PHOENIX, Ariz. –- Data collected from more than 500,000 patient visits to physical therapy clinics provide real-world clinical benchmarks that can help physician practices optimize their PT practices.

PT Management Support Systems, a leader in managing PT/OT programs for physician groups and other healthcare providers, offers its findings in the October issue of AAOS Now, the monthly publication of the American Academy of Orthopaedic Surgeons.

“Benchmarks can help an orthopaedic practice determine whether its PT program is operating at an optimal level, what functions need improvement, and how to make those improvements,’’ says Cary B. Edgar, PTMS President and author of “Benchmarking PT Programs: Use benchmarking to measure and improve productivity.”

PTMS analyzed data from more about 500,000 visits to PT clinics owned and operated by orthopaedic groups from January 2013 through June 2014. This data included procedures per work hour; visits per day; payments per visit; costs per visit; and other PT-specific metrics.

The data point the way to better practices by highlighting various clinical and administrative inefficiencies. Among other findings, the data show that therapists often under code; scheduling practices do not accommodate as many patients as possible; therapists may be spending too much time on non-billable activities; patients often self-discharge because they do not see the value of therapy; and authorization, billing, and claims denial follow-up procedures are lax.

“Orthopaedic practices can strengthen their ancillary PT practices by applying the findings of these data,” Edgar says. “Inefficiencies can typically be easily addressed with clinical and administrative changes that often improve the quality of care and patient satisfaction.”

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Cary B. Edgar is the President of PT Management Support Systems LLC, a company that helps orthopaedic groups and other healthcare organizations develop and manage their physical, occupational, and hand therapy programs. He can be reached at cedgar@pt-management.com.

To access Edgar’s article on benchmarking, go to http://www.aaos.org/news/aaosnow/oct14/managing6.asp.
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Press contact information:

Diana Kem
PT Management Support Systems
480-206-6240
dkem@pt-management.com

Optimizing the Quality and Profitability of Physical Therapy Services Using Data-Driven Management

PTMS head Cary Edgar to address Texas Orthopaedic Association and Texas Association of Orthopaedic Executives on using data to manage physical and occupational therapy

PHOENIX, Ariz. – September 2014 – Cary Edgar, president of PT Management Support Systems (PTMS), a leader in setting up and managing physical and occupational therapy programs for healthcare organizations, will speak at the 2014 annual conference of the Texas Orthopedic Administrators Society on October 10 regarding the use of data to optimize both the quality and profitability of ancillary physical and occupational therapy.

Edgar will share key PT/OT benchmarks and address why a provider or practice may not be achieving them.  He will also discuss how to use data, such as average procedures per visit, to determine whether therapists are treating patients for an appropriate period of time and whether they are capturing all appropriate charges.  Edgar will talk about payment trends, such as how higher co-pays and deductibles are affecting average visits per patient and overall PT/OT profitability.

 “PT/OT margins can shrink very rapidly, and therefore, proactive management of provider and support staff productivity and overall efficiency based on real-time data is an absolute necessity,” Edgar says.

About PT Management Support Systems

As the nation’s leader in the setup and management of ancillary PT/OT services, PTMS leverages its financial, operational and regulatory expertise to help healthcare organizations, including physician practices and hospitals, generate a substantial ROI. PTMS offers real-time benchmarking, productivity tracking and reporting through its web-based TherapyWorks solution. 

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Press contact information

Diana Kem

PT Management Support Systems

480-206-6240

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