Outpatient Therapy Services Targeted Probe and Educate Review Results

The Jurisdiction E, Part A Medical Review Department is conducting a Targeted Probe and Educate (TPE) review of Outpatient Therapy Services including revenue codes 042X and 043X. The findings of the claims reviewed from October 1, 2024 through December 31, 2024 are as follows:

Review Results

  • 487 claims were reviewed with 29.0% error rate

Top Trending Errors

  • Medical Necessity of Outpatient Therapy Services
  • Documentation Requirements for Therapy Services

Educational Resources

Education

Medical Necessity

To support medical necessity of therapy services, documentation must clearly support that the skills of a therapist were required.

Skilled care includes:

  • Individualized services rendered for treatment of a medical condition that require the skills and knowledge of a therapist
  • Services that meet acceptable standards of medical practice to effectively treat the patient’s condition
  • Services that are complex and sophisticated such that they require the judgement and skills of a qualified therapist for safe and effective completion
  • Rehabilitation services must be provided at a reasonable duration as evidenced by the patient continuing to significantly and objectively benefit from ongoing skilled therapy

As per the progress report requirements, documentation to support medical necessity for services is minimally required to be documented every 10 treatment days. Without the elements of the progress report documented, ongoing medical necessity is difficult to establish. Documentation must also support that the benefits from any prior therapy services for the same condition were sustainable following discharge for a reasonable amount of time.

The Internet-Only Manuals (IOM), Publication 100-02, Medicare Benefit Policy Manual (MBPM), Chapter 15, Section 220.3(D) describes requirements for rehabilitative and skilled maintenance therapy as follows:

  • Rehabilitative Therapy: "the patient’s condition has the potential to improve or is improving in response to therapy, maximum improvement is yet to be attained; and there is an expectation that the anticipated improvement is attainable in a reasonable and generally predictable period of time"
  • Maintenance Therapy: "treatment by the therapist is necessary to maintain, prevent or slow further deterioration of the patient’s functional status and the services cannot be safely carried out by the beneficiary him or herself, a family member, another caregiver or unskilled personnel"

The KX modifier should not be applied for services that do not meet Medicare's medical necessity standard. Unskilled maintenance therapy is not covered by Medicare.

Initial Evaluations

Initial evaluations involve clinical judgment and decision-making which is not within the scope of practice for therapy assistants. These services can only be provided by qualified clinicians, such as a physician, non-physician practitioner (NPP), therapist, or speech-language pathologist (SLP). Initial evaluation codes can only be billed when the medical record supports a completed comprehensive evaluation with sufficient data to support development of a thorough plan of care, including goals and intervention selection. Documentation must support that the evaluation service was medically necessary based on the patient’s current status and medical/functional history. Medicare does not reimburse for services related solely to workplace skills and activities. Separate service and procedure codes should not be billed for time spent providing initial evaluation services.

Providers may simultaneously receive multiple physician referrals for multiple medical conditions for one patient. When this occurs, it is expected that one qualified clinician from each discipline involved, such as a physical therapist (PT), an occupational therapist (OT), and/or a speech language pathologist (SLP), will complete one thorough initial evaluation that encompasses all of the identified medical conditions. It is not appropriate to bill a second initial evaluation for condition(s) known at the time of the initial evaluation. Following completion of the initial evaluation, other staff therapists specializing in specific medical conditions may treat the patient as needed. When medical necessity is supported, an initial evaluation is appropriate for:

  • A new patient who has not received prior therapy services
  • A patient who has returned for additional medically necessary therapy after having been discharged from prior therapy services for the same or different condition. Time spent evaluating this returning patient should not be coded as a re-evaluation. Prior discharge may have been due to one of the following:
  • Patient no longer significantly benefited from ongoing therapy services or;
  • Patient no longer required therapy services for an extended period of time or;
  • Patient experienced a significant change in medical status that necessitated discharge or;
  • Patient who is currently receiving therapy services develops a newly diagnosed unrelated condition

For example: A patient is currently receiving therapy services following a total knee arthroplasty (TKA). During the therapy episode of care for the TKA, the patient develops an acute rotator cuff injury from an accident at home. The clinician determines that the rotator cuff injury is not related to the TKA. Therefore, it is reasonable for the clinician to provide and code for a new initial evaluation of the rotator cuff injury since it is a newly identified diagnosis for an unrelated condition.

For additional information, refer to the Internet-Only Manuals (IOM), Publication 100-02, Medicare Benefit Policy Manual (MBPM), Chapter 15, Section 220.3 (C).

Progress Report

The progress report(s) must provide justification of medical necessity for continued treatment and supports that required therapy services are complex and sophisticated such that they can only be safely and effectively provided by or under the supervision of a qualified therapist. The minimum progress report period shall be at least once every 10 treatment days which includes assessment of the patient’s response to therapy services, plans for continued treatment or treatment revisions, updates to short or long term goals and objective functional assessment. If each element required in a progress report is included in the treatment encounter notes, at least once during the progress reporting period, then a separate progress report is not required. Without the elements of the progress report documented in the medical record, medical necessity is difficult to establish. Routine assessment for progress reporting is included in the ongoing therapy services provided and is not separately billable.

Physical therapy assistants (PTAs) or occupational therapy assistants (OTAs) may write elements of the progress report dated between qualified therapist reports. Reports written by assistants are not complete progress reports. The qualified therapist must write a progress report during each progress report period regardless of when the assistant writes other reports.

For additional information, reference: Internet-Only Manuals (IOM), Publication 100-02, Medicare Benefit Policy Manual (MBPM), Chapter 15, Sections 220(A), 220.3(D), 220-230, and the billing and coding article, Medical Necessity of Therapy Services A53304 (JE).

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