Physical Therapy Fraud

Physical therapy is the treatment of functional limitations to prevent the onset or to retard the progression of physical impairments following illness or injury.  Medicare pays for physical therapy in at least two contexts:

(1) Through the Part A hospital insurance benefit, Medicare pays for physical therapy as a component of skilled nursing care, in either the acute care setting or in a post-hospital skilled nursing facility.   In order to qualify for reimbursement, such therapy must meet the criteria for skilled nursing care.

Additionally, through Part B supplemental insurance, Medicare reimburses for physical therapy under limited circumstances.  In order to qualify for reimbursement, outpatient physical therapy services must: (1) be reasonable and medically necessary; (2) be furnished to a Medicare beneficiary under the care of a physician; (3) be furnished under a plan of care periodically recertified by a physician; and (4) be furnished by or under the direct supervision of qualified personnel.

Medicare regulations require that physical therapy services be performed either (1) by a State-licensed physical therapist or (2) by or “incident to” the services of a physician or other medical professional licensed to perform such services under State law.  See 42 C.F.R. § 410.60.  Under the “incident to” rule, a physician may bill for physical therapy services performed by non-physician personnel so long as those services are (a) commonly furnished in a physician’s office and integral to a physician’s covered services; (b) included in a treatment plan designed by the physician and in which the physician is actively involved; and (c) furnished under the physician’s direct supervision.

In order to bill directly – rather than through a physician – a physical therapist must be State-licensed.  Physical therapy services performed incident to a physician’s services may be performed by personnel without a license – however, such personnel must otherwise meet all qualifications of a licensed physical therapist including graduation from an approved physical therapy education program.

Regardless of who performs physical therapy services to be billed to Medicare or Medicaid, such services must be furnished in accordance with a sufficient plan of care established by a physician or by the licensed physical therapist who performs the services.  The plan must “prescribe[] the type, amount, frequency, and duration of the physical therapy . . .  to be furnished to the individual, and indicate[] the diagnosis and anticipated goals.”  42 C.F.R. § 410.60.

Fraud in physical therapy is rampant. In 1994, the Office of Inspector General, Department of Health and Human Services published a report finding that 78% of physical therapy billed by physicians did not constitute true physical therapy. In 2006, OIG published another report, stating that a staggering 91% of physician physical therapy bills submitted in the first half of 2002 were deficient in at least one regard. Frohsin & Barger has identified and uncovered the following types of physical therapy fraud:

(a) billing for physical therapy services performed by unqualified personnel;

(b) billing for physical therapy services that were never performed or only partially performed;

(c) billing for physical therapy services when, in fact, the service performed was unskilled, or amounted to maintenance therapy, or both, and did not constitute physical therapy;

(d) billing for physical therapy services performed under a deficient plan of care;

(e) billing under individual therapy codes for group therapy services;

To report Physical Therapy Fraud, contact Frohsin & Barger.