🇺🇸United States

Underbilling from mis-coded therapeutic activities vs. exercise in PT/OT

1 verified sources

Definition

PT and OT clinicians frequently bill lower-paying therapeutic exercise code 97110 for functional activities that qualify for higher-paying therapeutic activities code 97530, leading to chronic under-reimbursement. Industry billing guidance flags this as a common, systemic error in rehab therapy coding.

Key Findings

  • Financial Impact: $5,000–$25,000 per year per mid-sized outpatient rehab clinic (estimate based on typical 10–20% differential in allowed amounts between 97110 and 97530 applied to hundreds of visits per month).
  • Frequency: Daily
  • Root Cause: Clinicians default to familiar codes (e.g., 97110) and do not rigorously match interventions to the most accurate CPT description; training materials explicitly warn that billing 97110 for functional activities instead of 97530 causes under-reimbursement.[1]

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Physical, Occupational and Speech Therapists.

Affected Stakeholders

Physical therapists, Occupational therapists, Rehab aides documenting services, Clinic owners, Billing specialists, Revenue cycle managers

Deep Analysis (Premium)

Financial Impact

$10,000–$24,000/year (SNF re-bills, OIG audit fines, appeal labor; SNF 20–30% of clinic revenue; OIG penalties can be 10–15% of claims reviewed) • $10,000–$26,000/year (Medicaid re-bills, audit fines, appeal labor; 20–25% Medicaid mix; state audit penalties can be 5–10% of billed amount) • $10,000–$26,000/year (Medicaid re-bills, denials, appeal labor; 20–25% Medicaid mix)

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Current Workarounds

Advanced Excel models comparing contract vs. optimal CPT reimbursement • Billing staff calls insurance carrier each time; clinician documents generically; no standardized coding workflow for PI cases • Billing staff calls payer; OT unaware; manual rework

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Lost revenue from incorrect use of timed vs. untimed CPT codes in SLP and rehab

$10,000–$50,000 per year per multi-discipline practice (conservative estimate where 5–10% of timed services are underbilled by 1–2 units).

Denied or unpaid services from exceeding payer-specific therapy unit limits

$1,000–$10,000 per year per clinic, depending on how often sessions are delivered beyond allowed caps without approved extensions.

Delayed payment from incorrect or missing SLP and therapy modifiers

$50,000–$200,000 temporarily tied up in Accounts Receivable for a medium-sized practice when batches of claims are pended or denied until corrected and rebilled.

Clinical time lost to manual CPT code selection and rework

$20,000–$80,000 per year in lost clinical capacity per clinic (e.g., 15–30 minutes per clinician per day diverted from patient care to coding and rework).

Risk of recoupments and penalties from billing outside payer therapy coding policies

$10,000–$100,000 per audit cycle in recouped payments and non-payments for out-of-policy codes for a multi-location practice.

Suboptimal service mix and pricing decisions from poor visibility into CPT-level margins

$10,000–$50,000 per year in unrealized margin per clinic due to skewed case-mix and coding choices.

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