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:
I. 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 under 42 U.S.C. – 1495i. In order to qualify, a patient otherwise appropriate for Medicare must show a qualifying hospital stay of three or more days within the 30 days prior to entering the skilled nursing facility. A physician must order procedures for the patient that are appropriate to be performed only in a Skilled Nursing Facility (SNF), such as rehabilitative therapy, and must certify that the patient’s condition is such that he or she can practically be cared for only in a SNF. In so certifying, the physician must determine that the patient’s condition should improve or achieve stability in response to curative care. The SNF medical staff is required to write a plan of care for each skilled nursing patient based upon the individual’s needs and circumstances. Upon satisfaction of those requirements, Medicare will pay for 100 days of skilled nursing care per-patient per-illness period – though after the first 20 days a co-payment of 20% is required of the patient. Once a patient qualifies, Medicare bears all expenses of the skilled nursing facility, including the patient’s custodial care and room and board (custodial care is not otherwise covered by Medicare). Typically, an SNF receives approximately $650 per day from Medicare for a qualifying skilled nursing patient.
II. 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 pursuant to 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. Under 42 C.F.R. § 410.60, 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.”
Abuse of the Therapy Medicare Benefit
Unfortunately, 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. Through intense investigation and research, we have identified and uncovered the following types of physical therapy fraud:
(a) billing for therapy services performed by unqualified personnel;
(b) billing for therapy services that were never performed or only partially performed;
(c) billing for 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 therapy services performed under a deficient plan of care;
(e) billing under individual therapy codes for group therapy services.
Under the federal and some state false claims acts, whistleblowers can file suit against fraudulent therapy and skilled nursing companies under seal and may share in as much as 25% (and in some circumstances 30%) of the award. Blowing the whistle on corporate fraud takes courage, however, and the law rewards that courage with certain protections. The False Claims Act provides for a whistleblower’s case to be filed under seal and for the identity of the whistleblower to be protected during the course of the government’s investigation. Further, federal laws protect against retaliation by mandating the reinstatement of wrongfully fired employees at the same seniority level, and an award of double back pay, interest, and attorneys’ fees. More than $22 billion of taxpayer funds have been recovered under the False Claims Act over the past two decades. Despite all of the efforts and success by government and private attorneys policing the Medicare program under the False Claims Act, the only way that such fraud can be fought effectively is for people with knowledge – industry insiders, administrators, nurses, and therapists – to come forward and say that enough is enough.