This article explores whether in-house billing or outsourcing is better to address the challenges involved in physical therapy billing and coding.

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In-house or Outsourced Medical
Billing – Which Is a Better Choice
for Physical Therapy Management?
Physical therapists in the United States face several
crucial developments in 2014
such as Medicare payment
trends, ICD-10 implementation,
second stage of the meaningful
use incentive program for
electronic health records (EHRs)
and so on. Since most of these
challenging developments can
have a significant impact on
their reimbursement, they are required to fine tune
their medical billing practices as early as possible.
Physical therapists have two options – in-house
billing with Electronic Medical Records (EMR) or
outsourcing billing tasks to a billing company. In the
opinion of experts, the following things should be
considered when deciding on a suitable alternative
for your office.
Practice Approach and Expertise
If you choose in-house billing, it is
very important to ensure that
your staff has expertise in
analyzing financial reports and are

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able to assess and address issues within your
practice effectively. For example, Medicare therapy
cap amount is assigned per beneficiary for physical
therapy services each year in case of outpatient
therapy (annual per beneficiary therapy cap amount
in 2014 is $1920 for physical therapy and speech
language pathology services combined). If a
patient’s treatment exceeds that amount, physical
therapists may request an automatic exception
using KX modifier for those claims in Medicare
allowable (if medical necessity is properly
supported). Only experienced practice staff would
be aware of these things and perform billing tasks
accordingly. Engaging a third party service to
manage the entire medical billing process is the
practical choice if your practice staffs are not that
very efficient. If you don’t prefer to have an
administrative team to handle daily billing functions
within your office, medical billing outsourcing is
the best option.
Cost and Budget
In-house expenses would include labor cost, up-
front costs for hardware and physical therapy
billing software, and training and maintenance cost
for billing system. Fees for billing services from
outsourced companies are typically based on the
percentage of collection. However, this may vary

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according to the specialty and the range of services
offered. The startup cost for physical therapy
business may depend on how your state permits
you to operate as a physical therapist. Physical
therapists should monitor thoroughly whether in-
house billing or outsourcing is more suitable to their
budget. Never compromise cost for quality as it
may cause financial loss in the end through claim
denials and appeal processes.
Performance of Office Staff
The financial status of a physical therapy clinic
will remain safe only if the billing staff performs
their tasks efficiently. High-performing staffs would
be well-versed in billing procedures, well-aware of
the proper protocol of each payer and remain up-to-
date on the latest government policies. For
example, when ICD-10 transition comes, therapists
are required to use the most appropriate codes for
specific health conditions. You may need to use
even multiple codes for a single condition. Let’s say
a patient strained his Achilles tendon in the right leg
as a result of slipping when playing with his friends
in his garden. Four codes are needed to specify this
condition using ICD-10, code for the strain of right
Achilles tendon (should specify the encounter),
activity code, place of occurrence and external
cause.

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 S86.011: strain of right Achilles tendon
S86.011A: initial encounter
S86.011D: subsequent encounter
S86.011S: sequela
 Y93.6: activities involving other sports and
athletics played as a team or group
 Y92.017: garden or yard in single-family
(private) house as the place of occurrence of
the external cause
 W01: fall on same level from slipping, tripping
and stumbling
The practice staff should be well-trained in ICD-10
to ensure accurate medical coding and correct
reimbursement for services provided. If the
therapist has difficulty in finding competent billing
staffs, it is better to seek medical billing services.
Reputable billing companies will have high-
performing staffs and provide proper training
according to current trends. Therapists can save the
cost for additional training in this way.
Electronic medical records can increase the
efficiency of physical therapy services by providing
patient health details quickly. However, maintaining
accurate data within EHR is quite challenging. The
cost of EHR implementation and its meaningful use
is a matter of concern too. The service of a

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professional medical billing and coding company
that offers EHR feeds is quite relevant in this
regard.