Physical therapist assisting young woman with exercise.

What You Need to Know About Physical Therapy Billing  

Physical therapists, like any healthcare provider, generally don’t get into the profession because they like working with numbers. But no practice is going to succeed without a good understanding of the complex medical billing system. Like other medical billing processes, physical therapy billing relies on matching services rendered with standardized codes that let insurers and other parties know exactly what treatments a patient received, and how much money the practitioner is owed for it. It’s a time-consuming process when done by hand, but it’s perfectly suited for digitization and automation.  

It’s estimated that over one-third of U.S. healthcare costs go towards administrative tasks, including medical billing. Implementing a digital billing solution can have a big impact on your practice’s overall profitability by reducing the time it takes to process bills and dramatically improving the chances that a charge is processed on the first try. 

But how do you choose the right medical billing software to improve your billing routine? In this article, we’ll explain some basic guidelines around physical therapy billing, the steps to better managing your revenue or billing cycle, and what to look for in a solution to help with your physical therapy billing process. 

Women who id dealing with physical pain and should seek out physical therapy.

Physical Therapy Billing Guidelines 

Physical therapy billing relies on a standardized system of codes from the World Health Organization called the International Classification of Diseases (ICD) codes. The current code system is ICD-10, though an updated ICD-11 set of codes has been created and is expected to become the standard in 2025. The fact that these codes are regularly updated is one of the key reasons to implement a digital solution—it is far easier to rely on automation to keep up with the latest code changes than to do it manually. 

ICD codes aren’t the only system involved in the physical therapy billing process. The other is the Current Procedural Terminology (CPT) system of codes, developed by the American Medical Association (AMA). ICD codes refer to the condition exhibited by a patient, while CPT codes refer to the treatments administered by the practitioner. For example, a pulled muscle diagnosis would get an ICD code while the rehab exercises assigned for that muscle would get a CPT code. 

To file a physical therapy bill, you’ll need to include codes from both standards—ICD codes for the problem or problems being treated, and CPT codes for the solutions you’re using. 

While that might sound fairly straightforward, the fact that there are tens of thousands of codes at play makes it an extremely time-consuming process to do by hand. Simple mistakes come with costly consequences as well—an incorrect code will result in a rejected payment and lead to a lengthy resubmission process (one which a surprising number of healthcare providers simply neglect to follow).  

All of this has a major impact on your revenue cycle—how long it takes you to go from treating a patient to receiving payment for your work. The shorter your revenue cycle, the more fluid your cash flow. 

Physical therapist utilizing medical billing software.

Revenue Cycle Management Steps 

It helps to think of your physical therapy revenue cycle as a series of steps, so you can work to optimize each step individually. With that in mind, here are the five steps of a good revenue cycle. 

Step 1: Pre-Authorization and Insurance Eligibility Verification 

Your physical therapy revenue cycle starts with gathering a patient’s demographic and insurance information and verifying any additional eligibility for financial assistance. During this pre-authorization and registration phase, you’ll establish how your patient will pay for any services rendered. 

As a provider, you can optimize this step by implementing transparent pricing policies and making use of automated insurance verification tools. Transparent pricing will help filter out patients who cannot afford your services, making your practice more efficient. Automated patient eligibility tools will let you know in real time whether a patient’s insurance will cover their treatment, saving time for your staff. 

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Step 2: Rendering Services and Capturing Charges 

After completing the patient intake paperwork and verifying insurance eligibility, a physical therapist is free to see the patient and render services. As you do this, it’s important to record everything through CPT and ICD codes so you can accurately capture the charges for compensation. 

Good medical billing software simplifies this step dramatically, allowing you to find and enter accurate codes quickly and easily. Some medical billing software will even perform claims scrubbing to ensure each claim is coded accurately. This helps free up your staff for other work while improving the chances that your claim is processed correctly. 

Step 3: Claims Submission 

With the claims properly coded and ready to go, it’s time to submit them for reimbursement. An electronic medical billing system makes this easy, as it’s often integrated right into the workflow and can be done with the press of a button.  

Improving your claims submission process is all about improving your first-pass or clean claims rate—that is, the percentage of claims that are accepted the first time. Choose a solution with claims scrubbing and an in-house clearinghouse to verify accuracy—the best solutions boast a clean claims rate of over 99%. 

Should a claim be denied, it’s essential to resubmit it as quickly as possible. This is a step that many practices simply neglect to take, resulting in unnecessarily lost revenue. Again, the right billing solution can help here by offering automated reminders and making corrections and resubmission a cinch. 

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Step 4: Payment 

Once a claim has been reviewed and approved by the insurer, your reimbursement will be on its way. In most cases your patient will still be responsible for an out-of-pocket cost, which is up to you to collect. The key here is to make it as easy as possible for the patient to pay you.  

Today, that means using an integrated billing solution that allows for online payments through a patient portal. This is far more convenient than requiring a mailed check or a phone call to exchange credit card information, and as such it makes it more likely for a patient to take care of a bill quickly. Automated billing reminders will help encourage prompt payments as well. 

Step 5: Data Reporting 

As the saying goes, you can’t improve what you don’t measure. Having all your relevant data in one place—a digital dashboard—is the best way to look at the measurements behind your practice’s success so you can start to improve upon them.  

For starters, you’ll be able to determine a baseline average for the length of your revenue cycle, how many patients you average per week, how many no-shows you average, and other important metrics. A good dashboard will let you dig into this data to generate detailed reports on your practice’s financial performance and find ways to improve them. 

As you look at the data, focus on each of the previous four steps outlined above. Improving an individual step is a much more manageable task than improving the whole billing cycle, but the results are the same—faster payments and more time back in your schedule.  

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Physical Therapy Billing Software  

The right software is key to unlocking the potential efficiency of your physical therapy billing cycle. You’ll want to find a software vendor that offers a comprehensive revenue cycle management suite, from automated insurance eligibility checks to easy online payments and detailed data reporting. 

CollaborateMD is just such a solution. We offer an all-in-one solution for physical therapy practices to streamline their revenue cycle and collect more money, faster. Our best-in-class clean claims rate of over 99% means that your claims are likely to be accepted the first time, every time. We offer customized, one-on-one training to help get your office up and running, and we don’t charge any setup fees or lock our updates behind paywalls.  

If you’re ready to see what makes CollaborateMD the choice of thousands of practices in our 20+ years of business, get in touch today

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