How to Prevent Underbilling in Physical Therapy Claims
Underbilling in physical therapy claims is a hidden revenue leak that many clinics overlook. While compliance concerns often focus on overbilling, underbilling quietly reduces reimbursement and impacts long-term profitability. One major factor contributing to lost revenue is incorrect application of the 8-minute rule, which determines billable units for time-based CPT codes. When treatment minutes are not properly calculated or documented, practices may unintentionally submit fewer units than allowed.
Preventing underbilling requires awareness, structured workflows, and accurate documentation aligned with payer guidelines.
What Causes Underbilling in Physical Therapy?
Underbilling happens when medically necessary services are delivered but not fully captured in the claim. Common causes include:
Incorrect unit calculations for timed CPT codes
Misapplication of modifiers such as GP or 59
Missed secondary CPT codes
Billing software configuration errors
Time-based codes like 97110 (therapeutic exercise), 97112 (neuromuscular reeducation), and 97140 (manual therapy) require precise time tracking. Even small miscalculations can reduce reimbursement significantly over time.
Another frequent issue is documentation gaps. If treatment notes fail to clearly separate services or justify medical necessity, billing teams may reduce units to avoid denials—leading to consistent revenue loss.
Strategies to Prevent Underbilling
Strengthen Coding Education
Regular training ensures therapists and billing teams understand timed vs. untimed codes, payer-specific rules, and correct modifier usage.
Improve Documentation Accuracy
Clear, detailed documentation should reflect total treatment time, skilled intervention, and measurable patient progress.
Implement Pre-Bill Audits
Internal claim reviews help identify missing units, incorrect CPT combinations, and modifier errors before submission.
Leverage Analytics and Denial Management
Tracking average units per visit, reimbursement trends, and adjustment patterns can reveal underbilling trends. Strong Denial management processes also uncover patterns where services are reduced or downcoded unnecessarily. Reviewing denials alongside billing data ensures maximum legitimate reimbursement.
Align Clinical and Billing Teams
Consistent communication between therapists and billing staff reduces missed charges and coding inconsistencies.
Financial Impact of Underbilling
Even missing one unit per day can create substantial annual losses. For example, if one unit averages $35 in reimbursement, missing just one unit daily can result in over $8,000 in lost revenue per therapist annually. Multiplied across a clinic, the financial impact becomes significant.
Frequently Asked Questions
1. What is underbilling in physical therapy?
Underbilling occurs when clinics fail to charge for all medically necessary services provided during a visit, often due to missed CPT codes or incorrect unit calculations.
2. What is the 8-minute rule?
It allows billing one unit of a timed CPT code for every eight minutes of qualified therapy service.
3. How can clinics prevent underbilling?
Through accurate documentation, correct modifier usage, internal audits, analytics monitoring, and proper claim review before submission.
Preventing revenue loss requires accuracy, oversight, and expertise in Physical therapy billing. With structured audits, proper documentation review, and proactive revenue cycle strategies, practices can strengthen financial performance while remaining compliant. Reenix Excellence supports clinics with specialized billing solutions designed to improve claim accuracy, optimize reimbursement, and protect long-term growth.
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