Understanding Billing Units in Physical Therapy: A Guide to the 8-Minute Rule

Did you know that billing units directly influence your clinic's financial health and the reimbursement you receive from insurance providers? When it comes to delivering physical therapy (PT) services, accurate billing is more than just a matter of administrative necessity—it’s the cornerstone of maintaining a sustainable practice and ensuring patient satisfaction. 

The shift from service-based to time-based billing, particularly with the implementation of the Medicare 8-Minute Rule, means accuracy in documentation is more important than ever. Minor errors in logging time can result in lost revenue, as even a single unit discrepancy might impact payment and negatively impact your AR cycles. 

Many healthcare practices have trouble with billing systems that don’t capture the complete details of physical therapy treatments, especially when combining assessments and detailed hands-on care. Using CPT codes correctly and carefully tracking time-based therapies becomes essential for accurate billing and avoiding mistakes. 

This article will help you understand billing units in physical therapy and calculate them using the 8-minute rule. It will also provide practical examples of Billing Units and Assessments to help you better envision the 8-minute rule. 

Billing Units in Physical Therapy: Importance and Guidelines

Following accurate coding and billing guidelines allows therapists to focus on delivering quality care without administrative setbacks. Proper billing for physical therapy is essential in the Physical Therapy system for several reasons. Let’s learn about the major reasons why Billing Units in Physical Therapy are important. 

• Compliance: Accurate billing ensures adherence to insurance and Medicare regulations, preventing claim denials and audits.
• Fair Compensation: Proper coding guarantees therapists are compensated correctly for their services.
• Legal Obligations: Compliance with regulations like HIPAA avoids legal consequences and penalties.
• Patient Trust: Transparent billing fosters trust and prevents cost disputes.
• Avoiding Financial Loss: Accurate billing prevents revenue loss due to under- or overcharging.
• Efficient Management: Streamlined billing reduces administrative time and improves cash flow.

Physical therapists must adhere to updated billing regulations from the American Medical Association (AMA) and the Centers for Medicare & Medicaid Services (CMS). These guidelines standardize billing practices, ensuring accurate reimbursement and reducing claim errors. Proper documentation and compliance with these rules help prevent denials and ensure fair compensation.

Guidelines from AMA and CMS for Billing Units

As of 2024, the American Medical Association (AMA) and the Centers for Medicare & Medicaid Services (CMS) provide specific guidelines for billing units in physical therapy. Key guidelines by AMA and CMS are shown below. 

AMA Guidelines:

• CPT Codes: Correctly apply CPT codes to document each specific service provided.
• Service-Based vs. Time-Based Billing Units: There are two types of Physical Therapy billing unit systems: Service-Based and Time-based codes. Specific CPT codes align with each unit type.
  • Service-Based: These units are billed per session, independent of time. Documentation confirms the service was completed without tracking a specific time.
  • Time-Based: Time-based units require precise time tracking and are billed in 15-minute increments according to the 8-minute rule, which will be discussed later.
• Documentation: Accurate documentation of service type, duration, and complexity is mandatory for supporting claims.

CMS Guidelines:

• Medicare 8-Minute Rule: Therapists must provide at least eight minutes of time-based service to bill for one unit per the Time-based services guidelines.
• Billing for Multiple Units: Therapists must document time spent on different treatments to avoid overlapping billing.
• Compliance with MIPS: For therapists participating in the Merit-Based Incentive Payment System (MIPS), there are additional quality and performance reporting requirements for reimbursement.
• Appropriate Use of Modifiers: The correct modifiers, such as Modifier 59, KX Modifier, GP Modifier, etc., indicate that the services are provided under a physical therapy care plan, which is important for Medicare billing.

Now that we know the basic AMA/CMS guidelines for billing accuracy and compliance, it's important to understand the types of billing units used in physical therapy. These units, categorized as service-based and time-based, form the foundation for measuring and charging for services, ensuring accuracy and adherence to insurance requirements.

What are the Types of Physical Therapy Billing Units? 

Billing units in physical therapy measure and charge for services provided to patients. They can be categorized into service-based and time-based billing units. Both types ensure accurate billing and compliance with insurance requirements. Here are the two types of Physical Therapy Billing Units. 

1. Service-Based CPT Billing Units

Service-Based Billing Units are billed per session or occurrence, regardless of the service's length. Examples include physical therapy evaluations and group therapy. These codes do not require time tracking.

For example,

• Application of Hot/Cold Packs (CPT 97010): Application of heat or cold therapy to reduce pain and inflammation.
• Mechanical Traction Therapy (CPT 97012): Use of mechanical force to relieve pressure on the spine.
• Electrical Stimulation, Unattended (CPT 97014): Electrical therapy applied without constant supervision for pain management.
• Orthotic Management and Training (CPT 97760): Fitting and training for orthotic devices.

These codes are billed per session without regard to time, covering common non-time-based therapy services.

2. Time-Based CPT Billing Units

Time-Based Billing Units require tracking the duration of therapy, typically in 15-minute increments, and follow the 8-minute rule. These codes are used for treatments like therapeutic exercises and manual therapy, where the time spent with the patient directly impacts billing.

For example, 

• Therapeutic Exercises (CPT 97110): Exercises aimed at improving strength, flexibility, and range of motion.
• Neuromuscular Re-Education (CPT 97112): Techniques to restore movement, balance, and coordination.
• Gait Training (CPT 97116): Exercises to improve walking and mobility after an injury or a neurological disorder. 
• Manual Therapy (CPT 97140): Hands-on therapy, such as joint mobilization and manipulation.
• Therapeutic Activities (CPT 97530): Dynamic activities that restore physical function and enhance daily living skills.

These codes are billed based on the time spent delivering treatment, typically in 15-minute increments using the 8-minute rule. 

Both types are essential for proper reimbursement and compliance with insurance regulations.

Basic Differences Between Service-based and Time-based CPT Codes

Understanding the differences between the two types of Billing units helps avoid claim denials, billing errors, and financial losses while improving documentation and maintaining smooth practice operations for physical therapists.

It's essential to grasp the basic variations between service-based and time-based CPT Billing Units to ensure accurate billing and maximize reimbursement. 

Understanding the 8-Minute Rule is essential for accurate billing for time-based services. This rule ensures that physical therapists are fairly compensated for the time spent on treatments and plays a crucial role in time-based billing.

What is the 8-Minute Rule?

The 8-Minute Rule is a guideline used in physical therapy for billing time-based services. It applies to treatments billed in 15-minute increments, ensuring therapists are compensated for the exact time spent on a service. 

Medicare introduced the 8-minute rule in 1999 and made it fully functional in 2000. This rule standardized how physical therapy services are billed when using time-based CPT codes. 

According to the rule:

Units Number of Minutes

• 1 unit: ≥ 8 minutes through 22 minutes
• 2 units: ≥ 23 minutes through 37 minutes
• 3 units: ≥ 38 minutes through 52 minutes
• 4 units: ≥ 53 minutes through 67 minutes
• 5 units: ≥ 68 minutes through 82 minutes
• 6 units: ≥ 83 minutes through 97 minutes
• 7 units: ≥ 98 minutes through 112 minutes
• 8 units: ≥ 113 minutes through 127 minutes

The pattern remains the same for treatment times more than 2 hours.

Each additional unit is billed for every 15-minute block, starting from 8 minutes within that block. For example, a 35-minute session would be billed as 2 units, and a 50-minute session would be billed as 3 units.

Also Read: The Medicare's 8-Minute Rule: A Comprehensive Guide

This rule ensures accuracy in billing and prevents underbilling or overbilling for services. Medicare and many private insurers widely use it. Proper application is key to accurate reimbursement.

Check out this Video for a visual breakdown of the 8-minute rule for physical therapy billing- 8-Minute Rule for Physical Therapy Billing. 

This video helps us understand the intricacies of time-based CPT coding and calculating units effectively. Credit goes to Etactics, established in 1999, offering innovative revenue cycle management and compliance solutions for healthcare companies.

Calculating Billable Units

Billable units in physical therapy refer to the units of time or service that can be charged to insurance or a patient for treatment. They are calculated based on the time spent on time-based services, with each unit typically representing a 15-minute block, following the 8-minute rule. 

Steps for Calculating Billable Units Under the 8-Minute Rule:

1. Total the Minutes: Add time spent on all time-based services during the therapy session.
2. Identify the Time Blocks: Divide the total time into 15-minute blocks using the 8-minute rule (each unit is 8-22 minutes).
3. Assign Units: Allocate one unit for every 15-minute block, ensuring that services lasting 8 minutes or more can be billed for at least 1 unit.
4. Avoid Overlap: Make sure each time-based service is distinctly documented, with no overlapping times.

Using Total Treatment Time and Dividing By 15

When calculating billable units using the total treatment time, you divide the time spent on time-based services by 15-minute increments. According to the 8-minute rule, one unit is billed for 8-22 minutes of therapy. 

For instance, if the total treatment time is 30 minutes, divide by 15, giving two full 15-minute units. If the total is between 8 and 22 minutes, bill for 1 unit, and for 23-37 minutes, bill for two units, and so on. This ensures proper and accurate billing.

Suggested Read: Guide to Medicare's 8-Minute Rule

Handling Remainder Minutes for Additional Units

When handling remainder minutes for additional units under the 8-Minute Rule, if you have leftover time after calculating full 15-minute blocks, you can bill an additional unit if the remainder is 8 minutes or more. 

For example, if you have 38 minutes of total therapy, you can bill 2 full units (30 minutes), and the remaining 8 minutes qualify for an additional unit, resulting in 3 units total. If the remainder is less than 8 minutes, it is not billable.

Platforms like SPRY offer automated coding, precise time tracking, and seamless integration with Medicare’s 8-Minute Rule, reducing administrative burdens and improving billing accuracy. This ensures therapists focus on patient care while maximizing reimbursements. Book a Demo! 

Practical Billing Unit Examples

Real-world scenarios help therapists avoid errors in coding, ensure proper reimbursement, and stay compliant with insurance guidelines. By seeing how time and services translate into billable units, therapists can better manage treatment time and optimize billing accuracy. Let’s understand this better with a few practical examples. 

A Physical Therapy Example

Let’s say a patient is recovering from rotator cuff tendinitis, a condition characterized by inflammation of the rotator cuff tendons, causing pain and restricted shoulder movement.

In a 40-minute session, if 20 minutes are spent on therapeutic exercise (CPT 97110) and 20 minutes on manual therapy (CPT 97140), the therapist can bill 2 units for each service. This ensures accurate billing for time-based services following the 8-minute rule.

An example could look like this: 

An Occupational Therapy Example

A patient recovering from lower limb amputation is receiving occupational therapy to help adapt to a prosthetic limb and regain independence.

In a 45-minute occupational therapy session, 25 minutes are spent on prosthetic training (CPT 97761) and 20 minutes on self-care training (CPT 97535). According to the 8-minute rule, this session would be billed as two units for prosthetic training and 1 unit for self-care training, as the total time aligns with the rule for time-based services. 

Practical examples like this help occupational therapists accurately document time, avoid underbilling or overbilling and ensure compliance with insurance requirements.

An example of an Occupational Therapy Bill could look like this:

A Speech-Language Pathology Example

A patient with traumatic brain injury is undergoing a 50-minute session with a speech-language pathologist (SLP) to improve cognitive function and assess performance.

In a 50-minute session, 30 minutes are spent on cognitive intervention (CPT 97129) and 20 minutes on performance testing (CPT 96125). According to the 8-minute rule, this would be billed as two units for cognitive intervention and 1 unit for performance testing. 

Practical billing examples like this are vital to ensure that time is accurately documented and billed. They help speech-language pathologists avoid errors and ensure they are properly reimbursed for the services provided.

An example of Speech-Language Pathology:

To accurately bill for sessions involving mixed services, it’s also essential to understand how to apply both the 8-minute rule and the Substantial Portion Methodology. This ensures that each service is billed appropriately without overlap, maximizing reimbursement and maintaining compliance. Now, let's explore how this methodology works in real-world scenarios. 

Mixed Remainders and Substantial Portion Methodology

Mixed Remainders occur when multiple services are provided in one session, each with different time lengths. The Substantial Portion Methodology helps ensure accurate billing to handle these remainders.

• Mixed Remainders: If there are leftover minutes for different services, you apply the 8-minute rule separately.
• Substantial Portion: When the remainder exceeds 8 minutes for any service, it's considered billable as an additional unit. Less than 8 minutes is non-billable.

This approach ensures proper reimbursement for multi-service sessions.

Example Scenarios for Mixed Remainders

Scenario 1: Let’s say a patient is recovering from a frozen shoulder (adhesive capsulitis), a condition that restricts shoulder mobility and causes pain. Here's how the billing could work. 

A physical therapist spends 18 minutes on therapeutic exercises (CPT 97110) and 22 minutes on manual therapy (CPT 97140). Following the 8-minute rule:

• Therapeutic exercises: 1 unit (8-22 minutes).
• Manual therapy: 1 unit (8-22 minutes).
• Total billable units: 2 units.

Even though there's no remaining time for additional units, each service qualifies for 1 billable unit.

Scenario 2: In a 52-minute session, 25 minutes is spent on neuromuscular re-education (CPT 97112) and 27 minutes on gait training (CPT 97116):

• Neuromuscular re-education: 2 units (23-37 minutes).
• Gait training: 2 units (23-37 minutes).
• Total Billable Units: 4 units.

Both services require substantial time to bill for additional units.

Substantial Portion Methodology (SPM) vs. 8-Minute Rule

• 8-Minute Rule: This rule allows billing for one unit if a time-based service lasts 8 to 22 minutes. Additional units are billed for every 15-minute increment based on time spent.
• Substantial Portion Methodology (SPM): This method focuses on the dominant service time. If the remaining treatment time exceeds 50% of a 15-minute increment (i.e., 7.5 minutes or more), it's billed as an additional unit, even if it doesn’t meet the 8-minute threshold.

While the 8-minute rule is widely used (e.g., by Medicare), SPM can apply in certain non-Medicare contexts.

Incorporating Assessment and Management Time

When calculating billable units in physical therapy, it’s important to include assessment and management time within time-based services. This includes the time spent evaluating the patient’s condition, modifying the treatment plan, and educating the patient on the therapy.

• Assessment time: Involves evaluating the patient’s progress and needs.
• Management time: Involves activities like documenting and adjusting treatment plans.

Both should be recorded as part of the total treatment time and can contribute to the units billed under the 8-minute rule.

Activities That Count Towards Billable Time

Activities that count towards billable time under the 8-minute rule and for time-based CPT codes include:

• Direct treatment: Hands-on therapy such as manual therapy, therapeutic exercises, or neuromuscular re-education.
• Patient education: Explaining exercises, self-care techniques, or therapy goals.
• Assessment and management: Time spent assessing patient progress and adjusting treatment plans.
• Therapeutic activities: Guided movements to improve functional abilities, like balance or mobility exercises.

Non-treatment activities like scheduling or documentation do not count towards billable time.

Examples of Assessment and Management Activities

Examples of assessment and management activities that count toward billable time in physical therapy include:

1. Reassessing progress: Evaluating how a patient is responding to treatment, such as measuring range of motion or strength.
2. Modifying treatment plans: Adjusting exercises or therapy techniques based on the patient's current status or goals.
3. Explaining treatment goals: Educating the patient on specific exercises or therapies' purpose and expected outcomes.
4. Documenting findings and updates: This involves noting patient progress and any necessary adjustments in the treatment plan, which is done concurrently with patient care.

Ensuring Accurate and Defensible Documentation

Ensuring accurate and defensible documentation in physical therapy is crucial for legal, compliance, and billing purposes. Here are key strategies:

1. Thorough Documentation: Record patient assessments, treatment rationale, and detailed progress.
2. Specificity: Use precise language to describe treatments, patient responses, and adjustments made during sessions.
3. Compliance with Guidelines: Follow Medicare, insurance, and HIPAA regulations to ensure correct coding and privacy compliance.
4. Time Tracking: Accurately document time spent on each service, adhering to the 8-minute rule and applicable billing guidelines.
5. Legibility and Organization: Ensure all notes are clear, organized, and accessible for audits or reviews.

How does SPRY PT Help Streamline Billing Units in Physical Therapy?

1. Automated Billing Workflows:

SPRY PT automates the entire billing process, including claim submission, eligibility verification, and denial management. This automation reduces manual effort, minimizing errors and speeding up reimbursements by up to 40%.

2. Error Reduction:

The AI-driven rule engine with SPRY PT flags incorrect CPT codes and ensures compliance with payer-specific regulations. This reduces the risk of claim denials and helps clinics maintain a higher claim approval rate.

3. Real-Time Financial Insights:

SPRY PT's unified revenue dashboard offers real-time tracking of pending payments and comprehensive reporting on financial performance. This empowers clinics to make data-driven decisions to optimize revenue and improve cash flow.

4. Enhanced Efficiency:

By cutting down administrative tasks by 55%, SPRY PT allows clinic staff to focus more on patient care rather than paperwork, improving overall productivity and operational efficiency by 40%.

5. Seamless Integration:

SPRY PT integrates smoothly with existing Electronic Medical Records (EMR) systems, ensuring data accuracy across billing and patient care workflows. This eliminates duplicate data and enhances overall operational performance.

By adopting SPRY PT’s integrated billing solution, physical therapy clinics can streamline their billing processes, reduce errors, improve cash flow, and focus more on delivering quality patient care.

Conclusion

Accurate billing ensures proper reimbursement and compliance while reducing errors in physical therapy. Digital solutions help you automate time tracking, CPT code usage, and documentation to prevent claim denials. By automating tasks like the 8-minute rule and staying updated on payer requirements, you can focus more on patient care. 

Platforms like SPRY streamline physical therapy billing and reimbursement by automating complex processes like time tracking, CPT coding, and documentation. They ensure compliance with regulations like the 8-minute rule, reduce errors and maximize reimbursement. With SPRY, practices can manage billing efficiently, reducing administrative burdens while improving cash flow and claim accuracy. Book a Demo!