April 5, 2024

How PTs Can Avoid Overbilling, Misbilling, and Underbilling

For physical therapy professionals and practice owners, the triad of billing blunders—overbilling, misbilling, and underbilling—presents a formidable challenge, potentially undermining both the financial health of practices and the trust of patients. 

This article aims to unravel these complexities, offering insights and strategies on how to avoid billing mistakes effectively, ensuring accuracy, compliance, and optimized revenue.

Understanding the Billing Blunders

  • Overbilling occurs when services are billed at a higher rate than performed or more services are billed than provided. It's intentional and can lead to severe legal repercussions and damage to the practice's reputation.
  • Misbilling is often the result of errors in coding, documentation, or data entry. Although typically accidental, it can lead to claim denials, audits, and financial losses.
  • Underbilling, the focus of our discussion, involves billing for fewer services or lower-cost services than were actually provided. It's usually unintentional but results in significant revenue loss for practices.

Each of these billing issues can have profound implications, not just financially but also in terms of compliance and patient trust. Thus, understanding the guidelines developed to prevent incorrect billing is crucial for every physical therapy practice.


Overbilling is an intentional deviation from ethical billing that attracts regulatory attention and damages the reputations of the practices involved. This section delves into the mechanisms of overbilling, illustrating its forms and furnishing strategies to avert such practices.

Factors That Cause Overbilling

Overbilling manifests primarily through three nefarious tactics, each designed to illicitly inflate reimbursement:

  • Upcoding: This involves billing for more expensive services or diagnoses than those actually provided or warranted. For instance, billing for therapeutic activities with a higher reimbursement rate instead of gait training actually performed, capitalizing on the differential in payment rates.
  • Overcharging: This tactic entails billing for more units of service than were delivered or adding codes for services not rendered at all.
  • Utilization Abuse: Characterized by scheduling unnecessary visits or providing superfluous services, this practice overburdens the healthcare system but also unjustly increases patient charges.

How to Avoid Overbilling

Recognizing overbilling's intentional nature is the first step towards its eradication. It necessitates a conscious commitment to ethical practice, ensuring that every billed service is medically necessary and accurately reflects the care provided. Here's how to safeguard your practice against overbilling:

1. Adherence to Medical Necessity: Billing should strictly correspond to services deemed medically necessary for the patient's condition, following a thorough evaluation by a licensed physical therapist. The American Physical Therapy Association (APTA) outlines several criteria for medical necessity, including the minimization of impairments, the provision of care under a PT's supervision, and the application of evidence-based practices.

2. Educational Initiatives: Equip your team with the knowledge and tools to accurately document and bill services. This includes understanding the scope of medically necessary services and the appropriate use of billing codes.

3. Implementing Robust Billing Software: Utilize advanced billing software that facilitates accurate code entry, tracks services provided, and flags potential discrepancies before claims are submitted.

4. Regular Billing Audits: Conduct periodic audits of billing practices to identify and rectify patterns of overbilling or other inaccuracies, fostering a culture of continuous improvement and accountability.

5. Transparent Communication: Maintain open lines of communication with patients regarding their care plans and associated costs, ensuring transparent and justified billing practices.

6. Professional Development
Encourage ongoing professional development in ethical billing practices, keeping abreast of regulatory changes and payer requirements to mitigate overbilling risks.





Misbilling, a term that encompasses a range of errors from manual inaccuracies to timing oversights, is a pervasive challenge in physical therapy billing. It typically arises when practices fail to identify all billable codes, do not code to the highest level of specificity, or create claims that are not "clean."

The consequences of misbilling can significantly impact a practice's financial health, often manifesting as an elevated denial rate—a key indicator that your practice might be grappling with misbilling issues. Specifically, practices experiencing a denial rate above 4% should scrutinize their billing processes for signs of misbilling.

Identifying the Root Causes of Misbilling

Misbilling can occur in several forms, including:

  • Failure to Identify All Billable Codes: Not capturing every billable service translates directly into revenue loss for your practice. Documentation accuracy is crucial here, as it underpins the ability to identify all billable codes accurately.
  • Lack of Specificity in Coding: With the advent of ICD-10, diagnosis codes have become increasingly critical for claim reimbursement. A generic coding approach can lead to claim rejections or underpayments.
  • Creation of Unclean Claims: Several factors can render a claim "unclean," such as inaccurate place of service codes, missing prior authorization, mismatched totals, coding errors, or the use of outdated CPT codes.

These issues highlight the complexity of billing in the physical therapy domain and underscore the necessity of meticulous documentation and coding practices.

How to Avoid Misbilling

To combat misbilling and its detrimental effects on your practice, consider the following actionable strategies:

1. Conduct Internal Billing Audits: Regularly reviewing documentation, coding, and claims creation processes can help identify and rectify billing errors. Scrutinize denied claims to understand the underlying reasons for denial and address those specific issues.

2. Leverage Billing Software or Services: Adopting specialized billing software or services can streamline your billing processes, reducing errors associated with manual input and oversight. If your current billing solution is not effectively preventing misbilling, it may be time to explore other options that offer more robust error detection and correction capabilities.

3. Educate and Align Your Team: Ensuring that your billing and clinical staff are aligned in their understanding of billing processes and the importance of accurate documentation is crucial. Regular training sessions can keep your team updated on the latest billing practices and compliance requirements.

4. Thoroughly Review Denied Claims: With a significant percentage of denied claims never being appealed or resubmitted, it's essential to closely examine each denial. Payers can make errors, and overlooking these mistakes can cost your practice dearly. Implementing a denial management system and designating a team member to handle appeals can improve your practice's response to denials.



Underbilling represents a substantial yet often overlooked challenge. It emerges primarily from a lack of comprehensive understanding of billing rules, such as the 8-Minute Rule and the rule of eights, which govern Medicare and commercial insurance reimbursements, respectively. 

Therapists can inadvertently fail to bill for all services provided due to this knowledge gap. To combat underbilling and ensure practices are compensated fairly for every service rendered, it's essential to delve into the nuances of these rules and employ strategies that foster accurate billing.

Understanding the 8-Minute Rule and the Rule of Eights

The 8-Minute Rule, a cornerstone of Medicare reimbursement for rehab therapy, stipulates that therapists can bill for a unit of service if they provide a direct treatment for at least eight minutes. This rule is crucial for maximizing billing with Medicare patients, yet it also introduces complexities when it comes to billing for partial units or combining services to form billable units.

For instance, a scenario may arise where a therapist has five minutes of therapeutic exercise (97110) and three minutes of neuromuscular re-education (97112) left over after allocating time to other services. Under the 8-Minute Rule, these leftover minutes can be combined into one unit, provided they collectively reach the eight-minute threshold, and billed accordingly. This ensures that all service time, even in fragments, contributes to the total billed units.

The Rule of Eights, on the other hand, applies to commercial insurances adhering to the American Medical Association's CPT coding rules. It operates on the Substantial Portion Methodology (SPM), which dictates that a unit of service must be performed for a substantial portion of 15 minutes—specifically, at least eight minutes—to be billable. 

Unlike Medicare's 8-Minute Rule, the rule of eights does not permit the combination of minutes from different services to reach a billable unit. This can lead to underbilling if therapists are not meticulous in planning and documenting their treatment sessions to ensure each service meets the eight-minute minimum for billing.

How to Avoid Underbilling

To mitigate the risk of underbilling and secure rightful compensation, physical therapy practices should adopt the following strategies:

1. Educate Staff: Ensure that all therapists and billing personnel are thoroughly trained on the 8-Minute Rule and the rule of eights, including their applications and implications for billing. Regular workshops and updates on these rules can help keep your team informed and compliant.

2. Utilize Billing Software: Implementing intuitive physical therapy software that automatically tracks treatment times and applies the correct billing rules can significantly reduce underbilling. Look for software that offers alerts for potential underbilling scenarios and assists in optimizing the allocation of treatment minutes.

3. Conduct Regular Billing Audits: Periodically review billing records to identify patterns of underbilling. Audits can reveal common mistakes and areas for improvement, allowing practices to adjust their billing processes and documentation practices accordingly.

4. Leverage Documentation Templates: Use documentation templates that align with billing requirements, ensuring that every service is accurately recorded and billed. Templates should facilitate detailed recording of treatment times and services, aligning with the 8-Minute Rule and the rule of eights.

5. Optimize Treatment Planning: Strategically plan treatment sessions to maximize billable units under both the 8-Minute Rule and the rule of eights. For example, organizing a session to include multiple services, each lasting at least eight minutes, can enhance billing efficiency and revenue.

Bottom Line

In the intricate world of physical therapy billing, accuracy is key to financial health and regulatory compliance. PtEverywhere emerges as the premier solution for navigating the challenges of underbilling, overbilling, and misbilling. With its intuitive design, comprehensive billing features, and robust documentation capabilities, PtEverywhere ensures that every minute of care is accurately captured and billed according to the latest guidelines. 

Embrace PtEverywhere to empower your practice with the tools needed to optimize billing processes, safeguard revenue, and maintain the highest standards of care. Ready to transform your billing practice?

Discover how PtEverywhere can revolutionize your workflow today for free.