Medicare vs AMA Billing Guidelines

Medicare vs. AMA Billing GuidelinesOver the past several weeks in my private chats with readers, I have noticed that there is some confusion about billing guidelines. Medicare has billing guidelines and the AMA, American Medical Association, who is responsible for publishing the cpt, common procedural terminology, code book also has billing guidelines. The goal of this Compliance Chat is to try to explain the two.

Medicare Billing Guidelines: AKA the 8 minute rule. The 8 minute rule appears very simple but can be devilishly complicated. Medicare billing guidelines apply to all insurances that accept Federal funding i.e. Medicare, Medicaid, Medicare Advantage Plans, TriCare, CHAMPUS, etc. Medicare uses the AMA cpt definitions of the procedural codes and the codes are divided into time based codes (constant attendance) and visit based codes (supervised). What the 8 minute rule says, is in order to charge for a procedure, that procedure must be performed for at least 8 minutes. This seems simple enough except there is cumulative component to calculating charges under Medicare. You must add up all the time based code minutes to determine how many units you can charge. 1 unit of time based charge = 15 minutes. It looks like this:

  • 0 - 7 minutes = 0 units
  • 8 - 22 minutes = 1 unit
  • 23 - 37 minutes = 2 units
  • 38 - 52 minutes = 3 units
  • 53 - 67 minutes = 4 units and so on.

To calculate your charges under the Medicare 8 minute rule you would add up all your time based minutes to determine how many time based units to charge, then apply your visit based units also. 

AMA cpt Billing Guidelines: Page xii of the AMA cpt code book defines "Time". "Time is the face to face time with patients." Also defined in that section is: "A unit of time is attained when the mid-point is passed." The time associated with a procedure is in the definition of the procedure, for example: Therapeutic Exercise 97110 = 15 minutes. So under these guidelines, you still have to provide at least 8 min of a time based procedure before you can bill for 1 unit. The part that is different from the Medicare Billing Guidelines is under the AMA cpt Billing Guidelines, there is no cumulative part. So under what circumstances do the AMA guidelines apply? To determine which billing guideline to use, you will need to check with each individual insurer. When you sign a contract to participate with an insurance company you usually receive or create a password for their website. You would use your password on the website to access the medical policies for that insurer and in the medical policies you will find which billing guideline applies.

Let's look at an example to compare how the Medicare Billing Guideline and AMA Billing Guideline would apply:

A patient was seen in your clinic for their initial appointment and you performed a Physical Therapy evaluation 97001 for 30 minutes, 33 min of therapeutic exercise 97110, 5 min of ultrasound 97035, and 15 min of Electrical Stimulation Unattended 97014/G0283.

Under the Medicare 8 minute rule: there are 38 minutes of time based charges and 2 visit charges. Because there are 38 minutes of time based charge you are allowed to bill 3 units for these procedures. With 33 minutes of Therapeutic Exercise, you are required to bill 2 units of 97110 because there are 2 full 15 minute units (30 minutes with 3 minutes left over). Ok, that's 2 units out of 3, where is the additional unit coming from because you have 3 minutes of Therapeutic Exercise and 5 minutes of Ultrasound. Medicare allows you to compare the remaining minutes of  time based procedures and bill the larger of the two procedures. So 5 is greater than 3 which makes Ultrasound the remaining time based charge. The correct charge under the Medicare Billing Guidelines is 1 unit of Physical Therapy evaluation 97001, 2 units of therapeutic exercise 97110, 1 unit of ultrasound 97035, and 1 unit of electrical stimulation unattended G0283 (Yes, Medicare has a different cpt code for Electrical Stimulation Unattended).

Under the AMA Billing Guideline, there is no cumulative aspect to computing the correct charge. 33 minutes of therapeutic exercise is still 2 units. The 3 min left over of therapeutic exercise does not meet the requirement of exceeding the halfway point of the procedure so you cannot bill a third unit of 97110. The 5 minutes of ultrasound also does not meet the requirement of exceeding the halfway point of that procedure so you cannot bill for ultrasound. So the correct charge under the AMA billing guideline is 1 unit of Physical Therapy Evaluation, 2 units of Therapeutic Exercise, and 1 unit of Electrical Stimulation unattended 97014. 

The key is to know how to apply the billing guidelines and to know which billing guideline the insurers with whom you participate use. Non-compliance with the correct billing guideline is a major compliance issue these days in Physical Therapy. We will look at billing for qualified and non-qualified "Incident to" situations in the coming weeks. 

Tags: CPT Codes