June 7, 2023 | Net Health

3 Minute Read

What You Need to Know to Avoid Medicare 8-Minute Rule Mistakes

When it comes to coding and billing guidelines for Medicare, the instructions are quite specific. From service-based billing codes to time-based billing codes — and the anticipated Medicare 8-Minute Rule — proper documentation is crucial to receive payment from Medicare for direct treatment.

Unfortunately, most practice management software does not account for the intricacies surrounding rehab therapy billing, including thorough documentation of time-based treatment and time spent assessing a patient.

Learn about the latest in ICD-10 Codes in 2023: An Essential Guide for Rehab Therapists

Today, we’re sharing our top tips to avoid Medicare 8-Minute Rule mistakes and receive proper compensation for completed services.  

But first…

What is Medicare’s 8-minute rule?

The 8-minute rule is a billing practice implemented by Medicare that has a substantial impact on physical therapy and outpatient services. Understanding the 8-minute rule is vital for any physical therapy practice, as it significantly affects the calculation of billable units, documentation requirements, and overall reimbursement.

The 8-minute rule can be described as Medicare’s method of determining how many billable units can be charged for time-based services during a single patient visit. The rule states that a rehab therapist must provide at least 8 minutes of a service to bill for one unit of that service.

As such, the 8-minute rule directly influences how physical therapists bill for their services, including therapeutic exercise and manual therapy.

The 8-minute rule was introduced in the year 2000 and is utilized by outpatient services, allowing a rehab therapy practitioner to bill for services as long as they see their patient for at least eight minutes.

When billing for physical therapy outpatient services, Medicare only allows services to be billed in 15-minute increments, but with the 8-minute rule, a physical therapist can bill for a 15-minute unit, even if they only saw the patient for eight minutes.  

Intricacies of the 8-Minute Rule

Let’s delve deeper into the intricacies of the 8-minute rule. For a physical therapist to bill a single billable unit, they must provide at least 8 minutes of a particular service. For instance, if a therapist performs 8 minutes of manual therapy, they can bill one unit for that service.

As the duration of the service increases, so does the number of billable units. For example, if a therapist provides 23 minutes of therapeutic exercise, they can bill for two units, while 38 to 52 minutes equates to three billable units.

It’s important to understand that the 8-minute rule applies to individual services and the total time of service, determining how many billable unites a PT may bill Medicare for. In a situation where multiple time-based services are provided in one visit, like therapeutic exercise and manual therapy, the total minutes need to be added up.

If the total is at least 8 minutes, the therapist can bill for one billable unit, but each service must also meet the 8-minute rule individually to be billed separately.

Documentation of the 8-Minute Rule

The 8-minute rule plays a crucial role in the documentation of physical therapy services. Accurate recording of the minutes spent on each service is necessary to determine the correct number of billable units.

Rehab therapists need to ensure they correctly document the minutes of manual therapy and other time-based services. If the minutes of manual therapy or other services aren’t accurately recorded, it could lead to incorrect billing and potential issues with Medicare. Its best not to think in terms of total minutes, but instead in number of billable units.

Providing therapy via exercise is a common service in physical therapy that falls under time-based services. If a therapist provides 12 minutes of therapeutic exercise, they can charge Medicare for one billable unit. If the therapeutic exercise extends to 23 minutes, two units can be billed.

However, if the time spent on exercise is under 8 minutes, it cannot be submitted as a separate billable unit according to the 8-minute rule. This is often the culprit of billing errors. If you are going to be billing medicare, best to make sure you’ve followed the guidelines in order to get reimbursement.

Using Service-Based vs. Time-Based Billing Codes

Medical billing codes are used to report therapeutic, surgical, and diagnostic procedures and services. In rehab therapy, we use these codes to bill physicians, private health insurance companies, and federal health insurance companies, such as Medicare, for our services.

Across physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP), there are two types of billing codes we can use: service-based units and time-based units.

What are Service-Based Codes?

Service-based (or untimed) codes indicate a physical therapy or outpatient procedure has been provided, and bill Medicare for services such as:

  • Physical therapy evaluation — 97161, 97162, or 97163
  • Patient re-evaluation — 97164
  • Hot/cold packs — 97010

After delivering service-based treatment, therapists can only bill for one code, regardless of how long was spent providing treatment. 

What are Time-Based Codes?

Time-based codes are a bit different. Also known as “constant attendance” codes, time-based codes are billed in 15-minute increments. So, a provider is compensated for the direct amount of time spent delivering the service. 

We use a time-based code to bill for services such as: 

  • Therapeutic exercise — 97110
  • Manual therapy — 97140
  • Ultrasound — 97035
Physiotherapist treating patient in relation to Medicare's 8-minute rule

Why is the Medicare 8-Minute Rule is Crucial for Billing? 

Unlike a service-based code, a time-based code relies on the actual time spent with a patient. This caveat is especially important when billing Medicare. For time-based codes, providers must issue direct treatment for at least eight minutes to receive reimbursement. 

When calculating the number of billable units for a patient, Medicare adds the total minutes of dedicated, one-on-one therapy, and divides the sum by 15. If eight or more minutes are leftover, providers can bill for one more unit. However, if seven or fewer minutes remain, we cannot bill an additional unit. 

Imagine if we provided 54 minutes of various rehab therapy. Medicare would divide 54 by 15, and quantify that time as three whole units with nine remaining minutes. Because more than eight minutes remain, we can bill Medicare an additional unit. 

If we had provided 51 minutes of therapy, Medicare would quantify that time as three whole units and six remaining minutes. Therefore, we could only bill for three time-based codes.

Can Assessment and Management Time Apply Toward the 8-Minute Rule?

One of the most common trends we see in rehab therapy billing is the omission of assessment and management time. However, billing codes are meant to report all therapeutic and diagnostic procedures and services, which include but aren’t limited to:

  • Assessing the patient prior to performing a service
  • Answering patient and/or caregiver questions
  • Instructing the patient on-at-home self-care
  • Documenting treatment throughout an appointment

Assessment and management are essential components of the patient plan of care (POC) and deserve to be included in our services rendered. We must accurately document all processes to ensure they are defensible if you plan to apply this time toward the Medicare 8-Minute Rule.

In other words, documentation should be detailed, accurately describe the service, defend the clinical reasoning behind the treatment, and be easily understood by another provider.

When a healthcare provider can confidently describe and defend the minutes spent assessing and managing a patient, Medicare may green-light the extra minutes — resulting in more complete, billable units.

Conclusion of Medicare’s 8-Minute Rule

In conclusion, the 8-minute rule is a pivotal aspect of physical therapy billing and documentation. It directly influences the calculation of billable units and the documentation of time-based services, such as therapeutic exercise and minutes of manual therapy.

A thorough understanding of the 8-minute rule is crucial for physical therapists in clinics, hospital outpatient and inpatient acute settings to ensure accurate billing and compliance with Medicare’s billing guidelines.

Billing Medicare is one of the more intricate tasks in rehab therapy. 

Learn how Net Health’s Rehab Therapy Software for Hospital Outpatient Clinics, Acute Care, and Private Practice can help improve thorough documentation for service-based and time-based billing codes, so teams can receive proper compensation for direct treatment.

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