• Home
  • 2014-09-September

A Medley of Compliance Questions

By Mary R. Daulong, PT, CHC, CHP

Q: Does Medicare require all outpatient therapists, billing Part B, to be enrolled in Medicare and to have a Medicare Provider Transaction Access Number (PTAN)?

A: Yes, I believe that Medicare mandates that a physical therapist be enrolled in the Federal Program when billing Part B Medicare. The rationale for my “yes” is based on the following regulations:

Therapist refers only to a qualified physical therapist, occupational therapist, or speech-language pathologist. TPP refers to therapists in private practice (qualified physical therapists, occupational therapists, and speech-language pathologists).

To qualify to bill Medicare directly as a therapist, each individual must be enrolled as a private practitioner and employed in one of the following practice types: an unincorporated solo practice, unincorporated partnership, unincorporated group practice, physician/NPP group or groups that are not professional corporations if allowed by state and local law. Physician/NPP group practices may employ TPP if state and local law permits this employee relationship.1

For purposes of this provision, a physician/NPP group, practice is defined as one or more physicians/NPPs enrolled with Medicare who may bill as one entity. For further details on issues concerning enrollment, see the provider enrollment Website at www.cms.hhs.gov/MedicareProviderSupEnroll and Pub. 100-08, Medicare Program Integrity Manual, chapter15, section

This CMS Program Integrity Manual specifies the resources and procedures Medicare fee-for-service contractors must use to establish and maintain provider and supplier enrollment in the Medicare program. These procedures apply to carriers, fiscal intermediaries, Medicare administrative contractors, and the National Supplier Clearinghouse (NSC), unless contract specifications state otherwise.

No provider or supplier shall receive payment for services furnished to a Medicare beneficiary unless the provider or supplier is enrolled in the Medicare program. Further, it is essential that each provider and supplier enroll with the appropriate Medicare fee-for-service contractor.2

Q: Is it true that Medicare is using a Fraud Prevention System (FPS) to identify aberrant billing by providers and suppliers? If so, how do I know what they consider aberrant?

A: Yes, Medicare introduced this system about three years ago, and it has been very successful. The system allows Medicare to identify atypical or aberrant billing behavior. This predictive analytic technology is used to identify the highest risk claims for fraud, waste, and abuse in real time; and it stopped, prevented, or identified $115 million in payments, resulting in an estimated $3 for every $1 spent in its very first year.

A few examples of aberrant billing that would could be identified by the FPS for therapists are:

  • Redundant coding (e.g., using the same code sets for each date of service and/or for all patients regardless of their diagnosis)
  • Excessive use of the therapy cap exceptions (exceeding the peer average with no evidence of co-morbidities or complexities to justify the coding behavior)
  • Billing up to the therapy cap and never attesting to a therapy cap exception need
  • Abnormally high units of service under one National Provider Idenitifier (NPI)
  • Abnormally high billing with Advanced Beneficiary Notices (ABNs) noting “not medically necessary or statutorily non-covered services”
  • Disregard of Local Coverage Determination requirements and/or restrictions

Q: I know one of the seven recommended elements of a Compliance Program is monitoring and auditing. What should I be monitoring and auditing?

A: You are very prudent to be concerned about the “monitoring and auditing” element of a Compliance Program as this is how you prove its effectiveness. Compliance Programs are dynamic and require regular monitoring to determine if a policy, procedure, or process is current and reflects present day regulations. Many practitioners use a question process which, while revealing, can be less than comprehensive. Questions such as:

  • Is there a risk of internal fraud or theft?
  • Is there a risk of a protected health information (PHI) breach?
  • Is there a risk of hiring a person who is excluded from providing services to federal beneficiaries?
  • Is there a risk of exposing an employee to Bloodborne Pathogens?
  • Is there a risk of filling inaccurate or fraudulent claims?
  • Is there a risk of non-compliance with federal and/or state supervisory requirements?
  • Is there a risk of a patient abandonment claim?
  • Is there a risk of patient and/or staff harm due to a fire in the facility?

A risk assessment is a more thorough method to monitor effectiveness. The risk assessment is often divided into regulatory categories so it can be managed in separate time frames. These categories, typically, have many subsections which identify specific requirements or risk areas associated with the regulations; the detail of this method assists in the monitoring or auditing process. An example of some regulatory categories would be:

  • Fraud & Abuse
  • Office of the Inspector General List of Excluded Individuals & Entities
  • Payor Regulations
  • Human Resources/Labor Law

Health Insurance Portability and Accountability Act (HIPAA)/Health Information Technology for Economic and Clinical Health Act (HITECH)

  • Occupational Safety and Health Administration
  • Americans with Disabilities Act
  • State Practice Act
  • Town, City & Municipality Ordinances

In addition, I recommend using a compliance calendar to provide guidance regarding the timing of required activities mandated by payers, agencies, and other regulators. The use of a compliance tracking system is, also very helpful in verifying the status of functions completed, as well as corrective action plans.

Q: What is the difference between a HIPAA security incident and a HIPAA security breach?

A: HIPAA security standards define a “security incident” as an attempted or successful access, use, disclosure, modification, or destruction of information on a system without appropriate authorization. The incident need not involve “protected health information” to qualify as a security incident, as many security incidents occur because they compromise the security of the system and are attempts to bypass security controls.

Some examples of security incidents that would be germane and/or of potential risk are:

  • Shared passwords
  • Unlocked screens and/or extended log-off times
  • Worm, virus, and/or malware infections
  • Access and/or attempts to access applications or the Internet without authorization
  • Social browsing (employees/students without E-PHI access rights)
  • Unauthorized software downloads (e.g., screen savers)
  • Saving data to the local drive verses the server
  • Unprotected laptops used in or in transit to remote sites

On the other hand, a “security breach” is any impermissible use or disclosure of PHI that is presumed to be a breach, with a subsequent requirement to provide a breach notification, unless the covered entity or business associate, as applicable, demonstrates that there is a low probability that the PHI has been compromised. Importantly, the covered entity or business associate, as applicable, has the burden of demonstrating that all notifications were provided or that an impermissible use or disclosure did not constitute a breach, and they must maintain documentation sufficient to meet that burden of proof.

In determining whether notice of a breach is required, a covered entity or business associate must consider at least the following factors:

  • The nature and extent of the PHI involved, including the types of identifiers and the likelihood of re-identification
  • The unauthorized person who used the PHI or to whom the disclosure was made
  • Whether the PHI was actually acquired or viewed
  • The extent to which the risk to the PHI has been mitigated

Q: What audits that should be performed to comply with HIPAA/HITECH/Affordable Care Act Security Regulations?

A: Some of the typical security audits that you should conduct to be proactive are:

  • Network or Local Drive Audits (e.g., patches and ports)
  • Baseline Security Analyzer Audits (e.g., Security Update Status)
  • Back Up Logs or Reports (verify reproducibility)
  • Electronic Medical Records Access Audits
  • Practice Management Program Access Audits
  • Web Access Audits
  • Company and Personal Device Password Compliance
  • Remote User Security Measures (e.g., firewalls, antivirus software).

Mary R. Daulong, PT , CHC, CHP, is a PPS member and the owner of Business & Clinical Management Services, Inc., a consulting firm specializing in outpatient therapy compliance, including documentation, coding and billing, enrollment and credentialing, and Health Insurance Portability and Accountability Act and Occupational Safety and Health Administration regulation education. She is also the author of both The Private Practice Compliance Manual and The Third-Party Biller Compliance Manual. She can be reached at daulongm@earthlink.net.




1. CMS Benefits Policy Manual, Chapter 15 Section 230.4, Services Furnished by a Therapist in Private Practice (TPP),(Rev. 179, Issued: 01-14-14, Effective: 01-07-14, Implementation: 01-07-14).

2. CMS Program Integrity Manual, Chapter 15 Section 15.1, Introduction to Provider Enrollment, (Rev. 347, Issued: 07-15-10, Effective: 07-30-10, Implementation: 07-30-10).

Please Participate

By Tom DiAngelis, PT, DPT

At this time of year, I would be remiss if I did not mention the two most important events that the section gears up for and ask you to participate. I am referring to the PPS Annual Conference and the elections for PPS office this November.

Attendees of the PPS Conference know it has been the place for private practioners to gather and share ideas for decades. The conference has grown significantly over the years—the quality of programming has steadily improved, and PPS has been able to provide more and more for members. While the expense has risen drastically, we have been able to maintain the cost at the same rate. This is in part due to improved attendance, excellent management by our outside conference-planning group, Let’s Meet, our staff, and the increasing number of exhibitors who want to attend. Let’s Meet and the PPS staff have created great demand for the exhibit hall so that we now have waiting lists for exhibit hall space—which helps keep attendance price reasonable. I encourage you to visit the PPS website (www.ppsapta.org) to read about the great lineup of conference speakers this year. The Program Work Group has done an excellent job of providing topics that are relevant to our practices today, as well as help us plan for the future. The annual conference is where the best networking opportunities are for private practice. Do not miss this opportunity that could significantly impact your practice for years to come. If you are attending, download the conference app (PPS 2014) to your smart phone so you can have it all at your fingertips.

The most important event at this year’s conference will be electing new members for the Board of Directors. This is a big election year for the Board as we elect a new president and vice president, as well as one director. We must commend the Nominating Committee—that also has a position on which we are voting—for providing us with a great slate of candidates from which to choose. Their candidate statements were in the last edition of Impact and are available online. I urge you to respect those who are running for office by reading their statements and voting. If you have questions for them, send them an email or call them directly—your vote is important. It is disheartening as a candidate when you work so hard and see so few of our members participating in such an important event for the section, so please cast your vote. Remember, you do not have to attend the conference to vote as absentee voting is available. You can also find information for absentee voting on the website.

This is your opportunity to participate in the two biggest events of the year for PPS and for you as a member. Thank you for your membership and your participation.


Engage Your Competitors

By C. Jason Richardson, PT, DPT, OCS, COMT

Early in my career, I often viewed our competition as the “enemy” and believed that engaging them in collegial talks would conflict with our respective strategic plans or that the discussions would lead to revealing our “secret sauce.” Many of you may hold a similar view. Seeing the competition as the “enemy” means leaders with similar day-to-day challenges have little to no contact or collaboration with each other. Ultimately, this view will significantly limit your ability to evolve your business.

While certain strategic components of your business should remain under wraps, non competitive communication can lead to operational improvements, best practices, and personal growth.

Recently, I met a large competitor when I traveled through their town. My initial conversation with this executive was over the phone, and I followed up our conversation with a calendar invitation. I told him I wanted to discuss global changes related to regulatory and payment trends, general operational structure, and how they were leveraging technology to enhance patient experiences within their physical therapy practice—as well as put a face with the name.

While this practice executive was a bit guarded early in our meeting, these walls quickly came down once I demonstrated a willingness to discuss my perspective. During the meeting, we established a rapport and by its conclusion, we had generated new ideas on operational tasks that we each could implement to enhance our practices. To date, we both periodically speak with one another and have committed to catching up in person a few times a year.

In conclusion, we need to be open to engage with our competitors and meet with them periodically. Not to exchange business secrets, but to learn from one another and collaborate on issues that mutually align. Taking this initiative will enhance your knowledge, expand your point of view, and inspire new ideas. You may even make a new friend.


C. Jason Richardson, PT, DPT, OCS, COMT, is a PPS member and the vice president of clinical operations for Results Physiotherapy in Franklin, Tennessee. He can be reached at jasonr@resultsphysiotherapy.com.

Do You Have a Practice to Sell?

By Franklin J. Rooks Jr, PT, MBA, Esq
September 2014

At some point, practice owners inevitably think about what is next after private practice and start planning for retirement. It also may make sense for the private practice owner to think about pre-retirement plan- ning. While the private practice owner may not be ready to retire, he or she may want to consider options for exiting the ownership of the practice while continuing to work for the practice. In this regard, the owner is not retiring, but instead monetizes the practice by “taking some chips off the table.” It is pre-retirement in the sense that the owner continues to work—albeit under new ownership—and is able to invest sale proceeds to further achieve future retirement financial goals. The private practice must be a saleable asset—but is it? What do you have to sell? Some practice owners have been met with a rude awakening when they realize that they do not have anything to sell. That is, what they have built is not of value to any would-be buyer. As many practitioners have come to see, there is a tremendous distinction in the creation of a job versus the creation of a business.

Many private practitioners have outstanding clinical expertise and provide exceptional care, but that alone does not create a business. Many practitioners have been able to set up shop, design their own hours, control their vacation times, answer to themselves, and practice physical therapy the way they want. They are their own boss. Unless there is a significant earnings number created in the process, the private practitioner has succeeded in creating a job for him/ herself. Instead of working for a hospital or other entity, the practitioner has chosen to work for him/herself. This is laud- able, but not worthy of any financial consideration as part of any value-added transaction. Acquirers are not purchasing jobs, they are purchasing businesses.

Who’s Buying What

The physical therapy market has been active recently with a number of mergers and acquisitions taking place. Some of the acquisitions are strategic; others are financial. In a strategic acquisition, an entity that is already entrenched in the physical therapy space purchases a physical therapy practice that fits into its overall growth plan, making it a “strategic” fit. The purchaser is considered to be a “strategic buyer.” In some cases, a strategic buyer is a competitor of the target company. Other times, the strategic buyer is not a competitor in the target’s geographic marketplace, but wants to enter the region. The overall goal of a strategic buyer is to make a synergistic acquisition that fits within the acquirer’s growth strategy. Although, a financial buyer is generally one without any investments in the industry in which the target company is situated. A financial buyer looks at the metrics of the company—cash flow, return on equity, management sta- tistics—with the goal of increasing the financial performance of the target company.

These buyers typically determine the target company’s earnings, termed EBITDA. “EBITDA” is the acronym for earnings before interest, taxes, depreciation, and amorti- zation. This is a standardized measure used by buyers to assess the target company’s financial performance. The cal- culation subtracts the company’s revenue from its expenses, but the expense calculation excludes taxes, interest, depreci- ation, and amortization. The measure is intended to insulate the target company’s value from accounting treatments and accounting elections it may have made. EBITDA may be supplemented by certain add-backs, which serve to increase the EBITDA. Many times, add-backs are those expenses that are not required to run the company or those expenses that would not exist but for the current owners operation of the company. Examples may be the add-back of the owner’s automobile expenses to EBITDA, adding back any excess compensation or even the cost of tickets for sporting events that are not exclusively used for the business. These add-backs result in a higher EBITDA. Just as there may be add-backs that favor the seller, there can also be negative adjustments to EBITDA. For example, if the target company is under-insured and obtaining proper insurance results in a material expense, the application of that expense could lower EBITDA. Making positive and negative changes to the practice’s earnings produces an adjusted EBITDA.

Once the adjusted EBITDA is determined, the target company value is determined by using a multiplier. The multiple of EBITDA provides the enterprise value. For example, if the company has EBITDA of $750,000, and the multiplier is 4.5, the enterprise value is $3,375,000. Many factors influence the multiple. The buyer’s risk and the industry’s ability to grow are predominant factors. There are also “deal specific” factors that may come into play. Strate- gic buyers may pay a higher multiple than financial buyers. With respect to physical therapy, buyers may consider the following: How many clinical locations does the target company have? Does the target company have locations in more than one state? Is the EBITDA above or below a million dollars? This is not an exhaustive list. However, at the end of the day, you need to have EBITDA. EBITDA is typically the basis of any valuation.

Is There Enough EBITDA?

Simply put, EBITDA is what is left over after all expenses. For the solo practitioner, if all of the practice’s earnings are paid out in salary, an adjustment is made based on what the market compensation is for a person functioning at owner’s capacity. That is, if the solo practitioner pays him/herself $200,000 and the market price to replace that individual is $150,000, a rough estimate of the EBITDA is around $50,000. An EBITDA multiple of 5.0 would translate into an enterprise value of $250,000. Upon any sale, these proceeds would flow to the seller net of any debt that the practice has. If the prac- tice had $50,000 of debt, the proceeds to the seller would be $200,000. If a broker was used in the sale, there would likely be transaction costs. And, of course, the sale would be subject to federal and state tax. On the other side of the equation, there is a tipping point for which the sale does or does not make economic sense. Buyers in all transactions conduct due diligence on the entity that may be purchased. Getting the deal across the finish line requires accountants who assess the quality of earnings and lawyers who draft transaction documents and finalize the sale. All of this involves expense. The value proposition must be such that the deal makes eco- nomic sense. EBITDA of $50,000 may be too small. However, there is a point—which is buyer-specific—that determines whether or not to entertain the transaction.

Planning Ahead

Think about your exit strategy. Take a critical look at your business. As you plan for retirement at some point in the future, does your practice represent an asset that you can monetize? Does your perceived value of your practice mesh with realities of the market? What have you created? Your EBITDA is a great indicator of whether you have created a job for yourself or whether you have created a business.


Franklin J. Rooks Jr, PT, MBA, Esq, is a physical therapist and practicing attorney in Philadelphia. He was a founding partner of PRO Physical Therapy in Wilmington, Delaware. He can be contacted at fjrooks@gmail.com.



Share your passion and celebrate your business during National Physical Therapy Month

By Don Levine, PT, DPT, FAFS

As we gear up for October, the Marketing and Public Relations Committee urges you to celebrate your profession by sharing your passion! October is National Physical Therapy Month, and we champion you to make it your own and share your passion with your community. Ask yourself: Why did you open your doors? What makes your motor run? What is your purpose? Share these answers with your clients and community!

“To be successful, the first thing to do is fall in love with your work.”1 While few may love the ever-increasing administrative burdens, we cannot deny that we have one of the most rewarding professions. Learning the skills necessary to help alleviate patients’ pain and improve their function should humble us every day. It is truly a gift to help those in our community live better lives. Now, let’s celebrate and educate!

How you share your expertise is important—but first you must decide what you would like to share. Some companies have already developed their mission statement, and this may be a great tool from which to build your message. If you have a management team, bring this group together and discuss the message you want your community to receive next month. What makes your practice valuable to the members of your community, and what most excites you and your staff about your profession? Narrow the information down to one or two concepts and then hone your message. In a smaller practice, bring key staff together to perform this task—get input from team members. Sharing their passions will heighten their desire to be a part of the process.

Sharing is caring!

Getting the word out can be done in many different ways:

  • Website: List information on your website regarding any events your practice may be holding.
  • Facebook: Easy and free. Not only can you post events, but you can take advantage of posting pictures that demonstrate your passion and your involvement in your community. Engage your audience so it is not just a one-way street.
  • E-newsletter: This is a great way to get your information out to your fan-base!
  • Media placements: Placing ads in newspapers and in magazines or on radio and on television can be expensive, so it is up to each practice to decide if the cost is worth the exposure. Do not forget to seek out free press opportunities when you invite groups to cover your event!
  • Referral sources: Dropping off information to your referral sources can be more effective than mailing. Think outside the box for this group. Medical doctors easily come to mind, but remember other targets such as massage therapists, personal trainers, nurse case managers, and area coaches, too.

What’s a physical therapist to do?

The ideas should come from your practice to make it your own. Some ideas may be as simple as hosting an event to celebrate your patients or referral sources, and other events may be as elaborate as developing a road race or an obstacle course challenge. Holding a legislative open house provides lots of exposure (featured in Impact September 2013 issue). Hosting your local and state representatives is a sure way to bring in the press, so think about combining this event with something to really set your practice apart.

Physical therapists understand the health care issues that our society faces today. We cannot take this knowledge for granted, but instead should spread our knowledge and understanding to our communities. Every day that our clients place their wellness in our hands is truly a gift.

As Theodore Roosevelt stated, “Far and away the best prize that life offers is the chance to work hard at work worth doing.”2 Celebrate your profession and your passion!


Don Levine, PT, DPT, FAFS, is chair of the marketing and PR committee and co- owner of Olympic Physical Therapy with five locations in Rhode Island. He can be reached at dlevine@olympicpt-ri.com.




1. www.oneweekjob.com/blog/2010/11/09/the-50-best-work-and-passion-quotes-of-all-time/ Accessed July 2014.

2. http://idealistcareers.org/12-quotes-that-will-encourage-you-to-follow-your-passion/ Accessed July 2014.

Copyright © 2018, Private Practice Section of the American Physical Therapy Association. All Rights Reserved.