Efficient Flow


Achieve maximum reimbursement through managing every phase of your revenue cycle.

By Ann Burkhardt, RHIT

You are a physical therapist doing the important work of improving your clients’ ability to function at their highest possible level. But, as a physical therapist in private practice, you are also running a business. To run a successful business, it is important to develop and maintain an effective strategy to manage your accounts receivable. Accounts receivable (A/R) is the money that is owed to you for services you have provided. Think of it as the core of your business. To keep that money coming in, every phase of your revenue cycle must be managed for maximum payment.

Revenue Cycle Management

Revenue Cycle Management (RCM) is managing the workflow involved to make sure you get paid. In a physical therapy office, this workflow is a three-stage process:
  1. Patient intake and point of service registration stage: Many payment delays occur at this stage due to claim errors that can be avoided by creating and maintaining procedures for the entry of patient data into the computer system. Incorrect demographic and/or insurance information on an insurance claim can result in automatic rejection and payment delays. At this stage, insurance coverage is determined, and patient responsibility is determined and documented. When a client is covered by more than one payer, it is critical to establish which payer is primary. This simple step can prevent many hours of collection work. This is the time to have a frank discussion with your clients about their responsibility for any amounts not covered by insurance. If they are not insured, you need to discuss the payment options available to them. When a payment plan is agreed upon, put it into writing, and be sure the document is signed by both provider and client. This document should include the collection actions that will be taken in the event of client non-compliance. Taking the time for financial counseling at this stage can save time, work, and the reduction in revenue that results when an unpaid balance goes into debt collection.
  2. The clinical encounter stage: Complete and accurate documentation, including functional limitation and quality measures reporting for Medicare patients, is critical to the timely payment of claims. Insurance companies and Medicare frequently deny claims if they determine that the services being billed for are not justified by the reported diagnosis. In cases like this, the provider must supply documentation that justifies the performance of the service(s) being questioned. These denials can be time consuming to appeal and medical necessity can be impossible to prove without precise and accurate documentation. It is also at this stage that correct procedural codes, including modifiers and G-codes for functional limitation and quality measures, need to be applied for Medicare patients.For more information on functional limitation reporting, please see http://www.cms.gov/Medicare/Billing/TherapyServices/Downloads/Functional-Reporting-PT-OT-SLP-Services-FAQ.pdf. For more information on quality measure reporting, please see http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityMeasures/index.html?redirect=/qualitymeasures/
  3. The processing stage: According to Kathy McCoy of medicalbilling.com, 60% of the work effort in revenue cycle management is performed at the processing level.1 This includes:
    • Code review
    • Charge entry
    • Claim submission
    • Payment posting
    • Denied claim review
    • Correction and re-submission of claims with errors
    • Claim denial appeal
    • Creation of client statements
    • Collection activity if necessary

According to a report posted on the Oregon Health and Science University website, the revenue cycle is defined as “A term that includes the entire life of a patient account from creation to payment. Revenue cycle processes flow into and affect one another. When processes are executed correctly, the cycle performs predictably. However, problems early in the cycle can have significant ripple effects. The further an error travels through the revenue cycle, the more costly revenue recovery becomes.”2

Accounts receivable reporting on a regular basis can save a great deal of work at the processing level. Not only does an A/R aging report alert you to money left on the table, it can help you identify weaknesses in the revenue cycle, allowing you to take the necessary steps to improve procedures or provide training.

In 2014, you will be encountering many changes, including the transition to ICD-10 for diagnosis codes. As a physical therapist, you do not assign diagnosis codes, but you do submit claims with diagnosis codes included. According to Carl Natale of ICD10watch.com, “Oct. 1, 2014 could be the start of longer accounts receivable periods and more denials.”3 With this in mind, it is even more important in the months leading up to the transition to analyze and improve your revenue cycle to increase payment and decrease days in A/R. This process includes focusing on denials. Determine what is causing them and at what stage of the revenue cycle errors and omissions are occurring. Having control of your accounts receivable will make the inevitable claim denials and payment delays during the transition to ICD-10 easier to manage.

You can improve your accounts receivable with effective revenue cycle management that includes the following:

  • Client communication regarding payment
  • Accurate and complete entry of demographic and insurance information
  • Correct procedural coding and complete and precise documentation
  • Timely filing of clean claims

As a physical therapist, you know how important a strong “core” is to stabilizing the body. Remember, a strong revenue cycle management system is the core of your business.

Ann Burkhardt, RHIT, is health information director at Therabill, LLC. She can be reached at ann.burkhardt@therabill.com.


1. McCoy, Kathy. “Starting a New Medical Practice? Here’s a Primer on Successful Revenue Cycle Management.” Web log post. Medical-billing.com. N.p., 26 Mar. 2013. Web. 02 Dec. 2013. http://www.medical-billing.com. Accessed February 3, 2014.

2. “Revenue Cycle.” Oregon Health & Science University. N.p., n.d. Web. 02 Dec. 2013. http://www.ohsu.edu/xd/about/services/patient-business-services/revenue-cycle. Accessed February 3, 2014.

3.  Natale, Carl. “Welcome ICD10 Watch.” Healthcare Finance News. N.p., 23 Oct. 2013. Web. O2 Dec. 2013. https://www.Ohsu.edu/xd/about/services/patient-business-services/revenue-cycle. Accessed February 3, 2014.

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

Are you a PPS Member?
Please sign in to access site.
Enter Site!