Physical Therapy Billing Services: Why Most PT Practices Leave $50,000–$100,000 on the Table Every Year
By Medtransic | February 11, 2026 | 16 min read
Quick Summary: The average PT practice loses $50,000 to $100,000 per year not from low reimbursement rates but from billing execution failures — wrong unit counts, missed modifiers, expired authorizations, and a billing team that doesn't know your specialty. Here is exactly where the money goes and what a specialist does differently.
Your schedule is full. Your therapists are delivering excellent care. And your collections still feel lower than they should be. That gap — between what you are producing and what you are actually collecting — is almost never about your reimbursement rates. It is about what happens to your claims after your patients leave.
Physical therapy billing services are not the same as medical billing services. The rules that govern PT billing — how treatment time converts to billable units, which modifiers are mandatory on every Medicare claim, how the annual therapy threshold works, how evaluation complexity determines your reimbursement tier — are unique to this specialty and consistently mishandled by billing companies that don't work in PT every day. Medtransic works with PT practices across the country and the same patterns show up in every practice we audit: the money is there, but the billing process is losing it at predictable, fixable points. This guide covers exactly where those points are, what the dollar impact looks like, and what a specialized PT billing company does differently at each one.
- $2,410 2025 Medicare Therapy Threshold - KX modifier required on every claim above this
- $50K–$100K Annual Revenue Lost to PT Billing Errors - At a typical busy PT practice
- $40–$70 Per-Visit Revenue Gap - From selecting the wrong evaluation complexity tier
- $150–$200 RTM Revenue Per Patient Per Month - Most PT practices are not billing this at all
Why PT Billing Is Different From Every Other Specialty
Physical therapy is one of the only medical specialties where your reimbursement is determined by how many minutes you spent — not just what you did. Every billable unit ties back to documented treatment time, and a set of Medicare rules determines exactly how those minutes convert to dollars. A billing company that does not live in these rules daily will cost your practice more in lost revenue than you save on their fee.
In most specialties, billing is straightforward: the service happened, you code it, you submit it. In PT, the service happened, then you document the exact minutes per timed code, then a calculation determines how many units you can bill across all codes in that session, then specific modifiers must be appended depending on who delivered the service and whether the patient crossed an annual spending threshold — and if any step in that chain is wrong, the claim is either denied, underpaid, or creates audit exposure. This is why a general medical billing company consistently underperforms on PT claims — the billing logic is too different from what they handle in other specialties.
- Physical Therapy Billing Services
- Physical therapy billing services are specialized revenue cycle management companies that handle the full billing process for PT practices — including 8-minute rule unit calculations, timed vs. untimed code selection, mandatory modifier compliance, therapy cap tracking, prior authorization management, and denial follow-up. PT billing requires specialty-specific expertise that general medical billing companies do not have.
The 8-Minute Rule: Where Your Billing Company Is Probably Getting It Wrong
The 8-minute rule determines how many billable units you collect from every treatment session — and it is the single most common source of revenue loss in PT billing. If your billing company calculates units per code instead of cumulatively across all codes, they are either overbilling you into audit risk or underbilling you out of revenue you earned. Either outcome costs you.
Each timed PT code represents a 15-minute unit. You need at least 8 minutes to bill one unit. But the critical part most billers miss: the calculation is cumulative across all timed codes in a session, not per code individually. You total all timed minutes from all timed codes, determine total units from that combined number, then distribute those units across codes — starting with the code that has the most documented minutes.
| Total Timed Minutes in Session | Billable Units |
|---|---|
| 8–22 minutes | 1 unit |
| 23–37 minutes | 2 units |
| 38–52 minutes | 3 units |
| 53–67 minutes | 4 units |
| 68–82 minutes | 5 units |
What Correct Calculation Looks Like
A patient receives 97110 Therapeutic Exercise for 18 minutes, 97140 Manual Therapy for 10 minutes, and 97530 Therapeutic Activities for 12 minutes. Total timed minutes: 40. That falls in the 38–52 range — 3 billable units. Distribution: 97110 gets 1 unit (most time, 18 min), 97530 gets 1 unit (12 min), 97140 gets 1 unit (10 min). All three codes have at least 8 minutes, so all three qualify. Total: 3 units — matching the cumulative calculation exactly.
A billing company calculating per code independently — 18 min = 1 unit, 10 min = 1 unit, 12 min = 1 unit — arrives at 3 units here by coincidence. But change the time distribution and the error surfaces. A session with 22 minutes of 97110 and 9 minutes of 97140 is 31 total minutes — 2 units. A per-code calculation gives 97110 one unit and 97140 one unit — still 2, still technically correct. But a session with 22 minutes of 97110 and 5 minutes of 97140 is 27 total minutes — 2 units cumulatively. Per-code? Only 1 unit (97110 gets 1, 97140 has only 5 minutes so gets 0). You just lost a unit — and the revenue attached to it — because the billing company used the wrong method.
Timed vs. Untimed Codes: The Distinction That Determines Your Unit Count
Every PT CPT code is either timed — billed in 15-minute units based on documented treatment time — or untimed, billed once per encounter regardless of how long it took. Mixing these two categories in the unit calculation is one of the most common billing errors in PT, and it either creates audit exposure or leaves revenue behind depending on which direction the error goes.
| Timed Codes (billed in 15-min units) | Untimed Codes (billed once per encounter) |
|---|---|
| 97110 — Therapeutic Exercise | 97010 — Hot/Cold Packs |
| 97112 — Neuromuscular Re-education | 97014 — Electrical Stimulation (unattended) |
| 97116 — Gait Training | 97012 — Mechanical Traction |
| 97140 — Manual Therapy | 97161 — PT Evaluation, Low Complexity |
| 97530 — Therapeutic Activities | 97162 — PT Evaluation, Moderate Complexity |
| 97535 — Self-Care/Home Management | 97163 — PT Evaluation, High Complexity |
| 97542 — Wheelchair Management | 97164 — PT Re-evaluation |
| 97032 — Electrical Stim (attended) | 97150 — Group Therapy |
Note that evaluation codes (97161–97163) are untimed — billed per encounter at the complexity level the documentation supports. They never enter the 8-minute calculation. Billing them by units instead of per encounter is an error that will draw a payer audit. Billing them at the wrong complexity level is a revenue loss we will address in the evaluation section.
The Four Modifiers That Make or Break Every Medicare PT Claim
PT billing has four modifiers that are mandatory, situational, or reimbursement-affecting on Medicare claims. A billing company that does not know all four — and when each applies — will generate denials and revenue reductions on a daily basis without anyone on your team knowing why.
| Modifier | What It Does | When It's Required | What Happens Without It |
|---|---|---|---|
| GP | Identifies the service as part of a physical therapy plan of care | Required on every Medicare PT claim, every service, every session — no exceptions | Claim is denied. Not downpaid. Denied. This is the modifier most generalist billers miss because it doesn't exist in other specialties. |
| KX | Certifies that services exceeding the annual therapy threshold are medically necessary and documented | Required on every claim line once the patient's PT + SLP charges exceed $2,410 in 2025 | Automatic denial. No appeal option. The only fix is resubmission with the modifier, which delays payment 30–60 days. |
| 59 | Identifies a service as distinct and separate from another service billed on the same date | Required when two services that could appear bundled are both medically necessary and separately documented | Without it, the second service bundles into the first and you collect for one instead of two. |
| CQ / CO | CQ identifies services delivered by a Physical Therapist Assistant. CO identifies services delivered by an Occupational Therapy Assistant. | Required whenever a PTA or OTA delivers the service rather than the supervising PT | Medicare reduces reimbursement by 15% for PTA-delivered services. If the modifier is missing, the claim may process at the wrong rate or be flagged for audit. |
The GP modifier is the one that separates PT-specialized billing companies from generalists immediately. It is mandatory on every Medicare physical therapy claim — not just Medicare Advantage, not just certain service types, every claim. A billing team that handles multiple specialties and doesn't catch a missing GP modifier on thousands of PT claims per month is producing a systematic denial rate that looks like a payer problem when it is actually a billing competency problem.
The $2,410 Threshold That Triggers an Automatic Denial
In 2025, Medicare's annual therapy threshold for PT and speech-language pathology combined is $2,410. Once a patient's cumulative PT and SLP charges exceed this amount, every subsequent claim requires the KX modifier — certifying that continued treatment is medically necessary and that your documentation supports it. There is no grace period, no warning, and no appeal when the modifier is missing. The claim is automatically denied.
For a practice treating patients with chronic conditions, post-surgical rehabilitation, or neurological diagnoses, crossing the $2,410 threshold mid-treatment is not unusual — it is routine. A patient receiving three sessions per week at $150 per session hits the threshold in roughly 16 weeks. That means every claim from week 17 forward requires the KX modifier to pay, and your billing company needs to be tracking every patient's year-to-date charges in real time to know when that week arrives.
Above a second, higher threshold — the targeted medical review threshold — Medicare Administrative Contractors may select claims for manual review. At this level, your documentation needs to demonstrate clear functional progress with measurable outcomes, a plan of care that justifies ongoing treatment, and treatment goals that are specific and time-bound. Practices in states served by Palmetto GBA, CGS, Noridian, Novitas, and WPS Medicare face MAC-specific audit patterns — a PT billing company with experience in your region knows which MACs are most aggressive and what documentation standards trigger review.
The $40–$70 Per Visit You're Losing on Evaluation Codes
PT evaluation codes 97161, 97162, and 97163 represent low, moderate, and high complexity evaluations — and the reimbursement difference between the lowest and highest tier is $40 to $70 per visit. Across a practice completing 15 evaluations per week, selecting the correct complexity tier versus the wrong one is a $31,000 to $55,000 annual revenue difference. Most practices are losing this money in one of two directions.
Some practices consistently undercode — billing 97161 for evaluations that clearly involved moderate or high complexity — because their biller defaults to the lowest code to avoid scrutiny, or because they don't know how payers determine complexity. Others document high-complexity evaluations but their notes don't support the tier, which creates audit risk and retroactive downcoding. Neither is acceptable, and both are entirely preventable with the right billing oversight.
| Code | Complexity Level | Key Documentation Requirements | Typical Reimbursement |
|---|---|---|---|
| 97161 | Low complexity | Limited history, 1 body system examined, straightforward clinical decision-making | ~$75–$95 |
| 97162 | Moderate complexity | Established history, 2–3 body systems, moderate clinical decision-making with comorbidities considered | ~$110–$130 |
| 97163 | High complexity | Extensive history, 4+ body systems or significant comorbidities, high clinical decision-making complexity | ~$145–$165 |
A specialized PT billing company reviews your evaluation documentation before every claim goes out and matches it to the correct complexity tier based on what the notes actually support — not habit, not caution, not assumption. They know what each Medicare Administrative Contractor and commercial payer looks for when validating the tier. The result is that you collect the correct reimbursement for the work your therapists actually did.
The $150–$200 Per Patient Per Month Your Practice Isn't Billing
Remote Therapeutic Monitoring is one of the most significant revenue opportunities in PT right now — and most practices are not billing it at all. RTM codes allow PT practices to bill Medicare for remotely monitoring a patient's pain levels, adherence to a home exercise program, and functional progress between in-person visits. The revenue is real, the codes are active, and the documentation requirements are manageable. The reason most practices miss it is that their billing company either doesn't know RTM exists or doesn't have the workflow to capture it.
| RTM Code | What It Covers | Billing Requirements | Monthly Revenue Potential |
|---|---|---|---|
| 98975 | Initial RTM setup and patient education | One time per episode of care | $19–$25 per patient |
| 98976 | Supply of a musculoskeletal monitoring device | Once per 30 days when device is provided | $55–$65 per patient per month |
| 98977 | Supply of a respiratory monitoring device | Once per 30 days when applicable | $55–$65 per patient per month |
| 98980 | First 20 minutes of RTM treatment management services | Requires 20+ minutes of interactive communication, once per 30 days | $52–$58 per patient per month |
| 98981 | Each additional 20 minutes of RTM treatment management | In addition to 98980 when time exceeds 20 minutes | $40–$50 per patient per month |
For a practice with 30 eligible patients using RTM, billing 98976 and 98980 together generates roughly $3,000 to $3,700 per month — $36,000 to $44,000 per year — from monitoring that many therapists are already doing informally without billing for it. A PT billing company that is current on 2025 coding knows these codes, knows the documentation requirements, and builds RTM billing into the workflow for every eligible patient.
6 Billing Mistakes That Are Costing Your Practice Right Now
These six errors account for the overwhelming majority of PT billing revenue loss. Most practices are experiencing at least three of them without knowing the dollar amount attached to each one.
- Missing the GP modifier on Medicare claims. This is the fastest way to generate a wall of denials on PT claims and have no idea why. The GP modifier is mandatory on every Medicare PT claim line — not situational, not optional. A billing company unfamiliar with PT-specific modifiers misses this on every claim they submit for your Medicare patients.
- Miscalculating 8-minute rule units. Calculating units per code instead of cumulatively across codes produces incorrect unit counts on most sessions with multiple timed services. The error is usually underbilling — leaving units behind that your documentation supports. Over thousands of sessions per year, the cumulative loss is significant.
- Missing the KX modifier above the therapy threshold. In 2025 the threshold is $2,410 for PT and SLP combined. Once crossed, every claim line needs the KX modifier or it is automatically denied. A billing company that is not actively tracking each patient's year-to-date charges will miss this routinely — and the denials stack up before anyone notices.
- Billing the wrong evaluation complexity tier. Defaulting to 97161 when documentation supports 97162 or 97163 is $40–$70 per evaluation left behind. Doing it for every eval across a year of high-volume evaluation weeks compounds into five-figure revenue loss. A billing company that reviews eval notes before coding catches this every time.
- Not billing RTM codes for eligible patients. If your practice monitors home exercise adherence or pain levels between visits and your billing company does not capture RTM codes, you are forfeiting $150–$200 per eligible patient per month. This is not a fringe opportunity — for practices with a significant Medicare or commercial patient panel doing chronic condition management, RTM is real recurring revenue.
- Letting prior authorizations expire mid-plan of care. Many commercial payers authorize PT in blocks of 6–12 visits with a hard expiration date. When the authorized visits run out and nobody has initiated a renewal, the next session is denied. The patient may still come in, the therapist treats them, and the claim pays nothing. A PT billing company tracks every authorization by patient, payer, visit count, and expiration date — and flags renewals before the gap occurs.
How Physical Therapy Billing Should Work: The Full Process
The difference between a PT practice collecting 92 cents on the dollar and one collecting 98 cents almost always comes down to how thoroughly each step in this process is executed — particularly steps 2, 4, 5, and 8, which are where most revenue loss occurs.
| Step | What a Specialist Does | What Revenue Loss Looks Like Without It |
|---|---|---|
| 1. Insurance eligibility verification | Confirms active coverage, PT benefits, visit limits, deductible status, and prior authorization requirements before the first appointment | Patient arrives with exhausted PT benefits or lapsed coverage. You deliver care and write off the visit. |
| 2. Prior authorization | Obtains auth before treatment starts. Tracks visit count and expiration date per patient. Initiates renewal before visits run out — not after the denial. | Authorization expires mid-plan of care. Every session after expiration is denied. Retroactive appeals rarely succeed. |
| 3. Documentation review | Reviews treatment notes before billing to confirm timed minutes are documented per code, medical necessity is clearly stated, and evaluation complexity is supported | Incomplete notes become denied claims — or worse, they pay and then get recouped 12–18 months later on audit. |
| 4. Coding and unit calculation | Applies 8-minute rule cumulatively across all timed codes. Selects correct evaluation complexity tier. Assigns GP modifier to every Medicare claim. Applies CQ/CO where PTA delivered the service. | Per-code unit calculation produces wrong distributions. Wrong eval tier costs $40–$70 per visit. Missing GP = denied claim. |
| 5. Therapy cap and KX tracking | Tracks each patient's year-to-date PT + SLP charges against the $2,410 threshold in real time. Auto-applies KX modifier once threshold is crossed. | KX modifier missed. Claim auto-denied. Happens on every claim for that patient until someone catches it — often weeks later. |
| 6. RTM billing | Identifies eligible patients, sets up RTM monitoring workflow, bills 98975/98976/98980 for qualifying patients each month | RTM revenue never captured. $150–$200 per eligible patient per month permanently forfeited. |
| 7. Claim scrubbing and submission | Validates modifiers, place of service codes, NPI numbers, and payer-specific requirements before submission. Claims go out clean the first time. | Dirty claims enter a rework cycle. Each resubmission costs $25–$50 in staff time and delays payment 30–60 days. |
| 8. Denial management and AR follow-up | Works every denied claim within 48 hours. Identifies root cause, corrects, resubmits or appeals. Tracks AR by age and payer. Pursues everything before filing deadlines close. | Denials pile up unworked. Appeal windows close. Revenue is permanently gone. AR ages past 90 days where collection probability drops below 50%. |
How to Find Out If Your Billing Company Actually Knows PT
The PT billing market is full of companies that list physical therapy on their specialty page. The fastest way to find out whether they actually know PT is to ask them seven questions on your first call. A company that works in PT every day will answer all of them with specifics. A company that does not will answer with generalities — and that tells you everything.
Ask them to walk through an 8-minute rule calculation for a three-code session. Give them three codes and three time values. If they can't produce the correct unit count and distribution immediately, they don't know the rule well enough to apply it on thousands of claims per month.
Ask what modifier is required on every Medicare PT claim regardless of service type. The answer is GP. If they say KX, or list multiple modifiers without naming GP first, they are not running clean Medicare claims for your practice.
Ask how they track therapy cap spend for individual patients. You want a system-level answer — software that tracks year-to-date charges per patient, alerts before the $2,410 threshold is crossed, and auto-appends the KX modifier. Not a promise that they watch for it.
Ask whether they bill RTM codes and which patients qualify. If they don't know what RTM codes are, they are not current on 2025 PT billing and you are forfeiting that revenue entirely.
Ask which PT EMRs they integrate with natively. PT practices use WebPT, Prompt, Clinicient, Raintree, TheraOffice, Net Health, and Kareo. Your billing company needs to pull charge data directly from your system. If they want you to export manually, data entry errors will follow.
Ask for their PT-specific denial rate — not a blended rate across all specialties. A well-run PT billing operation keeps denials below 5%. If they can't separate PT performance from their overall book, they are not tracking it closely enough.
Ask about contract terms. Month-to-month with 30-day notice is standard for a billing company that earns its business through results. Long-term contracts with termination penalties mean they are not confident their performance will keep you.
The Numbers You Should Be Hitting
Set these five benchmarks in writing before your first month begins and review them monthly. A PT billing company that resists being held to specific numbers is telling you what you need to know.
- 95%+ Clean Claim Rate - Claims accepted on first submission
- < 5% Denial Rate - PT-specific — not blended across specialties
- < 35 days Average Days in AR - Under 30 is excellent for PT
- 96%+ Net Collection Ratio - After contractual adjustments
Zero KX modifier misses is a non-negotiable standard — the modifier is either on the claim or the claim is denied, and there is no acceptable miss rate on a rule this clear. Zero GP modifier misses on Medicare claims is the same standard. Proactive authorization management means no patient is ever denied because their authorized visit count ran out without anyone requesting an extension. These are not aspirational targets. They are the baseline for what competent physical therapy billing services deliver.
Medtransic provides specialized physical therapy billing services for PT practices — solo clinics, multi-site groups, hospital-affiliated outpatient departments, and pediatric practices — across Pennsylvania, Texas, Florida, California, Michigan, Illinois, New Jersey, and nationwide. If your current billing setup cannot tell you which patients are approaching the $2,410 therapy threshold this month, what your PT-specific denial rate is, or whether your 8-minute rule calculations are cumulative or per-code, it is time to find out what you are actually losing. Request a free PT billing audit.
Frequently Asked Questions
What are physical therapy billing services?
Physical therapy billing services are specialized revenue cycle companies that manage the full billing process for PT practices — including 8-minute rule unit calculations, mandatory modifier compliance (GP, KX, 59, CQ/CO), therapy cap tracking, evaluation code selection, prior authorization management, and denial follow-up. PT billing requires specialty-specific expertise because the rules governing timed codes, modifiers, and Medicare thresholds are unique to this specialty and consistently mishandled by generalist billing companies.
How does the 8-minute rule work in physical therapy billing?
The 8-minute rule converts documented treatment time into billable units for timed PT codes. The calculation is cumulative: total all timed minutes across all timed codes in the session, determine total billable units from that combined number (8–22 min = 1 unit, 23–37 = 2 units, 38–52 = 3 units, etc.), then distribute units across codes starting with the code that has the most documented time. Each code needs at least 8 minutes to receive a unit. Untimed codes like hot packs and unattended e-stim never enter this calculation.
What is the Medicare therapy cap for physical therapy in 2025?
In 2025, Medicare's annual therapy threshold for physical therapy and speech-language pathology combined is $2,410. Once a patient's cumulative PT and SLP charges exceed this amount, the KX modifier must be appended to every subsequent claim line — certifying that continued treatment is medically necessary and documented. Without the KX modifier, Medicare automatically denies the claim with no appeal option.
Why is the GP modifier required on PT claims?
The GP modifier identifies a service as part of a physical therapy plan of care and is mandatory on every Medicare PT claim regardless of service type, complexity, or whether the patient has crossed the therapy threshold. Unlike other PT modifiers that apply situationally, GP applies universally. Missing it results in claim denial. It is one of the most common errors made by generalist billing companies handling PT claims.
What is the difference between PT evaluation codes 97161, 97162, and 97163?
These three codes represent low, moderate, and high complexity physical therapy evaluations. Complexity is determined by the extent of the patient history, the number of body systems examined, and the clinical decision-making required. The reimbursement difference between 97161 (low) and 97163 (high) is $40–$70 per evaluation. Selecting the wrong tier — either undercoding and losing revenue or overcoding without documentation support and creating audit risk — is one of the most preventable sources of financial loss in PT practices.
What are RTM codes and should my PT practice be billing them?
Remote Therapeutic Monitoring codes (98975, 98976, 98980, 98981) allow PT practices to bill Medicare for monitoring patients' pain levels, home exercise adherence, and functional progress between visits. Billing 98976 and 98980 together generates $100–$120 per eligible patient per month. For a practice with 30 eligible patients, that is $36,000–$44,000 per year in revenue most practices are not capturing. If your billing company has not discussed RTM billing with you, they are not current on 2025 PT coding.
Find Out What Your PT Practice Is Actually Losing
Medtransic provides specialized physical therapy billing services — 8-minute rule accuracy, GP and KX modifier compliance, RTM billing, prior authorization tracking, and denial management built specifically for PT practices. Request a free billing audit and we will show you exactly where your revenue is going, with dollar amounts on every issue.