Importance of documentation

Physical therapists (PTs) and occupational therapists (OTs) are in the business of providing a health care service to improve quality of life. Because of the myriad insurance options available from both private and government-run programs, people rarely pay cash (self-pay) for physical and occupational therapy. Therapists want to be paid a “fair” amount for their skills and knowledge, but they generally rely on a third party to provide this payment. Clinicians must convince the third-party payer, an entity that was not present and did not receive the therapeutic interventions, that the patient received valuable, unique, and worthwhile services. Documentation is one method used to persuade the third-party payers to pay for the professional services provided.

Documentation is a skill a therapist must acquire. Its importance is equivalent to other forms of therapy skills. Documentation creates a lasting impression of the practitioners who represent the profession. Occupational therapy and physical therapy are an imperative and integral part of patient care; the documentation must reflect that. In addition, PTs and OTs are legally responsible for interventions provided by personnel under their supervision. Therapists then depend on other people to interpret their documentation and, on the basis of contracted rates, determine how much should be paid for each service. Third-party payers often submit documentation to peer reviewers to ascertain excessive, useless, or fraudulent treatments.

Securing payment for services rendered is, and will continue to be, a crucial element for the therapist as a professional as well as for the therapist’s livelihood. Documentation, which is a legal and professional responsibility, is the basis for billing and is the proof that treatment was provided. Documentation is critical for success in the payment appeals process. For these reasons, documentation and payment for services are tightly linked together. This chapter will look at the payer sources at the national level and their required documentation components for payment.

It is important to remember that all the federal programs mentioned in this chapter are constantly changing. The process of legislating health care is dynamic and will be significantly modified in the next several years because there are not enough dollars available to cover the projected total costs. The supply of funds is in direct conflict with both the increased numbers of patients and their need for services. Major changes must occur in the future to enable health care, as expected by the public, to survive. One of the keys to these changes lies in documentation. A new national health policy plan for United States citizens was voted on and accepted in the spring of 2010, and new payment schedules or structure may be the outcome; but the need for documentation will remain constant, and documentation will always be a tool used for evaluating and justifying payment for services.

Why document? Documentation provides baseline status, records pertinent information, measures progress and success, fulfills predictions, and declares the final outcomes. It creates a record of the appointments the patient or client had. It provides data for concurrent or retrospective audits as well as evidence for research. It serves as an itemized bill for services rendered. The medical record may also become evidence in legal proceedings, which can either defend or incriminate the clinician. Documentation provides a snapshot of a period of time that gives the reviewer a full and practical description of the status of patients and the impact care has made on their quality of life.

Who reads the medical record? Although many therapists seem to believe that documenting is a necessary evil with no particular purpose, the information that therapists provide is vitally important. Physical and occupational therapy documentation is read by colleagues in the same or related disciplines to affect or continue the plan of care (POC). It is also read by physicians and discharge planners to assist in determining additional treatment or surgical options or placement opportunities. Insurance case managers rely on documentation for the assessment of proper use of services. OT and PT documentation is read by employees of third-party payers who may be screening for proper dates and codes or for predicted outcomes in a reasonable time frame. Therapists do not want to have payment denied for any reason; therefore it is extr emely important that the documentation clearly present all the pertinent information in a manner that is easily understood by all parties.

Definition of terms

There is an entire language of terms regarding payment issues. Please refer to the Quick Reference Guide to Acronyms (Appendix 10-A) for assistance. When therapy services are received, either the person pays the therapist directly or someone else pays the bill. Generally a patient will pay directly for therapy in three circumstances: (1) having a need for skilled services and not having insurance; (2) having had therapy interventions, understanding their value, and wishing to continue beyond what insurance is willing to cover; or (3) having a preference for a specific therapist who accepts only cash payment or who is not a preferred provider of the insurance company. When someone else pays the bill, it is the third-party payer that is billed for the services. Third-party payers are usually insurance carriers who, by contract or written agreement, may determine the maximum amount of money paid and under what circumstances.

Private health insurance is either purchased by a consumer or provided to people as a benefit of employment. People may have additional coverage by paying for it or as a result of being a dependent on someone else’s insurance plan. This secondary insurance may pay for the portion of the bill that is unpaid by the patient’s primary insurance. In the case of Medicare coverage, Medicare beneficiaries can purchase supplemental insurance that will pay some or all of the charges that are not part of their Medicare benefit. As the federal government is taking on a larger role in making sure individuals are insured by setting up a National Health Insurance System, the payer for the therapeutic services may change, but the fact remains that someone or a group of insurance carriers will pay for services rendered.

Health care services, for purposes of payment, are generally divided into three groups: inpatient, outpatient, and home health services. Inpatient services are delivered to patients staying in a hospital or health care facility. Outpatient services are delivered to patients who receive service by going to a health care provider. Home health agencies (HHAs) deliver services to patients in their own homes. Medicare services are processed and paid for by Medicare Administrative Contractors (MACs). MACs are responsible for administrating Medicare programs in 15 jurisdictions comprised of two or more states. MACs are private companies that have been awarded contracts by the Centers for Medicare and Medicaid Services (CMS) for processing all Part A and Part B claims within their geographical jurisdictions. MACs have the ability to accept or deny claims made to them for payment on the basis of their interpretations of the CMS guidelines. Medicare Parts A and B are discussed in more detail later in this chapter.

COBRA (from the Consolidated Omnibus Budget Reconciliation Act of 1985) refers to short-term interim insurance coverage. It allows people whose employment benefits have been terminated to have continuing employer-sponsored group health coverage temporarily. The American Recovery and Reinvestment Act of 2009 (ARRA) has expanded premium assistance to some people who qualify.

Workers’ compensation is coverage for people who have been injured on the job. These regulations are determined at both national and state levels. Workers’ compensation is discussed in greater detail later in this chapter.

Correct billing and claims processing are also dependent on accurately communicating treatment diagnoses and interventions to third-party payers. Three primary coding systems are used to communicate diagnoses and interventions in health care. The International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) is a tabular list of medical diagnoses approved for use by CMS based on the World Health Organization’s ICD-9, originally published in 1977. Current Procedural Terminology (CPT) (a registered trademark of the American Medical Association [AMA]) is a coding system that describes health care interventions. CMS has developed its own coding system to meet the specific requirements of the Medicare and Medicaid programs. The Healthcare Common Procedure Coding System uses CPT and alphanumerical codes developed by CMS in conjunction with the AMA to describe interventions, procedures, and supplies for the Medicare and Medicaid programs.¹ Use of these coding systems is discussed in greater detail later in this chapter.

“Medicare is a health insurance program for people age 65 or older, people under age 65 with certain disabilities, and people of all ages with end-stage renal disease . . . (permanent kidney failure requiring dialysis or a kidney transplant).”² The Medicaid program provides medical benefits to groups of low-income people, some of whom may have no medical insurance or inadequate medical insurance.³ Although the federal government establishes general guidelines for the program, the Medicaid program requirements are actually established by each state. Whether or not a person is eligible for Medicaid will depend on the state where he or she lives.

“President Truman was the first President to propose a national health insurance plan.”⁴ Congressional debate about federal health care coverage continued for 20 years. In 1965, HR 6675, the “Mills Bill,” was introduced. “Congressman Wilbur Mills, Chairman of the House Ways and Means Committee, created what was called the ‘three-layer cake’ by starting with President Johnson’s Medicare proposal (Part A), adding to it physician and other outpatient services (Part B), and creating Medicaid which significantly expanded federal support for health care services for poor elderly, disabled, and families with dependent children. Medicare became Title 18 of the Social Security Act and Medicaid became Title 19.”⁴ Although HR 6675 passed the House without a single amendment, the Senate version required much more discussion and many amendments. Finally, Medicare Part A, which involves basic hospital benefits and other institutional services for the elderly; Medicare Part B, a voluntary program; and Medicaid were approved by both the House and Senate.

Medicare and Medicaid implementation did not begin until 1966. Initially, “Medicare was the responsibility of the Social Security Administration (SSA), the agency that controlled the retirement social insurance program through which most people became eligible for Medicare. Federal assistance to the State Medicaid programs was administered by the Social and Rehabilitation Service (SRS). SRS oversaw welfare programs including Aid to Families with Dependent Children (AFDC), through which many people became eligible for Medicaid. SSA and SRS were agencies in the Department of Health, Education, and Welfare (HEW). In 1977, HEW Secretary Joseph Califano reorganized the department to create the Health Care Financing Administration (HCFA). HCFA was designed to improve administration of both Medicare and Medicaid by moving both health programs together, to improve the staffing of the Medicaid program, and to create a new administrative structure to implement national health insurance. In 1980, HEW was divided into the Department of Education and the Department of Health and Human Services (HHS). In 2001, Secretary Tommy G. Thompson renamed HCFA to become the Centers for Medicare and Medicaid Services (CMS) as part of his initiative to create a new culture of responsiveness in the agency.”⁴

“Coverage for Medicare Part A is automatic for people age 65 or older (and for certain disabled persons) who have insured status under Social Security or Railroad Retirement. Most people don’t pay a monthly premium for Part A. Coverage for Part A may be purchased by individuals who do not have insured status through the payment of monthly Part A premiums. Coverage for Part B also requires payment of monthly premiums. People with Medicare who have limited income and resources may get help paying for their out-of-pocket medical expenses from their state Medicaid program. There are various benefits available to ‘dual eligibles’ who are entitled to Medicare and are eligible for some type of Medicaid benefit. These benefits are sometimes also called Medicare Savings Programs (MSPs). For people who are eligible for full Medicaid coverage, the Medicaid program supplements Medicare coverage by providing services and supplies that are available under their state’s Medicaid program. Services that are covered by both programs will be paid first by Medicare and the difference by Medicaid, up to the state’s payment limit. Medicaid also covers additional services (e.g., nursing facility care beyond the 100-day limit covered by Medicare, prescription drugs, eyeglasses, and hearing aids). Limited Medicaid benefits are also available to pay out-of-pocket Medicare cost-sharing expenses for certain other Medicare beneficiaries. The Medicaid program will assume their Medicare payment liability if they qualify.”⁵

The Balanced Budget Act of 1997 (BBA) made the most significant changes to the Medicare and Medicaid programs since their implementation. One goal was to shift some of the financial stress to the private sector, which was accomplished by allowing Medicare beneficiaries options for additional types of health plans. The BBA also reduced hospital payments, which had considerable consequences in the health care industry. This was one reason that the Balanced Budget Refinement Act of 1999 (BBRA) was introduced. The BBA was also designed to address fraud, abuse, and waste in the federal health care programs.

The BBA also created the Children’s Health Insurance Program (CHIP), also known as Title XXI of the Social Security Act. “CMS administers this program, which helped states expand health care coverage to over 5 million of the nation’s uninsured children. The program was reauthorized on February 4, 2009, when President Obama signed into law the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA or Public Law 111-3). CHIPRA finances CHIP through fiscal year 2013. It will preserve coverage for the millions of children who rely on CHIP today and provides the resources for states to reach millions of additional uninsured children. CHIP is jointly financed by the federal and state governments and is administered by the states. Within broad federal guidelines, each state determines the design of its program, eligibility groups, benefit packages, payment levels for coverage, and administrative and operating procedures. CHIP provides a capped amount of funds to states on a matching basis. Federal payments under CHIP to states are based on state expenditures under approved plans effective on or after October 1, 1997.”⁶

At least two other federal laws affect children who may not have sufficient health care coverage. The Elementary and Secondary Education Act of 1965 (ESEA), reauthorized as the No Child Left Behind Act of 2001 (NCLB), is standards-based education reform that is directed at disadvantaged students. IDEA, the Individuals with Disabilities Education Act, provides for early intervention, special education, and related services to children with disabilities.⁷