Without proper training and guidance, understanding time codes and the Medicare 8 Minute Rule can be pretty confusing. Unfortunately, the result is often under-billing, which in turn results in a loss of revenue for otherwise profitable outpatient services.
Time Codes and the Medicare 8 Minute Rule
Billing for physical medical services is based on what is referred to as the Current Procedural Terminology (CPT) coding system. The CPT system is composed of 5-digit codes that are used for billing third party payers.
Very often, Medicare is the primary third-party that foots the bills for outpatient physical medicine services. Typically, it will make its payments on a fee schedule that is based on time codes and the Medicare 8 Minute Rule.
The most commonly used CPT codes fall into two categories:
- Service-based codes
- Time-based codes
Service-based Codes
Some physical medicine services do not use time-based unit for billing. As such, it doesn't make a difference if the physical therapist completes an evaluation in 15 minutes or in 45 minutes - the same CPT code applies, and as such you can only bill for one single session. Examples of these services include: hot/cold packs and mechanical traction.
Time-based Codes
This category of services allows for variable billing that is based on 15 minute increments. The provider will bill for multiple units of time that are spent in direct contact with the outpatient. Medicare has established and published its own requirements regarding these time-based 15 minute codes. Several other third-party payers have also adopted them. At the heart of these requirements is the "8 minute rule."
The 8 minute rule dictates that in order to bill for each additional time-based code, you must spend at least eight minutes of each unit providing direct service to the patient. In other words, in order to bill for a 15 minute code, Medicare requires that the session be at least eight minutes long.
Here is the published guide for the range of minutes that are needed for billing 15-minute codes.
| 15 minute codes | |
| 1 unit | 8 minutes to 22 minutes |
| 2 units | 23 minutes to 37 minutes |
| 3 units | 38 minutes to 52 minutes |
| 4 units | 53 minutes to 67 minutes |
| 5 units | 68 minutes to 82 minutes |
| 6 units | 83 minutes to 98 minutes |
The first procedure must be at least 8 minutes, with each one thereafter billed in 15-minute increments. A minimum of twenty-three minute session is required in order to bill for two units. Only direct, face-to-face time with the patient is considered for timed codes.
For example, if a patient receives therapeutic exercise, this session is billed based on the CPT 97110 time-code. According to the eight minute rule, if the patient receives twenty minutes of therapeutic exercise as an outpatient, the hospital can only bill for one procedure, because you have not met the threshold for the next unit:
(15 minutes + 5 minutes) = 20 minutes
On the other hand, if he receives 25 minutes of outpatient therapeutic exercise, then you will meet Medicare's 8-minute threshold and can bill for two procedures instead of one:
(15 minutes + 10 minutes) = 25 minutes
Physical Therapy Services Produce Revenue
Outpatient physical therapy services are an important, albeit often overlooked source of revenue for most hospitals. The 8 minute rule can be confusing, particularly when more than one service is provided in a single visit and each service has their own code. However, when well-managed within the framework of Medicare's eight minute rule, physical therapy can provide a highly-lucrative revenue stream.
