Coding and Avoiding Fraud: The Importance of Understanding CPT Coding in Medical Billing

Medical billing is a complex process that requires a thorough understanding of Current Procedural Terminology (CPT) codes to ensure compliance with federal regulations and ethical billing practices. These codes are not just numerical representations of services—they come with specific definitions that outline the obligations for how services must be executed, including requirements regarding licensed professionals who must be involved in delivering the care. Failure to adhere to these definitions can result in serious legal and financial consequences, including violations of the False Claims Act (FCA).

1. Understanding CPT Codes and Their Definitions

CPT codes are developed and maintained by the American Medical Association (AMA) and are used to standardize medical procedures for billing and insurance reimbursement. Each CPT code includes a detailed description of the service, specifying:

• The type of service provided (e.g., evaluation, treatment, diagnostic testing)
• The setting in which the service must be performed (e.g., outpatient clinic, inpatient facility, home healthcare)
• The level of expertise required (e.g., must be performed by a physician, nurse practitioner, or licensed therapist)
• Time requirements and procedural steps
  
  For instance, CPT Code 97110 (therapeutic exercises) requires a licensed physical or occupational therapist to provide one-on-one services directly to the patient. If an unqualified individual performs the service, or if the service is provided in a manner inconsistent with the code’s requirements, billing under that code is fraudulent.

2. The False Claims Act and Its Application to CPT Coding

The False Claims Act (FCA) (31 U.S.C. §§ 3729–3733) is a federal law that penalizes individuals and organizations that knowingly submit false or fraudulent claims to government healthcare programs such as Medicare and Medicaid. Violations can result in treble damages (three times the government’s losses) and civil penalties per false claim. The law applies to situations where: 

• A provider bills for a service that was never performed
• A provider bills for a service under an incorrect CPT code that does not match what was actually done
• A service is performed by unqualified personnel when the CPT code requires a licensed professional
• A provider upcodes a service to a more expensive CPT code when a lower-cost service was actually performed

Billing for services in a way that does not align with the CPT code definition constitutes fraud if it results in improper payments. This can trigger investigations by the Office of Inspector General (OIG), the Centers for Medicare & Medicaid Services (CMS), and even the Department of Justice (DOJ).

3. Why Accurate CPT Coding Matters

1. Avoids Legal Consequences – Medical providers and billers who miscode services risk prosecution under the FCA, leading to financial penalties, exclusion from federal healthcare programs, and potential criminal charges.
2. Ensures Proper Reimbursement – Correct CPT coding ensures that providers are fairly compensated for the services they actually deliver while maintaining compliance with insurance requirements.
3. Protects Patient Care – Coding accuracy ensures that patient records accurately reflect the care they received, leading to better coordination among healthcare professionals and improved treatment outcomes.

Summation and Conclusion for This Section…
Understanding CPT coding is not just an administrative necessity—it is a legal obligation with serious consequences for noncompliance. Every CPT code comes with a defined scope of service, personnel requirements, and execution standards that must be followed. Billing for a service in a way that does not comply with the CPT code’s definition can trigger violations of the False Claims Act, exposing providers to legal action and financial penalties. Medical billers and providers must remain vigilant, ensuring that every billed service aligns with documentation and meets the required standards, safeguarding both their practice and the integrity of the healthcare system.

Understanding the Role of PTAs and COTAs in Medical Billing: Why They Are Certified Paraprofessionals, Not Licensed Professionals

In the realm of medical billing and coding, physical therapist assistants (PTAs) and certified occupational therapy assistants (COTAs) play essential roles in patient care but are not classified as licensed professionals. Instead, they are certified paraprofessionals who work under the direct supervision of licensed physical therapists (PTs) and occupational therapists (OTs). This distinction is crucial when it comes to billing Medicare, Medicaid, and private insurers, as billing regulations strictly define when and how their services can be reimbursed.

1. PTAs and COTAs: Certified Paraprofessionals, Not Licensed Professionals

A licensed professional in the medical field—such as a physical therapist (PT) or occupational therapist (OT)—is independently responsible for evaluating, diagnosing, and creating a treatment plan for a patient. They hold state licensure, which grants them autonomous practice authority within their scope.

In contrast:

• PTAs (Physical Therapist Assistants) hold an associate degree and must pass the National Physical Therapy Exam (NPTE) for PTAs to receive their certification. However, they cannot create treatment plans or perform evaluations—only assist in carrying out the interventions prescribed by a licensed PT.
• COTAs (Certified Occupational Therapy Assistants) also hold an associate degree and must pass the National Board for Certification in Occupational Therapy (NBCOT) exam to be certified. Like PTAs, they cannot evaluate patients or determine treatment goals—only assist in executing plans created by an OT.

Because neither PTAs nor COTAs are legally recognized as independent practitioners, their services cannot be billed in the same manner as those provided by a licensed PT or OT.

2. When Can PTA and COTA Services Be Billed?

Billing for services provided by PTAs and COTAs is strictly regulated by Medicare, Medicaid, and private insurers to ensure that only medically necessary, properly supervised care is reimbursed.

3. Medicare Rules for Billing PTA and COTA Services

1. Services Must Be Directed and Supervised by a Licensed PT or OT
   • Medicare requires general supervision for outpatient services (meaning the PT or OT must be available but does not need to be physically present).
   • For skilled nursing facilities and inpatient settings, supervision rules vary by state and facility policy.
2. Modifiers Must Be Used
   • Since January 1, 2022, Medicare requires the use of CQ and CO modifiers when services are delivered in part or fully by a PTA (CQ modifier) or COTA (CO modifier).
   • These modifiers trigger an automatic 15% reduction in Medicare reimbursement.
3. Cannot Bill for Evaluations or Treatment Planning
   • PTAs and COTAs cannot conduct initial evaluations, reassessments, or develop treatment plans. Any service requiring clinical judgment beyond intervention execution must be billed under the PT or OT.
4. State and Payer-Specific Rules Apply
   • Some Medicaid programs and private insurers may have stricter or more lenient rules on PTA and COTA billing, requiring confirmation of specific plan policies.

Risks of Improper Billing for PTA and COTA Services

Billing improperly for PTA or COTA services—such as submitting claims under a PT or OT’s name when the service was actually provided independently by an assistant—could result in False Claims Act violations (31 U.S.C. §§ 3729–3733), leading to hefty fines, recoupment of funds, and potential criminal charges.

To avoid fraud and ensure compliance:

• Always document which provider performed the service and use the correct CQ or CO modifier when applicable.
• Ensure the licensed PT or OT remains involved in case management and treatment oversight.
• Follow Medicare and private payer guidelines to prevent downcoding, upcoding, or unqualified billing.

Summation and Conclusion for the Supplementary Section:

While PTAs and COTAs are invaluable members of rehabilitation teams, they are not considered licensed professionals because their work must be directed and supervised by a licensed PT or OT. Their services can be billed under strict conditions, including proper supervision, modifier use, and adherence to Medicare and insurer guidelines. Understanding these distinctions is essential for ensuring accurate billing, preventing legal risks, and maintaining ethical medical practices.

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Another Blog Post by Direct Care Training & Resource Center, Inc. Photos used are designed to complement the written content. They do not imply a relationship with or endorsement by any individual nor entity and may belong to their respective copyright holders.

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