Are You OverPaying For Misclassified Group Therapy?

Insurance carriers and government agencies have been struggling with this question for decades.  Despite a wealth of coding information to educate providers, and several high-profile fraud settlements to deter them from participating in this behavior, insurers continue to see physical and occupational providers bill incorrectly.  Whether the misclassification is accidental or intentional, it has resulted in millions of dollars of overpayments.

What distinguishes group therapy from one-on-one?  The American Medical Association (AMA) defines group therapy as therapeutic procedures for two or more individuals.  It further states group therapy involves “constant attendance of the physician or other qualified health care professional [ie, therapist], but by definition [group therapy procedures] do not require one-on-one patient contact by the same [person].” The provider should bill one unit of group therapy per day for each person in the group.  The Centers for Medicaid and Medicare (CMS) released clarification in 2002 advising physical and occupational outpatient therapy services provided to two or more individuals simultaneously, constitutes group therapy2.  The American Physical Therapy Association (APTA) guidelines state group therapy can be provided to two or more patients who share a common diagnosis and are doing the same exercises, or group therapy can be provided to two or more patients with disparate diagnoses who are doing different routines3.  This is important because we tend to think of group therapy as a large group of people doing the same routine (think group exercise classes), but as CMS and APTA guidance indicate, group can simply be two patients being overseen by the same therapist in the same time interval.  Double-booking patients is a common occurrence in the rehab world.  If a therapist attends to both patients at the same time, this would be considered group therapy. 

In contrast, one-on-one therapy procedures require direct and constant attendance by a therapist for only one patient at a time.  If a therapist tells a patient to do three sets of exercises, watches one set, and then goes to another patient and does the same thing, it should not be billed as one-on-one therapy.  However, it often is.  Many therapists provide legitimate one-on-one services for a patient’s first session, and maybe a second.  However, the services often morph into group therapy, while the billing does not. 

From a monetary standpoint, it makes sense why unscrupulous providers may choose to misclassify group therapy as one-on-one.  A therapist can only bill one unit of group therapy, per patient, per day, regardless of how long the session lasts.  A unit of group therapy may reimburse at $15 per unit.  On the other hand, a provider can bill a unit of one-on-one therapy for every 15-minute block, and one unit may reimburse at $20.  So in one hour, a provider could receive $15 for one patient (group), or $80 for one patient (one-on-one).  Add that up over time, and it can be a very substantial overpayment. 

Billing group therapy is straightforward.  One-on-one therapy can be trickier, but there are some general rules around billing practices.  A provider should add up all their time spent with a patient over the day, and calculate billing units based on the total time spent performing one-on-one procedures.   One unit of treatment is 15 minutes.  A provider must reach 8 minutes of therapy before they can bill a single unit.  They must then reach 23 minutes (more than halfway past the midpoint of the next unit), before they can bill a second unit.  A provider who does five, 8-minute, one-on-one sessions with a patient over a day, cannot be reimbursed for five units.  They spent 40 minutes of total time with that patient, which means they can bill three, 15-minute units.  It does not matter how many different types of one-on-one services are provided.  If a provider bills services for multiple one-on-one procedure codes, then for “a single calendar day, the total number of timed units that can be billed is constrained by the total treatment minutes for that day.”4

Misclassifying group therapy as one-on-one and manipulating the number of units billed are two very common fraud schemes.  They can be lucrative for providers and damaging to insurers.  However, these schemes can also result in heavy fines and punishment for providers that are caught.  In 2015, Texas-based chain, Nova Healthcare Management, pled guilty to felony workers’ compensation fraud related charges, returned $6.5 million to Texas Mutual Insurance Company and paid a $5,000 fine, after it was established they overbilled by misclassifying group therapy as one-on-one5.  In 2013, the Department of Health and Human Services’ Appellate Division revoked Realhab, Inc.’s Medicare enrollment after Realhab argued their inflated billing was due to their belief they could bill 7.5, 8-minute units per hour.  The Administrative Law Judge and the Appeals Board both found Realhab did not bill properly, and referred to the CMS (and AMA) guidelines on calculating units discussed above.4

Data analysis, using tools like Pulselight, reveals information that can surface those providers billing one-on-one therapy differently than their peers.  An insurer may want to identify providers billing the highest percentage of their therapy as one-on-one.  Or perhaps find the providers who bill more time (via one-on-one units) in a single day than is humanly possible.  Data analysis can find providers who bill multiple claims for one-on-one therapy for a single patient on a single day (instead of combining the minutes and deriving units from the total time).  These types of measures can point to the most anomalous providers, who can then be singled out for records review, audits or investigations, if deemed appropriate. 

Uncovering and pursuing fraud schemes related to one-on-one therapy procedures can have big returns for any program which pays for physical or occupational therapy. 


  1. 2015 AMA Current Procedural Terminology – Professional Edition
  2. Centers for Medicare and Medicaid Services. Change Request 2126. May 17, 2002. https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R1753B3.pdf
  3. American Physical Therapy Association. Coding Interpretations: Group Therapy Patient Scenarios.  July 22, 2015. http://www.apta.org/Payment/Coding/GroupTherapyScenarios/ 
  4. Department of Health and Human Services Departmental Appeals Board.  Final Decision on Review of Administrative Law Judge Decision.  Nov. 19, 2013. http://www.hhs.gov/dab/decisions/dabdecisions/dab2542.pdf 
  5. PR Newswire. Major Medical Chain Pleads Guilty, Repays Texas Mutual $6.5 Million. Feb 10, 2015. http://www.prnewswire.com/news-releases/major-medical-chain-pleads-guilty-repays-texas-mutual-65-million-300033830.html