Private-practice physical therapists had a 19.9% Medicare Part B improper payment rate in the Centers for Medicare & Medicaid Services (CMS) FY 2025 review, against 8.4% for Part B as a whole. CMS projected $732 million in improper payments for the group, which is 2.5% of all Part B improper payments.
The figures come from the CMS CERT error-rate program. The FY 2025 review covered claims submitted from July 1, 2023 through June 30, 2024, and CMS put the national Medicare fee-for-service rate at 6.55%, or $28.8 billion of $439.9 billion paid.
How private-practice therapy compares with other billers
CMS reviewed 510 claims from physical therapists in private practice. The 95% confidence interval for their rate runs from 14.6% to 25.2%, so the true rate is uncertain by several points, but the whole range sits above the 8.4% Part B average (CMS Table A4).
The error mix is narrow. Of the improper dollars for this group, 88.3% were insufficient documentation, 2.9% were no documentation and 8.8% were other errors. CMS recorded 0.0% for medical necessity and 0.0% for incorrect coding. By my calculation, the 19.9% rate is about 2.4 times the Part B rate.
| Provider type (Part B) | Improper payment rate | Claims reviewed | Insufficient documentation share |
|---|---|---|---|
| Chiropractic | 30.4% | 100 | 89.5% |
| Physical therapist in private practice | 19.9% | 510 | 88.3% |
| Occupational therapist in private practice | 12.8% | 45 | 47.9% |
| Physical medicine and rehabilitation | 12.4% | 136 | 53.8% |
| Internal medicine | 9.8% | 866 | 46.1% |
Source: CMS, 2025 Medicare Fee-for-Service Supplemental Improper Payment Data, Tables I1 and J1. Base: claims reviewed in the FY 2025 CERT sample.
Occupational therapists in private practice show a different pattern. CMS found that 32.6% of their improper dollars had no documentation, but it reviewed only 45 claims, so that rate is a weak guide.
The therapy codes behind the rate
CMS also publishes overpayment rates for individual billing codes. Four timed therapy codes appear in its list of the 20 Part B services with the most overpaid dollars. Together they account for about $734 million in projected overpayments (my sum of the four rows).
| Code | Service | Claims reviewed | Overpayment rate | Projected overpaid dollars |
|---|---|---|---|---|
| 97110 | Therapeutic exercises | 214 | 25.2% | $286,653,227 |
| 97530 | Therapeutic activities | 245 | 18.1% | $179,101,995 |
| 97140 | Manual therapy | 223 | 30.5% | $145,990,543 |
| 97112 | Neuromuscular reeducation | 280 | 17.3% | $122,509,052 |
Source: CMS, 2025 Medicare Fee-for-Service Supplemental Improper Payment Data, Table L1. Base: Part B claims reviewed per code.
The intervals are wide. For 97110 the 95% confidence interval is 17.9% to 32.5%, and for 97140 it is 22.7% to 38.2%. CMS also reports lines in error for two of the codes: 21.8% of 285 reviewed lines for 97112 and 21.2% of 250 lines for 97530.
The four codes are a large share of the Part B overpayment total. CMS projected $9.3 billion in Part B overpayments, so the four therapy codes make up about 7.9% of it (my calculation).
What caused the errors
Of the $28.8 billion in national improper payments, CMS attributed $15.3 billion to insufficient documentation, $4.4 billion to medical necessity, $3.5 billion to no documentation and $3.2 billion to incorrect coding (CMS Table A5). Therapy follows the national pattern, with documentation as the main cause.
CMS lists the top root causes by sample claim count. Therapy rules fill most of the list for the category called minor procedures, other (Medicare fee schedule). That category had a 17.6% improper payment rate, $991 million in projected improper payments and 1,236 reviewed claims, which is 3.3% of all improper payments.
| Root cause | Sample claims |
|---|---|
| Therapy certification or recertification missing | 62 |
| Reason for delayed physician certification or recertification missing | 28 |
| Therapy plan of care missing | 20 |
| Required progress report, at least once every 10 treatment days, missing | 12 |
| Units of service coded incorrectly (documentation supports more units than billed) | 12 |
| Therapy plan of care inadequate | 11 |
| Therapy minutes missing | 10 |
Source: CMS, 2025 Medicare Fee-for-Service Supplemental Improper Payment Data, Table 6. Base: sample claims in the minor procedures category with that root cause.
The certification gap leads by a wide margin. Missing certification appears on 62 claims, and the next cause, a missing reason for a late certification, appears on 28. Another 13 claims in the category drew no response to the records request, which CMS counts as no documentation.
What a billing team can check
Each root cause in the table is a record that a billing report can test for before the claim goes out, or that an audit can test afterward. The checks follow the CMS list directly.
- Match each Medicare therapy claim to a signed certification and a plan of care. These two gaps account for 82 of the sample claims in the table above (62 plus 20).
- Count treatment days since the last progress report. CMS flagged 12 claims where the report due at least every 10 treatment days was missing.
- Compare billed units with documented minutes. CMS flagged 10 claims with minutes missing and 12 where the documentation supported more units than the practice billed.
The last check matters for revenue as well as compliance. The 12 unit errors in Table 6 are cases where the record supported a higher payment than the practice claimed.
A practice with several therapists can run the same counts per clinician. With 510 claims behind the national PT rate and an interval of 14.6% to 25.2%, a single practice's own sample will be much smaller, so a rate from a few dozen charts will move a lot from one review to the next.
Sources
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