The four Medicare traps that cost new PT/OT practices the most money

$1,100. That is what one practice owner said she lost on a single case: Part B visits Medicare paid, then recouped, because a home health agency had an open episode on the same patient. She had asked the agency. They told her they billed Part B. They were billing Part A. And it was not a one-off. "We keep getting hit time and time again," she wrote. Thousands of dollars a year.

If you are a PT or OT who just started billing Medicare Part B, this is the list of what will cost you the most money in your first year. None of it is a documentation problem or a coding problem. These are checks Medicare expects you to run on a schedule, and nobody tells a clinician about them until the money is already gone. I learned them the hard way running the back office of our own mobile and telehealth practice.

For each one: what it is, why it costs money, and how to handle it by hand.

1. Open home health episodes

What it is. When a patient is inside an active home health episode, Medicare covers their therapy through the home health benefit under Part A. The agency gets a bundled payment that is supposed to cover the therapy the patient needs during that window. If you bill an outpatient Part B visit on a date inside that episode, Medicare pays it at first and then takes it back when the overlap reconciles.

Why it costs money.The recoupment is the full allowed amount for every overlapping date of service, and it arrives months after you treated. Two things make it worse than it sounds. The agency will not reliably tell you, because the person answering the phone is not the person submitting their claims, and the patient often does not know they are "in an episode" at all. And an episode can open in the middle of your plan of care. The patient has a fall or a hospital stay in week three, gets admitted to home health, and keeps showing up to your visits. Your intake check was correct when you ran it and useless a month later.

What to do about it manually.Check Medicare's eligibility record yourself. Do not take the agency's word for it and do not take the patient's. Run the check before every visit, not just at the start of care, because the risk runs for the whole plan. Look back a year for prior home health, since a patient with recent home health history is the one most likely to be readmitted. And save the result of every check with the date you ran it. If an agency posts its episode late and Medicare backdates it over your visits, the eligibility response from the day of the visit, showing no open episode, is the evidence for a good-faith appeal. Without it you have nothing to send.

2. Medicare Advantage that looks like Part B

What it is. Patients keep the red, white, and blue Medicare card in their wallet whether or not Original Medicare is still their payer. A large share of them are enrolled in a Medicare Advantage plan through a private carrier, and that plan has replaced Medicare as the entity you bill. It has its own network, its own authorization rules, and its own fee schedule.

Why it costs money. You take the Medicare card at face value, bill Medicare, and find out at denial. Now you have a patient who has been treated for weeks under a plan you may not be contracted with, an authorization you never requested, and a claim that has to be rebuilt for a different payer with a timely filing clock already running. If you are out of network with the plan, the patient genuinely is out of network, and the conversation about what they owe happens after the fact instead of before the first visit.

What to do about it manually.Run an eligibility check before the first visit, every time, and read the response for a Medicare Advantage plan rather than stopping at "Medicare active." If it comes back Advantage, you bill the plan, not Medicare, and you find out whether you are contracted and whether the plan wants an authorization before you treat. Re-check periodically through the plan of care. Patients can change plans during enrollment windows without mentioning it, and the card in their wallet will not change.

3. Plan of care certification and the dates that follow it

What it is. Medicare will not pay for outpatient therapy without a plan of care certified by a physician or other allowed practitioner. That means a signature on file, not a referral and not a verbal okay. After that, the plan carries its own calendar: a progress note at least every tenth treatment day, and a recertification before the plan lapses, which for most plans is 90 days.

Why it costs money.Medicare pays the visit and checks later. Claims go out and get paid whether or not the signature is in your file. That is exactly why this is a trap: nothing stops you at the time. An audit can reach back years, and if the certification or the recert is missing or late, every visit under that plan is recoupable, including the ones you were paid for two years ago. A fax that never came back from the physician's office is a liability that sits in your records until someone asks about it.

What to do about it manually.Fax the plan of care for signature the day you write it, log the date it went out, and follow up until it comes back signed. Keep the signed copy where an auditor can find it. Then track three dates per Medicare patient: the certification date, the next progress note (count treatment days, not calendar days), and the recertification due date. Put them on a calendar you actually look at. Send the recert early enough that a slow physician's office does not push you past the 90 days.

4. Supplements and the secondary claim nobody sent

What it is.Medicare pays 80% of the allowed amount. For a patient with a Medicare supplement, the remaining 20% belongs to the supplement, not the patient. In theory Medicare forwards the claim to the supplement automatically once it processes the primary. That is crossover, and it depends on the patient's supplement being registered with Medicare's coordination of benefits records.

Why it costs money. In practice, coordination of benefits is often not set up right. The policy was never registered, or the patient switched supplements and the update never reached Medicare, or the remittance says the claim was forwarded and nothing ever arrives. When that happens the secondary claim does not send itself, and the 20% is not written off deliberately. It is just never billed to anyone. On a full Medicare caseload that is a fifth of your allowed revenue, leaking one visit at a time, and you will not see it in a denial report because there was never a claim to deny.

What to do about it manually.After every Medicare remittance, check whether the visit crossed over. If the supplement has not paid within a few weeks, build the secondary claim yourself from the Medicare remittance: the allowed amount, what Medicare paid, the adjustment codes, and the remaining patient responsibility. The supplement is not recalculating the visit. It pays against Medicare's determination, so the secondary claim has to carry that determination with it. If the supplement has a network (only the uncommon Medicare SELECT policies do), read the policy. For everyone else, being uncontracted with the supplement's carrier does not matter. Medicare pays first and the supplement pays second, whoever issued it.

What we did about it

We got tired of running these by hand, so we built them into HealthSpark and let them run on their own. Before each visit, our AI pulls Medicare's eligibility record and flags an open home health episode or a Medicare Advantage plan, and every check is saved with its date so a late-posted episode gets answered with an appeal instead of a loss. The plan of care faxes itself for signature, and the progress note and recertification dates come due on their own. When the Medicare remittance lands, the secondary claim is built from it and sent to the supplement, with the balance after that going to the card on file.

That is what HealthSpark is: the Medicare back office for PT/OT practices, running automatically. If you would rather keep doing it by hand, the four checks above are the whole job. If you would rather not, it is at joinhealthspark.com.