Hiring a PT Billing Service? 12 Questions to Ask First

2 points: one written fee schedule. It says what the percentage is taken from: money actually collected, or charges billed. It names the monthly minimum, if any. It lists every extra, even the $0 ones: setup, credentialing, patient statements, old A/R clean-up and termination.

Red flag: "It depends" with nothing in writing, or extras you only find in the contract.

Ask one more thing. The HHS Office of Inspector General has a "longstanding concern" that percentage billing arrangements may increase the risk of upcoding (OIG compliance guidance for third-party billing companies, 1998). So ask: "How do you make sure you never bill more units than the notes support?"

2 points: PT-only numbers for recent months, with the formula. Use HFMA's standard definitions so every vendor is measured the same way. Clean claim rate is claims that pass edits with no manual work, divided by claims accepted for billing. Denial rate is claims denied, divided by claims remitted (HFMA MAP Keys). Better still if they break denials down by reason code, so you can see which denials a biller should have prevented.

A check you can run yourself: Traditional Medicare does not pay a clean electronic claim before the 14th day after receiving it. It must pay or deny a clean claim within 30 days (Medicare Claims Processing Manual, chapter 1, sections 80.2.1.1 and 80.2.1.2). If clean Medicare claims routinely take longer, ask why.

Red flag: one company-wide number across every specialty they bill, no formula, or "industry-leading" in place of a number. We know of no official PT benchmark, so a vendor quoting one should say where it came from.

2 points: they explain all of this without notes.

• The 8-minute rule. For Medicare timed codes, add up all timed minutes for the day. Then convert: 8 to 22 minutes is 1 unit, 23 to 37 is 2, 38 to 52 is 3, and so on. Untimed codes, like evaluations, bill 1 unit (Claims Processing Manual, chapter 5, section 20.2). To test a vendor, give them the minutes from a real visit and check their units against the 8-minute rule calculator.
• Other payers. They know each commercial payer's own unit rule, because not every payer counts the Medicare way. State Medicaid programs and workers' comp set their own rules too. This part is industry practice: check each payer's policy.
• The KX threshold. For 2026 it's $2,480 for physical therapy and speech-language pathology combined. Claims above it without the KX modifier are denied (CMS Therapy Services). It's tracked per patient, per year, across therapy settings (chapter 5, section 10.3), so ask how they know a new patient's year-to-date spend. KX confirms the records support medical necessity. It isn't a password.
• The $3,000 line. Above $3,000, claims can be picked for targeted medical review (CMS Therapy Services).
• PTA work. When a PTA furnishes more than 10% of a service on their own, the CQ modifier goes on and Medicare pays 85% of the normal rate (CMS Therapy Services).
• GP on every PT line. Medicare requires a therapy modifier on therapy codes; for PT it's GP (chapter 5, section 20.1).

Red flag: "We fix it when it denies." Or any hint that you should bill more units per visit. Overbilled units come back as recoupments, which is its own headache (6 recoupment dilemmas and how to deal with them).

2 points: they handle Medicare enrollment and commercial payer applications, with the fee per payer quoted up front. PTs in private practice enroll in Medicare with Form CMS-855I, on paper or online through PECOS. They track dates. Medicare requires enrolled providers and suppliers, PTs included, to revalidate every 5 years (42 CFR 424.515).

Red flag: "You handle credentialing", fees you hear about later, or nobody watching revalidation dates.

2 points: they check auth status and visits left before each visit. They warn you before an auth or a certification runs out. And they know the rules:

• Since 1 January 2026, Medicare Advantage plans must decide standard prior authorization requests within 7 calendar days and urgent ones within 72 hours. They must also give a specific reason for any denial (CMS-0057-F).
• Medicare Advantage coordinated care plans may use prior authorization only to confirm diagnoses or other medical criteria or medical necessity. An approved course of treatment must stay valid as long as medically reasonable and necessary. A patient who switches into a new plan mid-treatment gets at least a 90-day transition with no new prior authorization for the active course of treatment (CMS-4201-F).
• For traditional Medicare, the physician or NPP should certify the plan of care within 30 days of the first treatment. Recertification is due at least every 90 days, unless a delay is documented (Medicare Benefit Policy Manual, chapter 15, section 220.1.3).

Red flag: "Your front desk handles auths" with no shared tracker, or no warning before anything expires.

2 points: a set schedule in writing (for example, weekly and monthly), showing A/R aging by payer, denials by reason, collections, and days in A/R. HFMA defines net days in A/R as net A/R divided by average daily net patient service revenue (HFMA MAP Keys). Plus your own login to the billing system, so you can check anything yourself.

Red flag: totals only, reports "on request", or no access to your own data.

2 points: month-to-month or a short notice period, in writing. No termination fee. A written run-out plan: who works claims sent before you left, for how long, and what they charge on them. Your data handed back in a format you can use.

Red flag: auto-renewing multi-year terms, termination fees, fees to export your own data, or "we'll discuss that then". No federal rule sets notice periods, so the contract is all you get.

• A signed business associate agreement (BAA) before any patient data moves. By law it must require them, when the contract ends, to return or destroy your patients' health information if feasible (45 CFR 164.504(e)(2)(ii)(J)).
• Payments land in your bank account. Medicare can pay a billing agent directly only if the agent's pay is not tied in any way to the amount billed or collected (42 CFR 424.80(b)(5), applying 424.73(b)(3)). If you pay a percentage of collections, Medicare money should go straight to you.
• Your systems in your name. The practice management and EHR accounts belong to you, or you get a full export of claims, payments and documents when you leave. This one is industry practice.

Red flag: no BAA, or "we'll send it later". Your data living only in their software. Any request to route deposits to their account.

2 points: one named person who works PT accounts, plus a backup. A direct email or phone line. A manager or owner you can reach when something goes wrong. They also tell you where the team works and who touches patient data.

Red flag: a ticket queue, a new rep every month, or "our team" with no names.

2 points: a reply-time promise in writing, their hours with a time zone, an escalation path, and stated turnaround for posting payments and working new denials.

Red flag: no number. "We're very responsive" is not a number.

2 points: a written plan with dates. Your payer list and fee schedules loaded. Electronic claims, remittance and payment enrollment with each payer. Clearinghouse set up. The billing company added to section 8 of your Medicare enrollment, which the CMS-855I says you must complete if you use a billing agency, unless you reassign all your Medicare benefits to a group. A plan, and a price, for your old A/R. The date your first claims go out.

Red flag: "We'll figure it out as we go", or no plan for the A/R you already have.

2 points: two current PT practices with a similar size and payer mix who'll take your call. Even better if one has been with them for years.

Red flag: website testimonials only, "our clients are confidential" with no exceptions, or references from other specialties.