Navigating home modifications billing for Medicare-covered clients

Although home modification services are clearly within the scope of occupational therapy, what is not so clear are the options for reimbursement.

As the population ages, and the majority of older adults express a desire to age in place, the need for home modification evaluations and interventions is expanding. Although home modification services are clearly within the scope of occupational therapy, what is not so clear are the options for reimbursement. Many questions arise regarding proper billing.

Medicare-covered clients are entitled, under law, to medically necessary services. Occupational therapy practitioners do not have the right, under current statutes, to “opt out” of Medicare. Any occupational therapy practitioner, even those who are not Medicare providers, must directly bill Medicare for any medically necessary skilled therapy services provided to Medicare-covered clients. Whether or not to bill Medicare for home modification OT services must be based on the occupational therapy practitioner’s clinical determination of whether the services are medically necessary.

This guide first provides a brief overview of the occupational therapy practitioner’s role in home modification and the current Medicare program. Second, case scenarios are provided on some of the factors used in determining whether the services are medically necessary. It should be noted that the scenarios are only examples, and each case requires a unique determination. The occupational therapy practitioner is ultimately responsible for determining Medicare medical necessity for each client.

The foundation of a profession’s scope of practice is inclusion in the educational curriculum, a history of application in practice, and language in state licensure laws and regulations that define a legally recognized scope of practice. Occupational therapy practitioners have a long established proficiency in addressing the impact of the environment on occupational performance. As such, home modification recommendations and services fall well within the scope of occupational therapy and are recognized in most state practice acts.

Are home modifications a covered service under Medicare? Who pays for the service? Can the patient pay out of pocket? The short answer is, it’s complicated.

The Medicare program, administered by the Centers for Medicare & Medicaid Services (CMS), serves older adults and pays for health care expenses. Medical expenses, including occupational therapy services that qualify as skilled therapy, need to be billed to Medicare for payment. **

In addition, services that may be considered skilled in some (but not all) circumstances still have to be billed to Medicare to protect the Medicare-eligible client. This process requires several important steps. The client can be charged privately for these non-covered services, but only if an Advanced Beneficiary Notice of Non-Coverage (ABN) is provided and signed by the patient prior to the service being rendered, with the appropriate billing option selected. Payment may be obtained up front, but must be refunded should Medicare pay any part of the service. Note that the ABN form gives the patient several options regarding billing and payment. The provider should clearly explain each option, but must allow the patient or their representative to select an option free of any influence from the provider. An occupational therapy practitioner who wishes to issue an ABN should read the ABN instructions closely. A claim must then be filed to Medicare utilizing a GA modifier to notify Medicare that an ABN has been obtained, if the beneficiary elects to bill Medicare.

Where do home modification evaluations fall under Medicare coverage requirements? Let’s take a look at three case scenarios.

Scenario 1

Occupational therapy receives a referral from a medical provider to evaluate a client at home who has decreasing functional performance due to a recent acute illness. An occupational therapist completes a functional assessment, reviews the home environment, and makes recommendations for environmental modification as part of the plan of care.

In this scenario, the occupational therapist is providing a service under a therapy plan of care. The home modification evaluation is part of the skilled therapy service being provided to the client. The home modification evaluation would be billed to Medicare Part B using the most appropriate occupational therapy evaluation CPT® code. Further, any additional treatment interventions carried out under the client’s plan of care would also be viewed as medically necessary under Medicare and billed to CMS.

Scenario 2

An occupational therapist is asked by an older client to review and recommend modifications to their home to support aging in place in anticipation of potential future needs. No referral from a medical provider exists. Even though the client had a stroke a year earlier, they are doing much better now and all rehabilitative intervention post-stroke has been completed. The occupational therapist completes a functional assessment and determines the client has no current therapeutic needs. They determine that a formal plan of care is not required, but they make multiple suggestions to the client to promote safety and facilitate ease of navigation within the environment as preventative measures.

This scenario is less black and white. In this instance, the occupational therapist meets with a client and performs a functional assessment. The process is similar to the process in scenario 1, except the therapist ultimately determines that the client does not need to be placed under a Medicare plan of care, which would require setting goals for skilled occupational therapy interventions. Instead, only home modification recommendations are needed, including adding a ramp leading into the home, and installing grab bars in each of three bathrooms. In other circumstances, the home modifications could fall under an occupational therapy skilled service, but based on the therapist’s clinical determination that there is no need for skilled medically necessary therapy, the evaluation is deemed to be non-covered by Medicare. This scenario requires the patient to be issued an ABN in order to bill the patient for the OT evaluation services. A claim must then be filed to Medicare utilizing a GA modifier for denial.

Scenario 3

An occupational therapist is contracted by a home builder to make recommendations for a client’s home.

In this scenario, the occupational therapist’s client is the home builder. In this instance the therapist is not directly in contact with the Medicare beneficiary, and the occupational therapist can receive payment from the home builder as a contractor. Under this scenario Medicare does not have to be billed at all. This service is not covered or paid for by Medicare under any circumstances. A voluntary ABN may be issued to the client to make them aware of their financial obligation; however, it is not required.

The key complicating factors in all of these case scenarios is that occupational therapists cannot “opt out” of Medicare like some disciplines can. This means that the only way an occupational therapist can bill a client directly who has Medicare coverage, without filing a Medicare claim, is when the service is never covered by the Medicare program. If the client in scenario 2 did not have medical issues and was only looking for modifications to prevent a medical issue, and a functional assessment was not necessary, the service would clearly fall outside of a Medicare-covered service (in this case, preventative and not considered skilled therapy) and the patient could be privately billed without the occupational therapist being required to file a Medicare claim.

AOTA supports and applauds occupational therapy practitioners who have identified that, as the older adult population grows, aging in place safely and independently is not only preferred by clients, but also achieves cost savings to the health care system and can result in improved occupational engagement and quality of life. Providing home modifications can open up a wealth of opportunities for occupational therapists. However, when deciding to perform these services, having a clear understanding of Medicare requirements in each unique client scenario is essential. As part of a skilled plan of care, home modifications can be a covered service under Medicare. When in doubt, it is in the therapist’s best interest to complete an ABN and file a claim.

** Section 1848(g)(4) of the Social Security Act requires that all physicians and suppliers (including occupational therapy practitioners), who provide covered services to Medicare beneficiaries submit claims for services rendered to those beneficiaries.