Timely Documentation Failures Can Be Costly

by Zenobia Knight on October 20, 2021




Often, therapy documentation comes under an audit with focus on quality patient care, continuity of care, and supporting the medical necessity of the services provided for coding and billing.

Although allegations of malpractice are raised less often, the importance of thorough documentation as a defense against allegations of malpractice cannot be overstated. Regardless of the reason for the documentation review, it is also important to remember appropriate documentation is necessary to prevent licensing board actions.

The Case

Healthcare Providers Service Organization (HPSO) and CNA released a case study involving a physical therapist fined by two state licensing boards for failure to sign or maintain contemporaneous patient records and failure to include pertinent information in patient records. The physical therapist involved was co-owner of a physical therapy and chiropractic center. There were four patient records reviewed. The insurance company filed a complaint against the physical therapist with the State Board of Physical Therapy.

State Board Findings

  • Failure to sign documentation.
  • Failure to maintain contemporaneous patient records.
  • Incomplete and/or missing documentation, including:
    • Name and license number of the clinician providing physical therapy services.
    • Plan of care, treatments, measurable goals, planned frequency, and duration of treatment.
    • Progress reports.
    • Discharge summaries with reason for discharge and therapy outcomes.
    • Communication with other healthcare professionals treating the patient.

Upon referral from the insurance payer, the State Licensing Board found the therapist was in violation of state patient medical record documentation requirements, as well as being non-compliant with the American Physical Therapy Association (APTA) Code of Ethics, Principle 7, dealing with documentation and coding accurately reflecting the nature and extent of services provided. In addition to the primary licensure state where services were provided, the therapist was reprimanded and fined by the State Licensing Board of a neighboring state where the physical therapist held a license.

Civil Penalties Levied by State Licensing Boards

This case serves as a reminder of the underlying professional licensure risk of poor, inadequate, or missing documentation poses to practices and the licensee. The clinician has a duty to provide documentation that facilitates the patient receiving quality care following the most stringent of the federal, state, professional organization, and payer guidelines; and ensure the documentation supports coding and billing practices. Payers often refer to the Code of Ethics of the APTA, the American Occupational Therapy Association (AOTA), and the American Speech-Language-Hearing Association (AHSA) when conducting documentation audits. When there are egregious concerns, the payer may refer the licensee to the State Licensing Board. Providers must not lose sight of state licensing agencies’ requirements, state medical records retention law, and the national association ethical standards. Violations and non-compliance with any can result in fines, which in this case totaled $15,800 costs. The therapist also had to enter into a program issued by the State Licensing Board to complete the APTA Defensible Documentation Training and was subject to clinical documentation monitoring for one year by a State Board approved monitor. This monitoring also incurs a cost to the therapist or practice.

What is Your Documentation Auditing Process?

Every healthcare organization is required to have a documentation audit process that supports the overall Quality Improvement Program. Do you have an internal documentation auditing process? What is the audit’s focus? Does the documentation audit check for State Licensing Board compliance, as well as payer compliance? Are external auditors used to ensure the documentation meets every aspect of regulatory compliance? Documentation audits can also reveal problems related to staff (and student) supervision, patient management and safety, and overall quality and appropriateness of care. Is the documentation being completed timely and present?

How LW Consulting, Inc. Can Help

  • LW Consulting, Inc. (LWCI) can conduct clinical documentation audits which include billing and coding (ICD-10 and CPT).
  • LWCI offers a web-based documentation tool, ChartVerify®, where providers can conduct documentation audits independently with a monthly subscription. This tool is available for Skilled Nursing, Therapy, and Home Health Providers.
  • LWCI can assist clients in developing Patient Care Policies and Procedures.
  • LWCI can also assist clients with developing and conducting Staff Competency Training with Attestation Acknowledgement.
  • LWCI offers a New Hire Series: Training for Outpatient Therapy Providers which supports New Hire and On-Boarding Policies and Procedures.
  • Finally, LWCI offers Quarterly Compliance Program Oversight services.


LW Consulting, Inc. can assist you with your compliance program and/or conduct a documentation and coding audit. For more information, contact Kay Hashagen at 410-777-5999 or email KHashagen@LW-Consult.com.

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Topics: Documentation, Billing, & Coding