Practice type: Independent chiropractic group Providers: 3 chiropractors (2 full-time, 1 part-time) Location: United States Patient volume: Approximately 1,200 patient encounters per month Payer mix: 31% Medicare, 44% commercial (BCBS, Aetna, Cigna), 15% personal injury/auto, 10% self-pay Services: Chiropractic manipulative treatment, therapeutic modalities, spinal decompression, physical rehabilitation, nutritional counseling (Coding and billing)
Background
When this chiropractic group first contacted Malakos Healthcare Solutions, they came with a specific concern their Medicare denial rate had been climbing for the better part of a year, and one of the chiropractors had recently received a payer audit letter from a commercial insurer requesting medical records on fifteen claims.
The practice had three chiropractors, a front desk team of two, and one billing person who handled all three providers. The billing person was competent and genuinely hardworking she had been with the practice for six years and knew the day-to-day workflow well. But she had never received formal chiropractic billing training, and most of what she knew came from figuring things out as problems arose.
“She’s not the problem,” the practice owner told us during the initial call. “The problem is that we’ve been doing chiropractic billing the way we learned it seven years ago, and I’m not sure that’s the right way anymore.”
He was right. The audit letter that arrived from the commercial payer wasn’t a coincidence. It was the visible symptom of billing patterns that had been building quietly for years.
The Initial Audit – What We Found
Malakos conducted a full revenue cycle audit covering twelve months of claims data, a review of thirty procedure notes from each provider (ninety notes total), six months of ERA and EOB records, and the complete AR aging report.
The audit identified seven specific billing problems some causing denials, some causing compliance exposure, and some simply resulting in the practice collecting less than it was owed on every qualifying visit.
Finding 1 – CMT Region Counts Inconsistently Documented and Coded
Chiropractic manipulative treatment (CMT) is billed based on the number of spinal regions treated:
- CPT 98940 – 1–2 spinal regions
- CPT 98941 – 3–4 spinal regions
- CPT 98942 – 5 spinal regions
The number of regions documented in the procedure note must match exactly the CPT code billed. This seems straightforward — but in practice, it breaks down consistently in high-volume chiropractic offices.
In the ninety-note review, we found:
- 23 notes where the documented region count supported 98941 (3–4 regions) but the claim had been billed at 98940 (1–2 regions) systematic undercoding
- 11 notes where the documented region count was ambiguous the note mentioned spinal areas treated without explicitly identifying the number of distinct regions
- 4 notes where the billed code was 98941 but only 2 regions were clearly documented a compliance risk
The pattern for undercoding was consistent: when the adjustment was performed across the cervical and lumbar spine two distinct regions the billing defaulted to 98940. When thoracic involvement was also documented making it a 3-region treatment the billing still used 98940.
The reason, when we asked, was straightforward: the billing person had been trained to use 98940 as the default and upgrade only when a note explicitly said “three regions.” In reality, the treatment documentation consistently showed three-region involvement it just wasn’t being counted correctly at billing.
Annual revenue impact of CMT undercoding across all three providers: approximately $41,600 based on the per-region reimbursement differential and the visit frequency in the audit sample.
Finding 2 – Modifier AT Missing on Medicare CMT Claims
This was the most urgent finding in the audit not because of the revenue impact, but because of the compliance exposure it had already created.
Medicare covers chiropractic manipulative treatment for acute or active conditions only. To indicate that the service is active treatment rather than maintenance care, Modifier AT must be appended to every CMT code billed to Medicare.
Of the Medicare CMT claims reviewed over the twelve-month audit period, 34% had been submitted without Modifier AT.
The claims without AT had been paid Medicare doesn’t always catch the missing modifier at adjudication. But missing Modifier AT is exactly the type of billing pattern that triggers a Medicare audit when claims are reviewed. More importantly, when Medicare pays a CMT claim without Modifier AT, it can be interpreted as the provider billing maintenance care as active treatment which is the definition of fraudulent billing under Medicare’s chiropractic coverage rules.
The commercial payer audit letter that had prompted this practice to contact us? It was almost certainly triggered by a similar pattern claims where the billing didn’t clearly indicate active treatment status.
Modifier AT was not a revenue issue. It was a compliance issue that needed immediate correction and a retroactive claims review to determine the scope of claims submitted without it.
Finding 3 – Therapeutic Modalities Billed Without Separate Documentation
The practice billed electrical stimulation (CPT 97014), ultrasound therapy (CPT 97035), and mechanical traction (CPT 97012) alongside CMT on a significant share of encounters. These codes are separately billable but only when the therapeutic modality is:
- Documented separately from the CMT in the procedure note
- Clinically distinct from the adjustment a different treatment performed for a separate clinical purpose
- Not bundled by the payer for the specific code combination
A review of the modality claims showed that in 41% of cases, the procedure note documented CMT and listed the modalities performed but did not document the specific clinical rationale for each modality as a separate therapeutic decision. The documentation read as a checklist “CMT performed, e-stim applied, ultrasound applied” rather than as distinct clinical decisions with separate therapeutic goals.
This documentation pattern created two problems. First, some payers were bundling the modality codes into the CMT payment and reimbursing at zero because the documentation didn’t support separate billing. Second, when the commercial payer audit requested records on fifteen claims, the majority of those claims were CMT-plus-modality combinations. The documentation would not clearly support separate billing on audit review.
Annual revenue impact from bundled modality denials: approximately $28,400.
Finding 4 – Active vs. Maintenance Care Not Documented at Transition Points
This finding connected directly to the Modifier AT compliance issue — but had its own distinct revenue and documentation implications.
Medicare’s coverage of chiropractic treatment applies to active care treatment expected to result in functional improvement. When a patient reaches maximum therapeutic benefit and treatment transitions to maintenance care, Medicare coverage stops. The billing must reflect this and the clinical documentation must clearly support the active or maintenance distinction at every visit.
In the audit, we identified a pattern across all three providers: patients who had been in treatment for more than 12 weeks rarely had documentation of ongoing functional improvement goals, objective outcome measures, or clinical rationale for continued active treatment. The notes documented the adjustment performed but not the clinical evidence that the treatment remained active rather than maintenance.
Without this documentation, Medicare CMT claims for long-term patients were vulnerable to post-payment audit recoupment regardless of whether Modifier AT was present. If Medicare audited the records and couldn’t find documentation of active treatment progress, the claims would be considered maintenance care billed as active treatment a finding with significant financial and compliance consequences.
The fix required both a billing correction and a clinical documentation update a form revision that prompted providers to document functional improvement indicators at every visit for patients in treatment beyond the acute phase.
Finding 5 – Personal Injury Billing Not Maximizing Reimbursement
The practice’s personal injury billing 15% of total volume was generating significantly less revenue per encounter than the clinical complexity of the cases warranted.
PI billing in chiropractic allows for more comprehensive E/M documentation and evaluation coding alongside CMT. In many PI cases, particularly those involving recent trauma, new patient evaluations, and cases with documented neurological involvement, additional evaluation codes (99203/99204 for new patients, 99213/99214 for established) and functional capacity assessments are separately billable alongside CMT.
The practice was billing CMT only on PI encounters not capturing the evaluation and management component even when a comprehensive evaluation had been performed and documented in the intake record.
Annual revenue gap from underbilled PI encounters: estimated $22,800.
Finding 6 – New Patient Evaluation Codes Used Inconsistently
When a new patient presents to a chiropractic practice, a new patient evaluation code (99202–99204 depending on complexity) is separately billable on the same date as the initial CMT treatment. The evaluation and the treatment are distinct services the evaluation establishes the diagnosis, the plan of care, and the clinical baseline; the CMT is the first treatment encounter.
In this practice, new patient evaluation codes were being billed inconsistently applied for some new patients and not others, with no clear documentation standard driving the distinction. In approximately 38% of new patient encounters, only the CMT code was billed. In the notes we reviewed, the majority of those encounters contained documentation that supported a separately billable new patient evaluation.
Annual revenue gap from missed new patient evaluation billing: approximately $18,600.
Finding 7 – AR Aging Concentrated in Commercial Payer Denials Not Appealed
The AR aging report showed $142,000 in outstanding balances. Of that:
- $22,000 in 0–30 days – normal pending adjudication
- $31,000 in 31–60 days – starting to require follow-up
- $28,000 in 61–90 days – requiring active escalation
- $38,000 in 91–120 days – at timely filing risk
- $23,000 in 120+ days – critically aged
The majority of the 61–120 day AR was commercial payer denials primarily bundling denials on modality codes and medical necessity denials on long-term patient CMT that had never been appealed. The billing person had been receiving the denials, noting them in the system, and moving on. She didn’t have the time or training to prepare formal appeals with clinical documentation support.
At the 90–120 day mark, some of these denials were still within the payer’s appeal window. Others were approaching or past it.
Audit Summary
| Revenue Gap | Annual Estimated Impact |
|---|---|
| CMT undercoding (98940 vs 98941) | $41,600 |
| Modifier AT compliance (compliance risk, not direct revenue) | — |
| Therapeutic modality bundling denials | $28,400 |
| PI evaluation codes not billed | $22,800 |
| New patient evaluation codes missed | $18,600 |
| Active/maintenance documentation gaps | $14,200 |
| Unappealed AR denials (estimated annual) | $31,800 |
| Total identified revenue gap | $157,400 |
Beyond the $157,400 in quantifiable annual revenue gaps, the Modifier AT compliance issue represented an unquantifiable but potentially significant financial exposure — retroactive recoupment risk on Medicare claims paid without the modifier.
The audit meeting lasted ninety minutes. The practice owner and the billing person were both present. The compliance findings the audit letter, the Modifier AT pattern, the maintenance care documentation gaps were the focus of the first half of the meeting. The revenue gaps were the focus of the second.
“I had no idea the modality documentation was an issue,” the billing person said. “I was billing what was on the charge ticket. Nobody told me the notes had to support separate billing.”
“The AT modifier thing is what worries me most,” the practice owner said. “If Medicare looks back at two years of claims and finds that pattern, what happens?”
We addressed both concerns directly, outlined the compliance remediation steps, and the practice signed with Malakos the following week.
The Transition – First 30 Days
Onboarding took ten business days. The practice used ChiroTouch. Malakos continued working within ChiroTouch no migration, no disruption.
The first priority was compliance. The Modifier AT issue required immediate action on two fronts:
Forward: Every Medicare CMT claim from day one of Malakos management would include Modifier AT where clinically appropriate with documentation review confirming active treatment status before submission.
Retroactive: We conducted a twelve-month retroactive review of Medicare claims submitted without AT. Of the claims identified, we determined that the majority had been submitted within Medicare’s claim review period and consulted with the practice on a voluntary self-disclosure assessment. A corrective action plan was prepared and implemented, including a clinical documentation update for providers treating long-term Medicare patients.
The second priority was provider documentation. We developed a two-page documentation reference for all three chiropractors covering:
- How to document spinal region count clearly and specifically (cervical, thoracic, lumbar, sacral, pelvic each identified distinctly when treated)
- How to document active treatment indicators for long-term patients (functional improvement measures, objective outcomes, treatment goals with measurable benchmarks)
- How to document therapeutic modalities as separate clinical decisions with distinct therapeutic rationale
- How to document new patient evaluations to support a separately billable evaluation code
None of this required the chiropractors to practice differently. It required them to document what they were already doing in a way that clearly supported billing.
The third priority was the AR backlog. Of the $61,000 in 61–120 day denials, $43,000 was still within commercial payer appeal windows. Appeals were filed within the first two weeks of onboarding for every recoverable denial with clinical documentation from the chart supporting the separately billed modality services.
90-Day Results
At the 90-day review:
CMT coding distribution:
| Code | Pre-Malakos | 90 days after |
|---|---|---|
| 98940 (1–2 regions) | 74% | 48% |
| 98941 (3–4 regions) | 24% | 49% |
| 98942 (5 regions) | 2% | 3% |
The shift from 74% at 98940 to 48% reflected the documentation change chiropractors explicitly identifying spinal regions treated, and billing correctly counting them. No upcoding the 49% at 98941 was supported by procedure notes that now clearly documented 3–4 region treatment.
Modifier AT compliance: 100% of Medicare CMT claims submitted with Modifier AT where active treatment documentation was present. Zero Medicare CMT claims submitted without AT. The compliance exposure was eliminated within the first billing cycle.
Modality bundling denials: Down 78% from pre-Malakos baseline. Clinical documentation now supported each modality as a distinct therapeutic service with separate rationale. Payer bundling of properly documented modality codes is significantly less common and when it occurs, appeals succeed at a higher rate because the documentation is clear.
AR recovery from backlog appeals: $38,200 recovered from the 61–120 day denial backlog through formal appeals filed in the first two weeks. $4,800 was beyond recovery past appeal windows or beyond timely filing. $18,000 remained in active appeal status at the 90-day mark, with resolution expected within 30–60 additional days.
Days in AR: Pre-Malakos: 61 days average. 90 days after: 41 days average. Improvement driven by same-week claim submission replacing a 5–7 day charge entry lag and structured AR follow-up replacing the previous reactive approach.
12-Month Results
At the twelve-month review:
| Metric | Pre-Malakos | 12 months with Malakos |
|---|---|---|
| Total net collections | $1,087,000 | $1,285,000 |
| Overall denial rate | 19.4% | 7.2% |
| Days in AR | 61 days | 38 days |
| CMT at 98941+ | 26% | 52% |
| Modifier AT compliance | 66% | 100% |
| Modality bundling denials | 41% of modality claims | 9% |
| New patient eval codes captured | 62% | 96% |
| AR backlog fully resolved | $61,000 outstanding | $0 legacy backlog |
Total revenue improvement year-over-year: $198,000
The gap between the $157,400 identified in the audit and the $198,000 recovered reflects both the AR backlog recovery ($38,200 from legacy denials) and the full-year effect of correctly billed CMT codes and captured new patient evaluations which ramped up over the first 90 days as documentation habits adjusted across all three providers.
What the Practice Said
At the one-year review the practice owner reflected on what the process had revealed:
“The thing that surprised me most was that we weren’t doing anything intentionally wrong. We were billing what was on the charge ticket. The charge ticket reflected what someone had set up years ago. Nobody ever looked at whether it was right.”
The billing person, who had initially been worried that the audit would reflect badly on her work, had a different perspective by year end:
“I learned more in the first month working with Malakos than I had in six years doing this on my own. The documentation guide they gave the doctors changed everything suddenly the notes actually explained what happened in the room, and the billing could reflect that. It wasn’t harder. It was just different.”
The chiropractor who had received the audit letter had the most direct observation:
“That letter was the best thing that ever happened to this practice. If it hadn’t arrived, we’d still be billing 98940 for everything and wondering why our Medicare denial rate kept going up. The letter forced us to look. Looking fixed everything.”
Key Takeaways
CMT region count documentation is the highest-impact coding correction in chiropractic billing. The difference between 98940 and 98941 is one spinal region. In a practice treating cervical, thoracic, and lumbar regions on the majority of visits, the systematic undercoding from this single habit can represent $30,000–$60,000 in annual revenue.
Modifier AT is a compliance requirement, not just a billing preference. Missing AT on Medicare CMT claims isn’t a technicality it’s the mechanism by which active treatment and maintenance care are distinguished for coverage purposes. A practice without 100% AT compliance on active-treatment Medicare claims is carrying audit exposure that grows with every billing cycle.
Therapeutic modality billing requires documentation that supports it. Billing 97014 or 97035 alongside CMT is legitimate when the modality is clinically distinct and separately documented. Billing it without documentation that supports separate billing creates both denial risk and audit exposure. The documentation is the billing.
The AR backlog in most chiropractic practices is larger than anyone realizes. Commercial payer denials that sit unworked for 30–60 days are often still within appeal windows but only if someone is actively managing them. Most chiropractic billing operations aren’t. The result is recoverable revenue that ages into write-offs not because it was unrecoverable but because no one appealed it in time.
Is Your Chiropractic Practice Missing Similar Revenue?
If your practice hasn’t had an independent billing audit in the past twelve months and especially if CMT region count documentation, Modifier AT compliance, and modality billing are not currently being actively reviewed there is almost certainly a version of this story sitting in your revenue cycle.
Malakos Healthcare Solutions offers a free chiropractic billing audit that identifies your specific revenue gaps in dollar terms. Your practice’s data, your practice’s gaps, your practice’s recovery opportunity.
No commitment. No obligation. Just a clear picture of what your billing operation is capturing and what it’s leaving behind.
Schedule Your Free Chiropractic Billing Audit
📞 +1 (307) 441-3431 ✉️ support@malakoshcs.com 📍 Cheyenne, Wyoming – Serving chiropractic practices nationwide
This case study represents a composite of common billing challenges and outcomes seen across chiropractic practices. Practice details have been generalized to protect confidentiality.
Related Reading
- Chiropractic Medical Billing Services
- Top Chiropractic Billing Mistakes That Cause Claim Denials
- Denial Management Services
- Medical Coding Services
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