Bookkeeper for Occupational Therapists

How do OT sessions get paid?

You get paid three ways: a session pay you directly, an insurance company or Medicare pays you after the claim, or a contract payer like a school district pays you at a negotiated rate.

Private pay happens at the time of the session, most times it's paid by card, sometimes by check or cash. Insurance is lighter: you document the treatment, submit the claim, and then the insurance company sends its payment, usually a few weeks later. Medicare has its own set of reimbursement rules, which is why the American Occupational Therapy Association provides a fee calculator to estimate Medicare-covered procedures. Contract work, like seeing children at a school district, is often billed in batches and arrives two or more weeks later.

That difference in timing matters. A month where you billed a lot of private will show in your bank quickly, while a month with heavy insurance claims looks better on paper than in cash, because the claims have not been paid yet.

What are the quiet costs I need to track?

The repeating costs that are easy to skip are your license, liability insurance, continuing education, and the equipment you actually use for sessions.

Your state license renewal is a business expense, and it may come every couple of years, so it surprises you. Professional liability insurance is a set annual or monthly premium, and a business owner policy is often part of the package. Continuing education keeps you licensed and the courses are directly tied to it, so the courses belong in the practice books. You also have real equipment: a sensory cart, a set of adaptogens, or new clinical assessment tools.

For a practice that rents a room from another provider, the rent is real. One practice coach we saw put a one-day-a-week room rental between $200 and $350 a month, which is an example of the size, not a universal number. Mobile or home-based practices may have lower room costs yet higher car and travel expenses instead.

• License renewal fee
• Professional liability insurance and BOP
• Continuing education courses
• Equipment and substitutes that are the replacements
• Rent or loan if you buy a space
• Practice management or invoicing software

Why does my profit look so different from my cash balance?

The biggest reason is that insurance claims sit unpaid for weeks, so you record the income when you invoice but the cash lands much later.

Think of an invoice you send today as a claim that will be paid, not yet. When your books are on a cash basis, the invoice is not on the books until payment arrives. At the same time, you collect co-pays at the session, but the insurance portion is still owed. The two happen on very different schedules.

So a single monthly profit and loss can look great, while your checking account is stressed because the claims for that very same month have not landed yet. The way we handle it, your profit and loss shows the revenue you actually earned for the month, and a separate cash flow report shows what is in the bank and what is owed. That is the numbers you need to make a confident decision about drawing a salary or delaying a purchase.

How should I track revenue?

Track your revenue by the type of service and by payer, so the money is separated before it ever touches the bank.

A private pay session and a Medicare session are not the same number, and they are not paid the same way. The same goes for an evaluation versus a regular session, because an evaluation has a different code and rate. Bookkeeper like us will set up income accounts for evaluation fees and treatment fees, and then split each one by payer. You end up with a row for Evaluation Self-Pay, another for Treatment Medicare, another for Contract School District.

That separation actually change what you see. When you want to know whether it makes sense to take on contract work, you look at that one microscopic account and you have the answer. Without the breakdown, you are just at a jump to find the same mixed number under insurance revenue, which tells you nothing.

Which reports should I run each month?

The three reports that matter are the monthly profit or loss, a cash flow summary, and an overdue aging report for unpaid claims.

Your profit and loss tell the story of the whole practice: how much revenue you booked, how much you spent, and whether the month stood on its own. But it is raw without the cash flow view, because the revenue may be earned and not yet collected. The cash flow summary lists your bank inflows and outflows for the month and tells you whether you have enough cash to pay your insurance or make a share.

The aging report shows which unpaid invoice has been sitting the longest. If a carrier is 30 days late, you notice it in 15 seconds and you can follow up or decide to drop that contract.

You can also run a revenue by source report, which is your product mix. It shows you how much is private pay, how much is Medicare, and how much is contract work. That mix is the insurance of some time to change, and it is the branch point for a business decision.

What decisions should my books support?

Your books should help you answer three questions: per session you truly earn, when you should add another person, and whether a new offering is worth the work.

Take pricing. If you know your fully burdened cost per hour, which includes a portion of your space, equipment, and the overhead, you can see exactly where your session fee sits. If you are below where you need to be, then raising the rate is a decision the books can support. If you want to hire a contractor or an employee, your books show the revenue per additional session and the cost of getting on payroll, so you can see whether the margin will hold.

A new stream, like an online course or a contract program, is also a line you can fund correctly. A separate account for the revenue and expenses for that project means you do not let the new idea hide inside the main practice numbers. The books show you what the project actually did, not what you counted on.