Dry needling billing
Dry needling is increasingly popular in outpatient rehab and musculoskeletal practices, but billing for it remains challenging. The services are described by CPT 20560 (needle insertion without injection in one or two muscles) and CPT 20561 (needle insertion without injection in three or more muscles). These codes were introduced in 2020, and CMS confirmed in its Change Request R12185 that they are valid for reporting. However, that confirmation did not guarantee coverage.
Because Medicare coverage decisions fall to local contractors, providers face a patchwork of rules. Palmetto reminded clinicians in its Railroad Medicare News update that not all beneficiaries are covered for dry needling even though the CPT codes exist. Similarly, Novitas advises practices to confirm regional policies using its LCD search portal before scheduling or submitting claims
Understanding CPT codes 20560 and 20561 for dry needling services
When CMS created CPT 20560 and 20561, it gave providers a way to report dry needling distinctly from acupuncture or injection procedures. Both codes describe “needle insertion without injection,” but they differ by the number of muscles treated. According to the CMS Change Request R12185, CPT 20560 covers one or two muscles, while CPT 20561 applies when three or more muscles are treated during a single encounter.
These definitions may sound straightforward, but errors occur when providers treat multiple regions and mistakenly bill both codes, or when they document muscle groups without specifying the count. Such oversights are among the most common reasons payers deny dry needling claims.
Why 20560 and 20561 require careful claim setup?
The CMS Change Request R12185 confirms these codes are recognized but does not guarantee payment. Palmetto GBA, in its Railroad Medicare News, reminds providers that not all beneficiaries are covered for dry needling even though CPT codes exist. Novitas, another MAC, maintains an LCD search portal where practices must confirm policy before submitting claims.
Because these codes are untimed and per session, incorrect setup or overlap with other services can lead to denials. This blog breaks down the codes, explains how Medicare and MACs set rules, clarifies frequency and same-day edits, and compares commercial payer patterns. The goal is to help providers set up dry needling billing that is compliant, efficient, and defensible.
Why CPT 20560 and 20561 are classified as untimed codes?
A critical detail is that both 20560 and 20561 are untimed codes. Unlike therapeutic exercise codes such as 97110, which require documentation of minutes under the “8-minute rule,” dry needling is reported once per session regardless of how long the needling takes. The distinction lies not in time but in muscle count.
This means providers should not attempt to bill 20560 twice if they spend more than 15 minutes with two muscles, nor should they bill 20561 multiple times if five muscles are needled in one visit. One code, one encounter. CMS makes this explicit in the Change Request R12185, and Medicare Administrative Contractors (MACs) reinforce it in Local Coverage Determinations.
Documentation requirements that support billing of 20560 and 20561
A clear example might read: “Dry needling performed on bilateral upper trapezius and right levator scapulae (three muscles total) to reduce cervical spasm interfering with overhead reach. CPT 20561 billed.”
PROMBS advises using its CMS-1500 Claim Form Guide to ensure claim lines align with documentation. The Office of Inspector General (OIG) has consistently found that insufficient documentation is a leading cause of improper Medicare payments, making clear and detailed dry needling notes crucial for compliance.
Audit-proof documentation
Audit-proof notes should separate dry needling from other services provided that day. A well-structured SOAP entry could include:
Subjective
Patient reports sharp lateral shoulder pain with overhead reach.
Objective
Trigger point in left infraspinatus with painful arc from 90–120°.
Assessment
DN indicated to reduce spasm restricting pain-free elevation.
Plan
DN to posterior cuff as needed, progressing to scapular loading.
This clarity ensures reviewers see why CPT 20560 or 20561 was billed and why it was medically necessary.
Improper Payment Data and Denial Rates for Dry Needling Claims
For compliance teams and revenue cycle managers, understanding the scale of risk is just as important as knowing the rules. CMS reported in its Improper Payments Fact Sheet that outpatient therapy services carried an improper payment rate of 6.3% in 2023, with insufficient documentation as the leading cause. Although dry needling was only recently introduced into CPT, it inherits the same risk profile, if not more, because coverage is inconsistent and documentation requirements are strict.
The Office of Inspector General (OIG) underscored this vulnerability in its 2018 audit of outpatient physical therapy claims, finding that 61% of claims reviewed did not meet Medicare requirements. In many cases, the failure was linked to incomplete notes that did not justify the service provided. When the same issue is applied to dry needling, where providers must prove the exact muscles treated and the functional reason for doing so, the likelihood of denial increases if documentation is vague.
For compliance directors, the takeaway is that dry needling is statistically more exposed than traditional therapy codes. Each time a provider bills 20560 or 20561 without explicitly documenting muscle count and medical necessity, they risk contributing to the multi-billion-dollar pool of Medicare improper payments flagged each year by CMS and OIG. PROMBS reinforces this in its Specialties page, urging providers to link interventions like DN to measurable outcomes to satisfy payer scrutiny.
How Medicare and MAC Rules Determine Dry Needling Coverage
Medicare’s stance on dry needling is unique because, while CMS officially created CPT codes 20560 and 20561 and confirmed their validity in its Change Request R12185, it did not establish a national coverage determination (NCD). This means CMS handed the responsibility to each Medicare Administrative Contractor (MAC) to decide whether and under what conditions these services would be reimbursed.
This delegation is why coverage varies so much across the country. Some MACs issue Local Coverage Determinations (LCDs) that explicitly exclude dry needling, while others provide limited coverage tied to specific diagnoses or clinical scenarios. For example, Palmetto made it clear in its Railroad Medicare News that dry needling is not covered under Railroad Medicare at all. Meanwhile, Novitas directs providers to verify their region’s policies through its LCD search portal, where DN is often listed as “non-covered.”
What this means for providers
For clinics, this decentralized coverage approach creates both risk and operational burden. Submitting a claim without checking the LCD almost guarantees a denial if the service is excluded in that jurisdiction. Worse, if providers bill without issuing an Advance Beneficiary Notice (ABN) in a non-covered area, they may not be able to collect payment from the patient.
That’s why many practices build LCD verification into their intake workflow. Staff check the local MAC LCD before scheduling or on the first visit, record the LCD ID in the patient record, and, if necessary, issue an ABN that informs the patient of their responsibility. PROMBS recommends combining this policy awareness with line-by-line billing accuracy using its CMS-1500 Claim Form Guide to ensure claims reflect both the code and the coverage status correctly.
Why coverage differs from acupuncture
Another reason MACs are cautious is that CMS distinguishes dry needling from acupuncture. Acupuncture was granted limited Medicare coverage in 2020 for chronic low back pain, but dry needling is considered a musculoskeletal technique rather than an alternative medicine service. CMS reiterated in its Change Request R12185 that DN and acupuncture are not interchangeable, and MACs have therefore issued separate policies.
Frequency rules and session edits
CMS explained in Change Request R12185 that only one dry needling code may be reported per session. Reporting both 20560 and 20561 together triggers an automatic denial.
CMS edits that prevent billing DN and acupuncture on the same date
Dry needling is distinct from acupuncture. CMS edits prohibit reporting DN with acupuncture codes (97810–97814) on the same date of service. PROMBS explains in its Mastering Modifiers 59, 25, and 91 resource that unbundling them with modifier 59 is non-compliant and increases audit risk.
Commercial payer patterns
Commercial insurers vary widely. Some cover DN if documentation proves functional benefit after conservative therapy failed, while others exclude it as investigational. The American Physical Therapy Association (APTA) notes that commercial plans often base policies on internal bulletins, not CMS.
Practices that face prior authorization challenges may benefit from PROMBS’s operational strategies described in Cut Prior Authorization Denials by 30%, which can be adapted to DN claims.
Payer Policy Trends and Utilization Data That Impact Dry Needling Billing
While Medicare leaves dry needling decisions to MACs, commercial payer behavior is increasingly influential. The American Physical Therapy Association (APTA) reported in a 2022 payer policy survey that only 34% of commercial health plans reimburse dry needling, and of those, most require prior authorization or impose frequency limits. This means the majority of patients with private insurance may either face exclusions or strict utilization controls.
Utilization review data also shows that dry needling is billed most frequently in orthopedic and sports rehabilitation clinics, which makes it a focal point for payer medical directors. Because DN is often positioned as an add-on rather than a core service, insurers look for strong outcome documentation to justify its medical necessity. PROMBS highlights in its Cut Prior Authorization Denials by 30% resource that documenting measurable gains, such as increases in pain-free range of motion or functional ADLs, can dramatically improve approval rates.
Commercial payers also track regional variations. Some insurers adopt LCD-like exclusions in line with local Medicare contractors, while others classify DN as “investigational” and deny it outright. The Kaiser Family Foundation (KFF) noted in its Medicare and private payer coverage comparisons that when CMS does not issue a national coverage determination, commercial insurers often default to exclusionary policies. For dry needling, this means clinics cannot assume private payer coverage even if they practice in a Medicare jurisdiction that allows it.
For professional readers, rehab directors, compliance managers, and CFOs, the message is clear: payer utilization patterns, denial statistics, and prior authorization trends should be factored into DN billing workflows. Without aligning clinical documentation to payer expectations, clinics risk not only claim denials but also financial liability shifting back to the practice.
Visual reference for billing and denial logic
| Scenario | Code | Payer behavior | Documentation requirement |
|---|---|---|---|
| 1–2 muscles | 20560 | Payable if LCD allows | Muscle names, rationale, function |
| 3+ muscles | 20561 | Payable if LCD allows | Muscle names, rationale, function |
| Both codes same DOS | 20560 + 20561 | Denied | Choose one, document count |
| DN + acupuncture | 2056x + 9781x | Denied | Document only one service |
| Non-covered LCD | 2056x | Denied | ABN required |
This framework mirrors CMS’s Change Request R12185 and reinforces reminders from Palmetto and Novitas that clinics must confirm local policies before billing.
Why auditors focus on dry needling?
Auditors see DN as high risk because coverage varies and errors are common. The OIG has warned that billing for non-covered services is a major source of improper payments. The GAO has noted that inconsistent MAC policies create confusion that increases denial rates.
How can clinics build compliant workflows?
Best practice is to embed compliance into workflow. Clinics should check LCDs during scheduling, issue ABNs when needed, and configure EHRs to block both DN codes on the same DOS. PROMBS’s Specialties page offers coding resources, while its CMS-1500 Claim Form Guide ensures claims are submitted cleanly.
Conclusion
The current landscape of dry needling billing is defined as much by statistics and payer data as it is by CPT definitions. CMS validated the codes in its Change Request R12185, but improper payment data show that therapy services remain highly scrutinized, with documentation errors accounting for a 6.3% improper payment rate in 2023. The OIG’s 2018 audit revealed that over 60% of outpatient therapy claims failed compliance checks, a finding that applies with even more force to dry needling, where coverage is inconsistent and muscle counts must be exact.
Commercial payer utilization data add another layer, only about one-third of plans reimburse dry needling, and most impose prior authorization or frequency limits. For providers, this means DN claims are not only vulnerable to Medicare LCD exclusions but also to payer-specific utilization rules.
The operational path forward is clear. Providers should verify LCDs through tools like the Novitas LCD portal, issue ABNs in non-covered areas, and document each treated muscle, rationale, and functional goal to support medical necessity. PROMBS offers resources such as the CMS-1500 Claim Form Guide and Cut Prior Authorization Denials by 30% to help clinics align compliance with operational efficiency.
In practice, dry needling remains clinically valuable but administratively complex. By combining CMS guidance, OIG audit lessons, and commercial payer utilization trends, therapy practices can position themselves to deliver dry needling effectively while protecting both compliance and reimbursement.
