By Dr. Ashley O'Rourke PT, DPT, ATC, LAT
Look, let’s just be honest - you’re probably hesitant to go to a physical therapist that is not in-network with your insurance company...and we don’t blame you. After all, you pay good money for health insurance! It would make sense to want to use a service you already pay for.
But does it really make sense? Do we need to use insurance for everything? Should we?
The simple answer when it comes to physical therapy is NO. Generally speaking, you will get more for your money by paying cash, and in a lot of cases it will actually SAVE you money. Keep reading and we will show you exactly how that is the case by doing the math. But first:
What is Cash-Based Physical Therapy?
In a cash-based treatment model, the physical therapist enters into a contract with the patient to provide physical therapy services in a manner that both parties have determined will help them reach treatment goals most efficiently. The patient pays a predetermined amount at the time of service, allowing the therapist to focus attention on providing the best possible service while keeping administrative costs low. You may pay for services using actual cash, a check, or a credit/debit card. You may also use FSA/HSA cards. Think of it as the same way services are rendered for a massage therapist or personal training.
Typically, coding for physical therapy services provided (CPT codes), is determined using a complex matrix of "timed codes" and "untimed codes". This often results in confusing patient bills, as the amount billed to insurance will vary visit to visit based on the exact services provided that day. Cash-based billing eliminates this confusion and allows for clarity in decision making on the part of the patient and their provider. Documentation for evaluations, treatment visits, and progress notes are performed just like any other physical therapy practice and comply with all legal requirements.
What does it mean to be an out-of-network provider?
This simply means that the therapist has not entered into a contract with individual insurance companies to receive reimbursement based on their contracted rates. There are MANY insurance companies, each with their own contracted rates and regulations, and cash-based therapists believe their energy is best spent working with patients. It is important to note that in-network provider status is not currently based on education, experience, skills, or treatment outcomes, but is often determined by the number of providers in a demographic area.
Is it possible for my insurance company to reimburse me?
Possibly! It is possible for insurance companies to reimburse patients depending on the individual provider and plan. There is no guarantee that your insurance company will reimburse you for the services, however, the cash-based clinic can provide you with the paperwork necessary to submit your claim. It is the patient's responsibility to do so and also to provide payment in full, up front, at the time services are rendered.
Most insurance companies, with the exception of Medicare, Medicaid and some HMOs, will provide payment for services received "out-of-network". Going out-of-network means that you can choose to see a physical therapist who is not a participating provider with your insurance company. Many patients choose to receive services out-of-network in order to see the physical therapist of their choice. In the case of cash-based services, it is the patient who is waiting for reimbursement rather than the provider.
Disclaimer: The cash-based clinic provides the required documentation, but is not responsible for reimbursement processing. Insurance companies reimburse patients according to their out-of-network benefits. Reimbursement benefits vary from company to company. Please make sure you understand the terms and conditions of the reimbursement eligibility and process through your insurance provider.
What steps are involved in submitting a claim to my insurance company?
The process is actually quite simple: the cash-based clinic will provide you with an invoice at the time of service (or when you request one), and you may submit that invoice to your insurance company for reimbursement. The invoice has all of the necessary information (business name and address, tax ID, national provider identification, license numbers, etc.) as well as the patient’s ICD-10 (diagnosis) and CPT (billing) codes. You may choose to submit bills following each visit, one time per month, or at any other interval, typically up to one year following your treatment visit.
How is paying cash cheaper?
In many cases, the out-of-pocket expenses for a course of physical therapy will actually be LESS for services provided at a cash-based clinic. In large part, this is due to the ability to charge less per visit, with these charges being well below the national average charge submitted to insurance in a typical outpatient practice. The cash-based clinic can charge less because the simplified cash-based fee structure streamlines billing and does not require hiring billing personnel or paying fees to a third party billing service. This allows the clinic to focus all energy on patient care, and allows patients to make informed decisions regarding the costs of their health care choices.
Let's do the math:
A 60 minute evaluation will be billed to insurance companies at anywhere between $225 to nearly $300 for that evaluation alone. Then about $175-$225 for a follow-up. So:
Insurance-Based Clinic:
1 evaluation (45-60 minutes) + 3 physical therapy visits (30-45 minutes) = 135-195 minutes.
1 evaluation ($275-$300) + 3 physical therapy visits ($175-$225) = $800-$975 billed to insurance.
Sometimes the insurance company will show a “discount” on a patient’s EOB (Explanation of Benefits) and an amount like this will come out to $700-$850 after discounts are applied. That “discount” ultimately reduces the clinic’s bottom line. Guess how clinics typically respond after a number of discounted rates come in? (Hint: They stop accepting that type of insurance, they prioritize patient's with other insurance companies ahead of you, or they base your treatment on what codes they will be reimbursed more for- instead of what is best for you.)
In this scenario you are spending $3.58-$4.35 per minute in the clinic. If this clinic happens to use support staff (aides, techs, or assistants) to administer care (because they are treating multiple patients at the same time) then you are spending only a fraction of that time with your actual therapist.
In this day and age, it is likely that your deductible is going to be well over $1000 per year. This means that you will be responsible for the entire bill (which you will not receive until about 4-8 weeks later). SURPRISE! You wind up with a bill much larger than you expected and, in the meantime, you have likely been attending additional sessions adding more to your tab not realizing how much it is costing you per session. With a high deductible, your insurance company doesn't pay anything- they just get you a "discounted rate" which, in the end, many times is still more than the cash-based rate that you would pay! This scenario doesn’t even factor in copays per visit if you have them...
Cash-Based Clinic
This one is pretty simple.
1 evaluation (60 minutes) + 3 physical therapy visits (3 x 60 minutes) = 240 minutes
1 evaluation ($100-$150) + 3 physical therapy visits (3 x $100-$150) = $400-$600 billed to patient upfront or paid in installments.
No copays, no deductibles, no out-of-pocket maxes to meet (which are rarely ever met without some sort of medical catastrophe).
That equates to $1.67-$2.50 per minute in the clinic. Not only does this route get you a better dollar per minute ratio, but it also gets you the following:
-A therapist who is not drowning in paperwork
-A therapist who is not drowning in other patients
-A therapist who crafts a plan of care that is not predicated on
"playing the game” of insurance authorization
-A clear plan that addresses your individual goals
***Not to mention that most insurance plans still allow for out-of-network benefits and will accept itemized invoices from the cash-based provider for partial reimbursement to you (Making it even CHEAPER per minute!)
What is the downside to seeing a cash-based therapist?
The biggest issue with cash-based PT is that, due to federal laws and regulations, they cannot treat anyone currently enrolled in Medicare or Medicaid. Outpatient physical therapy services are generally covered under Medicare Part B, provided the service is considered medically necessary to treat a disease or condition. Under current Medicare regulations, it is illegal for a physical therapist to accept cash pay from Medicare patients for services that may be covered
under Medicare, even if the services provided meet all treatment, documentation, and HIPAA requirements and have been prescribed by their physician
Second, is that if you are fortunate enough to have very good insurance with a low deductible and little to no co-pay, cash-based PT will actually end up costing you more. The decision you have to make if whether the trade off in quality of care is worth it. Here is a breakdown of the two options/scenarios:
Use Insurance in Insurance-Based Clinic
Low cost
Therapist treats you with 2-3 others simultaneously
Less hands-on time spent with the therapist
Less individualized care leading to longer recovery time
Pawned off to a PT Assistant (Requires an Associates Degree) or an aide/tech (doesn't even require a high school diploma)
Very little time spent with the actual Doctor of Physical Therapy (who, in many clinics, will only do your Initial Evaluation)
Your insurance company will determine when they think you're better enough (not you or your therapist)
You're insurance company will- a lot of the time- not cover things like return to sport or return to running. (So, if those are your goals, they likely will stop paying long before you reach them)
Most insurance companies limit you to 20-30 visits a year (which means they will only pay for about half of the visits required to recover from most surgeries)
Many insurance companies will require a script/referral from a physician before they will pay
But if they deny your visits (because they don't think you need anymore), getting a new script/referral will not make a difference. They will still refuse to pay for more visits.
Will not pay for preventative care
Will stop paying if you do not show enough improvement, but will also stop paying if you show too much improvement (that they think you can do the rest on your own at home)
You may have to wait several days or have gaps in your care if your insurance requires authorization
OR
Pay Cash in a Cash-Based Clinic
Higher cost
Treated 1 on 1 for the entire session
Individualized care means getting better faster
Plenty of time for hands-on, manual care
can be seen for preventative care or sport-performance
Can attend as many sessions as it takes to get better
Plenty of time for questions, explanations and education
Entire time is spent with the Doctor of Physical Therapy
Does not require a referral (in most states that have direct-access)
Can get started right away- no gaps in treatment waiting for authorization
Can work towards YOUR more advanced goals like "return to sport" or "return to running"
Bottom Line/Takeaway Message:
The bottom line is that the insurance accepting clinic makes much less money per patient based on declining insurance reimbursement rates. As a result, they must see more patients to make up for it and use support staff to cut costs. Since the cash-based clinics don't have this problem, and have less expenses overall, they can afford to see less patients and hire only the most highly qualified employees.