Over the past year, I have continued to gather information on Medicare and cash-based PT, and have been compiling a full overview of the subject. I didn’t want to simply revise my former post addressing this question, because it would no longer match with some of the reader comments. I also felt that the posts could stand alone and refer to one another, with the former one focusing solely on clinics who have no relationship with Medicare, and this one including all three possible relationships that a Physical Therapist can have with Medicare.
I’ll start by defining those relationships because the answer to this important question completely depends on which of those relationships you are in.
- You have No relationship with Medicare (you have not enrolled as a “Participating Provider” nor as a “Non-Participating Provider”).
- You are a “Participating Provider” with Medicare.
- You are a “Non-Participating Provider” with Medicare. (When you apply to enroll in Medicare, you can elect to be either a Participating or a Non-Participating Provider. I have also heard that there is a period at the end of each year in which you can apply to change your status from one to the other.)
I’d like to clarify something at this point: being a Non-Participating Provider is not the same thing as “Opting out” of Medicare. Similarly, if you do not participate with Medicare in any way (#1 above), this also is not the same thing as “Opting out” of Medicare.
When you hear about health care practitioners “Opting out” of Medicare, please know that this is an entirely different scenario than those described above and does not currently apply to Physical Therapists. At the time of this writing, Physical Therapists are not included in the list of practitioners who can “opt out” of Medicare (outlined in the Balance Budget Act of 1997 and Medicare Prescription Drug Improvement and Modernization Act of 2003).
So now that we’ve defined the different relationships that Physical Therapists can have with Medicare, let’s address the question at hand based on each of those relationships.
1) You have no relationship with Medicare:
In this situation, it is only okay to accept self-payments from a Medicare Beneficiary if it is for a service that would not be covered by Medicare. I’ll give details on non-covered services in a moment. This is the relationship I have with Medicare, and when I originally wrote the popular post addressing this question, I was only addressing this particular scenario. Please see this post for more details and especially for a number of great comments from readers.
2) You are a Participating Provider with Medicare:
Similar to above, if the service would normally be covered by Medicare, you cannot accept self-payment. You must bill Medicare directly for covered services provided to Medicare beneficiaries.
3) You are a Non-Participating Provider with Medicare:
You can accept self-payment from the beneficiary at the time of service, but you still must send in the claim to Medicare. Medicare will then send any reimbursement directly to the patient.
Note: As a Non-Participating Medicare Provider, you can bill the patient up to 115% of the Medicare Fee Schedule.
Three reasons that services are not covered by Medicare
So now we need to define which services are covered and which are not covered (and the scenarios in which covered services become non-covered).
There are three reasons that Physical Therapy services would not be covered by Medicare:
1) The first is called a “Statutory” reason. Two important examples of this are:
- When a service would be considered “prevention,” “wellness,” or “fitness.”
- When the Medicare Therapy Cap has been reached, and the patient does not qualify for an exception.
2) The next reason a service would not be covered is due to a “technicality.” An example of this would be a missing Physician signature on the Plan of Care. (Of course it goes without saying that you shouldn’t use this as a tactic to be able to collect self-payments from Medicare beneficiaries).
3) The third reason is that the services are not considered “reasonable and (medically) necessary.” Some examples:
- When a Medicare contractor will not cover certain commonly used treatments or modalities (like iontophoresis).
- When the service is considered “Maintenance” care. Let’s say a Medicare Provider has been seeing a patient for skilled therapy and the patient is no longer progressing. Medicare would then consider the services “maintenance” and would no longer cover them. You could then accept out-of-pocket payment from the beneficiary.
Advanced Beneficiary Notice
If you are going to collect self-payments from Medicare Beneficiaries, there is important information about Advanced Beneficiary Notices (ABN) that you need to know…
If you are a Medicare Participating or Non-Participating Provider and are going to provide services to a MC beneficiary that are not considered “Medically Necessary” (like the maintenance example above) or go beyond the therapy cap, then it is mandatory to provide the patient with an ABN before further treatment is provided.
The patient should also be informed of what the services will cost. On the ABN they sign, the estimate of the cost should be included on the form, and what they actually pay needs to be within $100 or 25% of the estimate.
Let’s explore an example based on the “Maintenance” scenario above. Once you have determined that the patient will be continuing treatment on a maintenance basis, you need to explain and have them sign the ABN. After the next visit with the (now cash-paying) patient, you will submit a claim to Medicare with a GA Modifier. The GA Modifier tells Medicare that you have an ABN on file for the patient, and also prompts them to automatically deny the claim. After doing this once, you do not need to continue submitting claims for that patient’s non-covered services. (Please note that this paragraph is directed at those practices who have a relationship with Medicare. If you are not enrolled in Medicare with a Provider number, you cannot submit in any bill … even one with a GA Modifier to get a denial.)
With all that said, whether you do or do not have a relationship with Medicare, it is best practice to always use a signed ABN with any Medicare beneficiary who will be paying out-of-pocket for your services (regardless of if the services are maintenance, fitness, post-therapy-cap, etc).
ABN Resources
http://www.cms.gov/Medicare/Medicare-General-Information/BNI/ABN.html Gives you the current and detailed instruction manuals as well as the most up-to-date ABN forms accepted by CMS (at the time of this writing, CMS will only accept a particular ABN form: CMS R‐131)
http://www.advancebeneficiarynotice.net/ is a great site that gives a detailed overview of ABNs (in a slightly more understandable way) and also has the currently accepted ABN forms available for download.
Pricing for Self-Pay Medicare Beneficiaries
Now let’s briefly look at the pricing of our cash-based services in two different scenarios…
1) For the non-covered services of Prevention/Wellness/Fitness, you can price these services at whatever level the market will support.
2) When continuing care on a “maintenance” basis, you should not drop the pricing too far below the Medicare fee schedule. If you do price your maintenance services below the fee schedule, it is probably best if these discounts are given as “same-day payment discounts.”
I hope this post saves a lot of Physical Therapists a lot of time. With that said, I feel compelled to state again that I am not a lawyer and that any decisions based on this information should first be checked with an attorney. Medicare rules and regulations change frequently so it is quite possible that parts of this post could become out-dated and incorrect in the future. I will do my best to stay on top of changes, but I do not accept responsibility or liability for the accuracy of this information; and you should double check everything before acting on it.
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I didn’t know we couldn’t opt out!
What are you writing on the ABN? “I’m not affiliated with Medicare?”
Since I have no relationship with Medicare, the ABN I use is not the CMS R‐131 that Medicare Par and Non-Par providers must currently use. My ABN explains that I am not a Participating Provider with Medicare and that Medicare will not cover services rendered at Carter Physiotherapy. Some ABNs say “may or may not” depending on the clinic and their association with MC, but since I’m not allowed to see MC beneficiaries for any type of normally covered services, mine says “will not.”
thanks for the information, jarod. since you have no relationship with medicare, and you don’t use form CMS R-131, what ABN form do you use?
thanks again,
tricia
If you don’t have a relationship with Medicare, then you need to create your own ABN somewhat fashioned after the CMS R-131. I can’t really post what mine says here, because it’s really something you should have checked by a healthcare attorney who is well-versed in Medicare Law … I wouldn’t want to be responsible for people just copying mine and ever running into problems in the future.
thank you, jarod. i appreciate the reply.
Great post, Jarod.
You are a very clear writer and I appreciate the logical development of your presentation.
Also, you we’re able to present this subject without resorting to the standard “legalese” language we find in the Coverage manuals.
More of us need to be familiar and comfortable with the Medicare regulations because, otherwise, we cede this domain to predatory Medicare Auditors who make their living off of physical therapists.
Thank you,
Tim
I appreciate the kind words, Tim!
Thanks, Jarod! As you and I have discussed, this is a very tricky issue! I’m glad to see that the information I have managed to pull together matches what you have shared here. Thank you for providing a nice, concise summary.
Ann
You’re most welcome, Ann. It took a while but I finally feel that all my (and my readers’) questions were answered, and I could confidently create a more comprehensive overview … but with this topic, it probably won’t be long before the rules change and it’ll be back to the drawing board!
Hi Jarod,
Thanks for the great post on this confusing issue. It looks like the non-participating sounds like the best of both worlds if you wanted to go that route. Other than having to deal with the usual Medicare hassles, what other downsides do you see as being a non-participating provider?
It obviously would be great to not have to deal with it at all, but if someone is starting a new practice would you find it more difficult to get this pt. population to pay cash without having your credibility established yet and/or word of mouth referrals? Could consider dropping it as you build your practice.
Thanks for the comments and questions, Christine.
As for the downsides of being a Non-Par provider, you already nailed it … you still have to send claims to Medicare and deal with the myriad of hassles and costs associated with it; and you can only bill 15% more than the fee schedule. So I think the question is: “Is that extra 15%, and the ability to see Medicare beneficiaries for covered services, worth the hassles and costs of dealing with Medicare.” I’m guessing that most practice owners billing Medicare (Par or Non-Par) are paying someone to do so. If they’re not, they are likely spending way too much of their own time on dealing with Medicare rather than strengthening their clinical practice. That 15% is probably gone in a heart beat, so it probably comes down to your location and whether or not you can thrive without treating Medicare beneficiaries (if you’re viewing it solely from a business/financial perspective). For some PTs, they simply don’t want to turn away this population even if it means more work and less income to do so. I can completely understand and respect this perspective as well. It’s a multifaceted dilemma that each of us must answer based on our individual circumstances, needs, and desires.
I hope I’m understanding your second question correctly, but I wouldn’t suggest anyone start a new practice without already having some sort of reputation and word of mouth referrals available from former PT positions (regardless of business model and Medicare relationship). As for starting a new practice and becoming a Non-Par provider … I tend to think of the Non-Par status as a good stepping stone for an established PT practice to move from being a Participating Provider and wanting to pull away from 3rd party reimbursement. Since you’ll still have to set up and pay for billing, deal with audits, etc. I don’t see a huge advantage for a new practice owner going Non-Par vs Par; especially if you plan to drop provider status altogether. If you plan to build up a patient base that includes Medicare beneficiaries, it will be difficult in the future to have to tell them “I can no longer treat you for normally covered services.” It’s not quite the same as dropping and insurance provider and then telling those insureds “I can still treat you, but I’m now out of network and it will cost you more out-of-pocket.” I hope that makes sense. Let me know if I didn’t answer your question as you meant it.
Jarod was just reading another one of your articles and this question came up for me. I As I am building my private patient caseload under under my own business, I still work for a private OP clinic for extra money and I am considered a participating provider of Medicare at that clinic although I have not established that status for my personal business. Being that I am a provider for this company does that automatically make me an automatic provider for my company even though all of the information that Medicare has regarding me is under the private OP clinic’s name that I work for. Thanks again for all of your research and time.
Dana, When I applied for my Medicare Provider number, I had to be very specific about whether I was with a group, incorporated, sole proprietor etc… So, now that you are on your own, you will likely need to file your own Medicare Provider app so that you are able to get in the system as your own entity. I’ve work many places where I was also a Medicare Provider but that “number” does not follow me to my own private practice. Hope that helps.
Great question, Dana. And great answer Marcia! I actually wouldn’t have known how to answer that one before she responded. As with anything related to Medicare, I would double and then triple check with CMS … you’ll often get different answers every time you call.
Dr. Jarod… I have also found this link helpful https://www.cahabagba.com/part-b/enrollment-2/applications/provider-enrollment/
Marcia
Thanks again Marcia!
I understand that Medicare has now extended the caps on PT + ST services to include hospital outpatient clinics, not just for profit clinics. Apparently most patients choose to stop their services after they have exhausted their annual limit of approximately $1800 limit for reimbursed fees. They are allowed to continue with an appeal, but if denied, they are responsible for the full bill of about $300 per hour! However even with a successful appeal, they can only receive about total of $3500 for reimbursement of PT + ST fees annually.
This really makes me want to step in to offer a lower cost alternative for them to come to me when they have exhausted their annual benefit, to allow them to not have to stop for fear of HUGE bills for needed services.
It is hard right now for me to contemplate, however, charging the per hour rate you have stated in your book. I have been an hourly employee PT for 22 years. Any suggestions for the transition? I don’t want my fear of rejection of the rate by Medicare covered individuals who need / want to continue their therapy despite the cap to cause me to either cave and charge much much less than the market or to not make the leap because of fear that I won’t have enough business to sustain me if I charge that rate.
Thank you recommend being debt free, starting small and growing it organically. It is good to remember that I don’t have to start out in a clinic like I have grown accustomed to working in / supporting their choice for large facilities.
Thanks so much for the questions and for purchasing my eBook. My first suggestion would be to re-read the “Mindset” chapter a few times. Secondly, if you truly believe your services are worth $xxx/hour, then you should charge that even if you think prospective patients will balk at the price. If you want to provide services at a more affordable rate for beneficiaries who have exhausted their benefits, $100-$150/hour is still WAY lower than the $300 they may be paying elsewhere. If you still think you’d have a hard time getting that amount, you may consider other services that would still be beneficial and could bolster the bottom line with more volume … ex: group classes for Tai Chi, water aerobics (local indoor pools may not be expensive to rent per hour), etc.
The idea of marketing directly to Medicare beneficiaries who have hit the therapy cap is a very interesting one, and I think it could work (side note: if you will charging them less than the MC Fee Schedule you should probably do so in the form of a “same day payment discount” from the fee schedule rates). You can start slowly with a space you only pay for per session used (as described in the eBook) while still working elsewhere, and “test the waters” without risking too much money. Be careful about conflict of interest and make sure everything you’re doing is okay with your current employer. Legal issues get expensive fast … even if you didn’t do anything wrong.
Thanks Jarod-
Makes it easy to understand. Will def use it as a reference.
Jess
So glad I can help, Jess.
Let me start with stating that our practice does participate with Medicare. We have a liscensed massage therapist in our office, however she does not work under the supervision of a Physical Therapist, therefor I understand it that Medicare will not cover massage therapy in office? We have many Medicare patients whom are interested in persuing massage therapy as self pay, however I beleive this would be against Medicares guidelines? Is there anyway of getting around this, or can we simply not offer this service to a Medicare patient?
You would first need to find out if “massage therapy” is a “covered service” under Medicare. If it is not a covered service, then you should be able to offer it on a self-pay basis.
I am a physical therapist 20+ years, and soon to be personal trainer. I would appreciate any advice or resources on beginning a cash based business. The business would be based in the clients homes, not a typical clinic.
This site is full of advice on exactly that topic. You might also consider my eBook which explains exactly how I did it. The fact that you’ll be doing home-based visits doesn’t actually change much in terms of how you would market and grow your business. Make sure you check with your State Board for any possible rules or restrictions regarding your business/treatment plans.
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