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  • Writer's pictureNashville PT

Medicare & Cash Based Physical Therapy Practices

Question: Do you lose your freedom of choice of where you can obtain physical therapy services once you have Medicare?

The answer is: YES

One of the most difficult concepts we have to explain to clients inquiring about PT services when they have Medicare, is that since we are an out-of-network provider when it comes to all insurances (meaning we do not hold contracts with insurance companies and we do not file insurance claims for our clients) is that we are not legally allowed to accept direct payment from anyone who has Medicare as their insurance for any service that would otherwise be covered by Medicare (like physical therapy services).

Here's how that conversation typically goes...

Client: So you’re telling me that I can’t pay cash for physical therapy services if I have Medicare, even though I’m not using my Medicare benefits?

NPT: Yes, that is correct.

Client: But wouldn’t paying cash (and not using Medicare benefits) be SAVING the government money by not using government funds? Why am I not able to do this? It doesn’t make any sense.

NPT: Yes, you would absolutely be saving the Medicare program money by paying cash out of pocket for a service and not using Medicare benefits to cover that service. It honestly doesn’t make any sense what-so-ever, and this is only one of the many reasons why the Medicare program is suffering. While we disagree with it whole-heartedly, and we believe it is 100% wrong for Medicare to restrict your choices in your healthcare decisions even when you are not using their funds, we are similarly restricted in that we are held to the federal law on this Medicare rule even when we do not have a relationship with Medicare.

We know what you’re thinking: “This doesn’t seem to make any sense.”

Exactly. It makes absolutely zero sense. Basically, once someone turns 65, they lose the right to choose their provider and receive the level of care they want to receive. And we believe this is wrong.

What is frustrating to us, is that not only are we not able to help those with Medicare, but we also end up having to be the “bad guys” when it comes to breaking this news to Medicare beneficiaries about a law we feel is outdated and unethical. It is difficult to explain why we are restricted by the federal government to treat someone when we can’t put any logic to it what-so-ever when trying to explain why it exists. I mean, how do you explain to the Medicare beneficiary that the government has restricted their right to choose their healthcare provider, even when they are not using the government funded program to pay for their care, AND they would actually be saving government money that could then be used for others in need?

There is no good way to explain it, and we have yet to find someone in the Medicare system or within the government, who is able to explain to us (with good logic and reasoning) why this law is in existence.

The federal law we are referring to is called the Social Security Act's Mandatory Claims Submission rule. The rule makes it illegal, under federal law, for a physical therapist to collect direct payment from a Medicare beneficiary for any service that is covered by Medicare. Even if the PT has no relationship with Medicare. Thanks to this rule, an out-of-network physical therapy practice like ours, is restricted from collecting payment for physical therapy services from anyone with Medicare, even though we do not have a relationship with Medicare.

Yes, it’s the most ridiculous thing ever, and quite frankly we believe it is unethical for the federal government to limit a patient’s choice in their healthcare – especially when the care they are seeking does NOT use their Medicare benefits or cost the government money.

So why aren’t we in-network with Medicare?

Answer: For all the same reasons we are not in-network with ANY insurance companies.

Here are a few key reasons our practice is out-of-network:

  • Cash physical therapy practices exist to provide more one-on-one care for our patients. We can do this because we are not spending our time on submitting claims to insurance companies, all of which require specific rules and stipulations related to billing and collecting. For example, some insurance companies do not allow certain codes to be billed during the same treatment session – regardless of whether it is the service you need most for improvement of your condition. In other words, we exist to work for YOU rather than work for your insurance company.

  • When the specific billing codes are not subject to insurance approval and stipulations, and when we do not have to spend extra time billing and collecting from insurance companies, we can:

1. Use that time to focus on what is most important – YOU. And we can do this in the most efficient and effective way by giving you our full attention with one-on-one care. This allows us to really learn about you and help you achieve your ultimate goals.

2. Avoid playing the insurance mark-up game. You know, the one where healthcare facilities bill insurance at a much higher rate, knowing that they will only get a certain percentage reimbursed. We strictly bill it as it is – no games. (more on this in a previous blog)

3. Keep costs low by not having to hire a full-time administrative person to call insurance companies for pre-approval, to submit claims, to manage billing/collecting, and to dispute the denied claims for simply doing what is best for the patient.

  • This is why, when you visit other PT clinics, you will likely find that each PT sees 2-3 patients per hour. This isn’t by choice, it’s because insurance doesn’t reimburse well for physical therapy, therefore PT’s need to treat/bill multiple patients per hour to cover the costs of the clinic and full-time administrative staff to manage the insurance side of things.

  • In the cash-based model, each PT sees 1 patient per hour and there is no lost time on billing/collecting or required need of an additional staff member to handle insurance issues. Patients know the cost up-front and pay at the time of service – that means no surprise bills! They often require fewer overall visits (because they get a higher quality visit at each session) and save the patient money this way. A typical plan of care at Nashville PT is 4-6 visits vs. the more traditional 12-18 visits that will be recommended at large-volume clinics.

But let’s talk more about Medicare and physical therapy practice:

  • PT’s are not legally allowed to fully opt-out of Medicare. Therefore, PT’s are required by law to submit claims to Medicare directly for any services rendered that would otherwise be covered by Medicare (basically all PT intervention). This is due to the Social Security Act's Mandatory Claims Submission rule, which is applicable all PT’s, even to those providers who are not currently enrolled with Medicare or never have enrolled in Medicare. (Reference: 1-3)

  • Physicians and other providers specified in the law are eligible to opt out of the Medicare requirements for claims submission under the program’s private contracting provisions. The provision allows Medicare beneficiaries to contract privately with physicians for Medicare-covered services. The private contracting rules do not apply to PTs because they are not within the opt-out law’s definition of either a “physician” or “practitioner.” (Reference: 4) . This is why a Medicare beneficiary can pay cash to see a physician but not a PT. These rules were put in place back in the 90's and haven't been changed since.

  • If a non-Medicare enrolled physical therapist accepts payment directly from a Medicare patient for a service that is covered under Medicare, he or she could be subject to federal investigation, as well as financial and other penalties.(Reference: 5)

  • Thus, when furnishing Medicare-covered services, PTs must comply with the Mandatory Claims Submission rule and may not accept cash or out-of-pocket payments from Medicare beneficiaries.(Reference: 1)

In our opinion, this is not acceptable. It not only appears to be age discrimination (since there is a penalty for not taking Medicare at age 65), but it is simply not doing the right thing by the patient. It is restricting patients from having the right to choose their healthcare providers and find the best treatment for managing their condition.

Let’s take action to get this rule changed!

The owners of NPT recently met with the legislative director at Congressman Jim Cooper’s office (TN-05).

Here’s the response we received when asking how we should explain that Medicare restricts people’s rights to choose their healthcare provider and where we should direct them:

“I would just say if you think this should change, contact your congressional representatives (you can look them up online: and”

Trust us, this rule with NEVER change unless there is serious push-back from Medicare beneficiaries and healthcare providers. We are encouraging EVERYONE to take just a moment to reach out to your representative to request a change to the Social Security Act's Mandatory Claims Submission rule.

We will make it easy for you:

To contact your Congressman/Congresswoman:

· In the upper right corner, enter your zip code.

· Then enter your address to find your specific representative.

· Click on the little envelope icon under your representative’s photo.

· Fill out the email information:

o Issue: select “healthcare”

o Subject: enter Social Security Act's Mandatory Claims Submission rule

o Message: (you can copy and paste this message if you would like):

I am writing on behalf of the Social Security Act’s Mandatory Claims Submission rule which is restricting my rights, as a Medicare beneficiary, to see a physical therapist in a cash practice model. I do not think it is right to restrict my choices in my healthcare provider, especially when I would be paying cash to see this provider and NOT using my government funded Medicare benefits. By doing this, I would be SAVING the Medicare program money. I do not believe I should have my rights revoked on choosing the best healthcare provider for my needs when I turn 65 and have Medicare. I do not believe that I should be required under federal law to use my Medicare benefits for physical therapy services when I do not want to use my Medicare benefits for this service. I believe that a physical therapist should have the same rights as a physician or practitioner and be able to “opt out” of Medicare and thus the Social Security Act’s Mandatory Claims Submission rule.

To contact your Senators:

· In the upper left corner, select your State in the dropdown box labeled “Find your Senator”

· You will then find a “contact” you can select under each Senator that will take you to an email

· Enter your contact information

· Follow instructions above for Subject and Message Content. Feel free to copy/paste.



If you are a PT and want to learn more, here is a great reference:

If you’d like to see the actual language surrounding the “mandatory claims submission” rule in The Social Security Act, click here, and scroll way down to section (g)(4)(A).

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