Two changes in the Federal Laws/Rules have taken effect in 2013, and have important implications for seeing Medicare beneficiaries on a private-pay basis (for “covered” physical therapy services). In this two-part series, we will look at:

  1. HIPAA Rule changes and whether or not it created a “loophole” that will allow physical therapists to treat Medicare Beneficiaries on a self-pay basis
  2. The Jimmo v. Sebelius federal case and its effect on our ability to accept self-payment for “maintenance” care with Medicare beneficiaries

This is gonna be interesting …

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2013 HIPAA Rule Changes – Can Physical Therapists Treat Medicare Patients on a Cash-Pay Basis Now?

There was a recent stir on Twitter regarding a possible loophole to get around the fact that physical therapists are not included in the legislation allowing us to “Opt Out” of Medicare.  When I first read about this topic, it certainly perked my ears up. Could the Final HIPAA Omnibus Rule changes really give us the ability to see Medicare patients for “covered” services but take out-of-pocket payment from them directly? I didn’t want to weigh in on the article, or the Twitter chatter, until I really researched what was going on and even received some legal consultation on the subject. So let’s dive in.

Before getting into my opinion and conclusions about all this, let’s take a close look at the language in HIPAA itself. As part of the Dept. of Health and Human Services’ (HHS) aim to give patients greater control over how their protected health information (PHI) is utilized and shared, they have now given patients the right to restrict certain disclosures of PHI to a health plan when the individual (or any person other than the health plan) pays for the treatment out of pocket in full.

The segment of the new HIPAA rules we are analyzing is the second half of page 5628 of the Federal Register, Vol. 78, No. 17 (page 64 of this PDF: I would suggest reading it carefully a few times. Specific to our topic, the new HIPAA rules state:

“With respect to Medicare, it is our understanding that when a physician or supplier furnishes a service that is covered by Medicare, then it is subject to the mandatory claim submission provisions of section 1848(g)(4) of the Social Security Act (the Act), which requires that if a physician or supplier charges or attempts to charge a beneficiary any remuneration for a service that is covered by Medicare, then the physician or supplier must submit a claim to Medicare. However, there is an exception to this rule where a beneficiary (or the beneficiary’s legal representative) refuses, of his/her own free will, to authorize the submission of a bill to Medicare. In such cases, a Medicare provider is not required to submit a claim to Medicare for the covered service and may accept an out of pocket payment for the service from the beneficiary. The limits on what the provider may collect from the beneficiary continue to apply to charges for the covered service, notwithstanding the absence of a claim to Medicare. See the Medicare Benefit Policy Manual, Internet only Manual pub. 100–2, ch.15, sect. 40, available at Thus, if a Medicare beneficiary requests a restriction on the disclosure of protected health information to Medicare for a covered service and pays out of pocket for the service (i.e., refuses to authorize the submission of a bill to Medicare for the service), the provider must restrict the disclosure of protected health information regarding the service to Medicare in accordance with § 164.522(a)(1)(vi).”

At first glance, this looked like it could be legal way for PTs to provide “covered” services to Medicare beneficiaries and accept out-of-pocket payment for those services; and in some cases, I believe it is. However (and this is a big “however”), there is a key segment of the language that should not go ignored, and upon consultation with a certain professional organization that will go unnamed here, they too confirmed it is important to consider the meaning of the words, “of his/her own free will.”

I think that even without this “free will” wording, we would all still have an interesting ethical decision to make about how routinely we would use this clause to collect self-payments from Medicare Beneficiaries. But ethics aside, and looking at the wording through a legal lens, the language makes it pretty clear that it would be problematic if CMS or HHS perceived that patients are being influenced or pressured to “refuse to submit claims” in order to obtain treatment. It is my opinion that physical therapists could be putting themselves at risk if their standard policy with Medicare beneficiaries is to present them all with paperwork stating that they refuse to allow the physical therapist to submit claims to Medicare.

With that said, it is not uncommon that I get a calls from Medicare beneficiaries seeking my treatment, who state (before I mention the fact that I’m not a Participating Provider with Medicare), “I know you don’t take Medicare or insurance, but I want to get treatment from you anyhow and just pay you out-of-pocket.” In these specific situations, it is pretty clear that the patient is making that decision “of his/her own free will,” and I would then explain that in order to receive treatment at my clinic, they would need to sign something expressing what they just said and that they do not want claims submitted to Medicare.

So my personal conclusion is as follows: I, as a cash-based practitioner, will only be utilizing this HIPAA rule change to see Medicare beneficiaries for covered PT services in the narrow instances where the prospective patient preemptively states that they do not want to bill Medicare for their treatments.

As I often say, I am not an attorney so this is simply my opinion. In no way am I making suggestions about how everyone else should interpret and use (or not use) these changes in the law.  You and your attorney may come to very different legal (and ethical) conclusions than I have.

So now I would really like to hear what everyone else out there thinks about this. This is a hugely important topic and one that obviously has some room for different interpretations. Please share yours in the comments below and share this post with your colleagues so they can join the conversation.

If you want every last detail on this topic, get the book on Medicare and cash-based physical therapy



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