It has been over five years since I started my cash-based practice in Austin and had to figure out the regulations on taking private-payment from Medicare beneficiaries. I originally published the article below about three years ago, and this is an editor’s note/addition (10-5-15) to what has become the most viewed article of this website.

As I have consulted with all types of PT practices through the years, I have had to figure out the Medicare regulations as they apply to any PT practice, and find the answers to a great deal of both common and obscure questions. All this information has eventually turned into a book:

Medicare & Cash-Pay Physical Therapy

– a Guide to the Rules and Regulations on Taking Private Payment from Medicare Beneficiaries –

Though the details of this topic span far beyond what you’ll find below, this article remains a very good overview of the subject and starting point to further exploration of cash-pay opportunities with Medicare beneficiaries.

August 2012

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.

  1. You have No relationship with Medicare (you have not enrolled as a “Participating Provider” nor as a “Non-Participating Provider”).
  2. You are a “Participating Provider” with Medicare.
  3. 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 PT 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).

Editor Note: Different components of the information below changed in 2013, so it has been updated to reflect current rules. Due to this, some of the comments for this post (prior to Dec 2013) may not make as much sense if they were based on the information that has changed. (12-3-13)

There are three reasons that Physical Therapy services would not be covered by Medicare:

1)   The first is called a “Statutory” reason. The most important example of this is when a service would be considered “prevention,”  “wellness,” or “fitness.”

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:

  1. When a Medicare contractor will not cover certain commonly used treatments or modalities (like iontophoresis).
  2. As of 2013, the Medicare “Therapy Cap” coverage denial was moved into this “medical necessity” category. At the time of this writing, if you are a Participating or Non-Participating provider treating a beneficiary who has met the Cap, but you believe the PT services are still medically necessary, you cannot just begin taking self-payment from the beneficiary. You must submit the claims with a KX modifier (if it is between $1900 and $3700) and make sure your documentation supports the medical necessity. At $3700, there is a manual medical review process. You can only begin taking self-payment if you get to a point at which you believe (or Medicare decides) that the services are not medically necessary. Please note: before these services are provided on a self-pay basis, you must provide the patient an Advanced Beneficiary Notice (ABN). Please see the following document for great info on the use of ABNs in regards to the Therapy Cap:

Up until early 2013, “maintenance care” also fell into this 3rd category of services that Medicare was not covering (and we could therefore accept private payments from beneficiaries who were receiving our services to maintain a certain level of functioning). The Jimmo vs Sebelius case had an effect on how Medicare views and covers “maintenance” care. It is not the case that Medicare will now cover any and all care that would be considered “maintenance.” It’s a little more complex than that. To summarize the current cash-pay PT and maintenance care topic:

If physical therapy treatment/service is preventing or slowing a patient’s deterioration, and this service could not be provided/reproduced by non-skilled personnel (like a spouse, caregiver, etc.), then those services would be considered “covered services” (unless they fall into other non-covered categories like prevention, fitness, wellness), and you could Not accept self-payment from the beneficiary to provide them.

For more details on this topic, see this article that really goes into the details.

A Loophole?

The 2013 HIPAA rule changes contained some language that some Physical Therapists feel creates a “loophole” to the above limitations on seeing Medicare beneficiaries on a cash-pay basis. Before you get your hopes up, please see this article on the subject. Both ethically and legally, I believe the HIPAA rule changes only allow us to provide covered services on a self-pay basis in a very narrow set of circumstances, and that caution should be exercised if you plan to do so.

Advance 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 going to provide services to a MC beneficiary that may not be considered “medically necessary” then it is mandatory to provide the patient with an ABN before the 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.

If you are a Participating or Non-Participating Provider who has already been treating this patient: once you have determined that the patient will be continuing treatment that is not medically necessary, you need to explain the situation 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 PTs 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.)

When providing services that are never covered by Medicare, it is not mandated you provide beneficiaries with ABNs for these services, but you can certainly create your own written notice to inform them of what they’ll be receiving, what it will cost, and the fact that Medicare will not cover any part of those costs.

ABN Resources 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)

Again, please see the following document for info on the use of ABNs in regards to the Therapy Cap:

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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