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5 Biggest Cash-Based Therapy Billing Mistakes

Cash-based providers (and some patients) still need to get paid. See out our guide to the biggest case-based therapy billing mistakes

Erica McDermott
5 min read
May 16, 2017
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Whether you’ve jumped on the cash-based bandwagon all the way, or you’ve just added a few cash-pay services to your in-network clinic’s care options, you may be tempted to forgo the billing best practices we’ve been discussing on the WebPT Blog recently. After all, isn’t billing for physical therapy without insurance a piece of cake compared to playing the third-party payer game—and struggling to receive reimbursement? Maybe, but that doesn’t mean you’re totally off the hook when it comes to your billing processes. You do still need to get paid—and in some cases, so do your patients. With that in mind, here are five of the biggest cash-based therapy billing mistakes you should avoid:

1. Failing to maintain proper documentation.

As a healthcare provider, it’s your responsibility to maintain detailed documentation that supports your billing decisions—whether or not you’re contracted with any insurance companies. While you may never have to provide your SOAP notes as part of an insurance audit, you’ll most definitely need them if you plan to collaborate with other providers—or if you ever face a malpractice suit. Not to mention that keeping good records is the best way to track patient progress in the interest of improving patient care; demonstrate your value to patients and referral sources; and ultimately, increase your bottom line.

That’s why cash-based practice maven Ann Wendel, PT, uses WebPT as her documentation software: “I like having everything handled through WebPT,” she says. “It's pretty seamless. I use everything: scheduling tools, automatic appointment reminders—which are invaluable—and online evaluation and treatment note faxing. I like that I can fax my notes directly to other providers and have them review the POC.”

2. Ignoring insurance billing requirements.

While you may have written off insurance companies, there’s a good chance your patients haven’t—which means they may attempt to collect insurance reimbursement for the money they’ve paid you out of pocket. To keep your patients happy—and ensure they’re able to afford your services—you still need to stay up to date on the rehab therapy-specific billing codes each payer requires, including these new ones. Plus, if your patients require prior authorization to receive reimbursement for your services, you’re the only one who can request it.

As I wrote in this blog, “Wendel has a form she provides to patients that they can use as a prompt to ask their insurance company the right questions about their out-of-network benefits. If they do require authorization paperwork, Wendel fills out the forms for them: ‘Only the providers can, so I do it as a service to my patients so that they can get reimbursed.’" Then, after each visit, Wendel provides her patients with an invoice that they can “submit to their insurance company for reimbursement,” she said. “The invoice has all of my pertinent business information (contact information, tax ID, etc.) as well as the patient’s ICD code and the CPT codes billed for the session. The invoice contains a statement that the patient has paid in full for the visit and that reimbursement should go directly to the patient.” (As ActivCore’s Ian Kornbluth explains in this post, though, you may need to be credentialed with a specific insurance company before it will recognize you as a provider and reimburse a patient for your services.)

3. Setting unclear expectations.

Health insurance terminology can be confusing for even the most savvy patient, which is why it’s imperative you ensure that all prospective patients understand exactly what it means to see a cash-based provider. That includes telling them what, when, and how they’ll be charged for your services—as well as what steps they’ll need to take in order to request reimbursement from their insurance companies. Ideally, this conversation will take place prior to the patient’s first visit to your office. And cash-based providers—just like in-network-providers—should collect all patient payments at the point of service, which means you may want to consider accepting multiple forms of payment. That way, a patient forgetting his or her checkbook won’t throw a wrench in your collection efforts—or your cash flow.

4. Accepting cash from patients when you shouldn’t.


Unless you’re a non-participating Medicare provider, you may not accept cash from Medicare beneficiaries for Medicare covered-services. As a reminder, PTs have three options when it comes to their relationship with Medicare:

  1. No relationship: PTs who have no relationship with Medicare may not provide covered services—such as physical therapy—to Medicare beneficiaries. However, they may provide non-covered services, including wellness services.
  2. Non-participating provider: PTs who are non-participating providers may accept  cash-payment from Medicare beneficiaries at the time they provide service; however, they must submit the claim to Medicare, so that Medicare may reimburse the patient directly.
  3. Participating provider: PTs who are participating providers accept and bill Medicare for all patient visits. They may not accept payment directly from a patient—outside of the standard deductible and coinsurance—for any Medicare-covered service.

To learn more about providing cash-pay services to Medicare beneficiaries, check out this three-part blog series from Jarod Carter, DPT.

Private Insurance

If you’re still under contract with any third-party insurers, then you may also want to heed Carter’s advice about providing cash-pay services to those patients: “There are certain things that must be kept in mind to ensure you are not violating your contracts with insurers, and possibly breaking state laws,” he said. “First and foremost, carefully check the contracts you have with third-party payors. They unfortunately may not allow you to ‘just take cash’ from a patient with that insurance, even if the patient wants to be self-pay. There is often a clause that mandates you directly bill the insurance company for any covered services provided to their insureds.” We recommend reading Carter’s article on the subject in full, and, if you’re ever in doubt about the legal ramifications of accepting cash from a patient, then reach out to a healthcare attorney with expertise in this area.

5. Charging less than what the market supports.

According to Wendel, cash-based therapists “can charge whatever the market bears in [their] town/city.” Insurance companies reimburse patients according to their own fee schedules, and each insurance company has a “different rate of reimbursement for different codes.” It’s important to remember that “as a provider, you do not have control over what the insurance reimburses, only over what you bill/receive as payment from the patient,” Wendel said.

To figure out what to charge for your services, Wendel recommends considering “overhead costs, caseload size, and clinic location” as well as “the amount of income you need to generate to live on and keep your practice running smoothly.” Charging anything less than that could be bad for business.

There you have it: five of the biggest cash-based therapy billing mistakes. Looking for more great cash-based resources? Check out this section of our blog for everything we’ve ever published on the subject. After all, cash-based businesses are on the rise right now.


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