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Compliance in Cash-Based Practice, Part 1: State Practice Acts, Direct Access, and Licensure

Before you start collecting cash for your PT services, there are a few compliance considerations you need to know.

Keaton Ray
5 min read
October 21, 2021
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As a physical therapist, the ability to spend ample one-on-one time with patients is a gift that many healthcare professionals don’t get to experience. While this remains true in most practice settings, as reimbursement decreases and liability increases, you’d be hard pressed to find a physical therapist who isn’t impacted by the administrative burden that is piling up in our profession. As a result of this increasing pressure, we have seen a dramatic rise in the number of cash-based or “out-of-network” clinics popping up across the country. 

There are a host of benefits that come with working in a cash-based setting, including increased one on one time with patients and decreased paperwork. If this model of care interests you, the market is ripe with opportunity. However, administrative burden—especially that of the compliance type—is not entirely unavoidable. 

It may be tempting to grab a treatment table, head to your local box gym, and start pocketing cash for your services. But now more than ever, it is essential that every physical therapist venturing into business does so with as much attention to compliance as the large PT corporations do. Our brand as a doctoring profession and the authority in movement health depends on it! 

Below are the first three compliance essentials you must consider before treating your first cash-based patient. 

Know your state practice acts.

Our state practice acts are a set of rules that your state has put in place to protect patients from negligent care. All of our state practice acts combined govern the practice of physical therapy. If you’ve paid any attention in the past few years, no doubt you’ve heard of the brutal battles over whether physical therapists can practice dry needling, perform manipulation without a physician script, or order imaging studies. All of these are governed by legislation that has formed our state practice acts. 

There are likely many items in which you disagree with your state practice acts and to make matters worse, many states operate in shades of gray. States widely differ and are often unclear in matters such as PTs ability to give advice on medication, provide nutritional or supplement recommendations, or our ability to provide wellness services.

In a traditional in-network clinic, it is easier to adhere to practice acts for one simple reason: insurance won’t pay for services that aren’t allowed. When you start accepting cash for services and don’t have big brother watching your every move, it becomes much easier to bend the rules. Here’s a prime example: 

Jane Doe, PT becomes certified in dry needling in Virginia and sees the immediate and lasting effect this modality has on her patients. She then moves to Oregon where dry needling isn’t allowed. She decides that because she isn’t billing insurance, she’ll just accept cash for the service and no one will know. It’s what’s best for the patient, right?  

Jane Doe, PT may be correct clinically, but legally she is very wrong. She is directly violating her governing jurisdiction’s practice acts (in this case Oregon), and is setting herself up for violation against her license and possibly a lawsuit. 

The moral of the story is this: know your practice acts in and out. If you practice in multiple states, make sure you know how those practices overlap and differ. And finally, remember that whether you are in a cash-based or in-network setting, it makes absolutely no difference in how you should adhere to your practice acts. 

Follow your direct access laws.

The ability to evaluate and/or treat your patients without a physician referral is known as direct access. Direct access is part of your state practice acts, but it is so vital to the survival of cash based practices that we believe it deserved its own section. 

At MovementX, we have found that the majority of our patients come from word-of-mouth referrals (approximately 68% to be exact), while only 17% come directly from physicians. We believe this is a pattern that will continue to expand with the rise in cash based clinics. While this is a huge win for the profession’s visibility in society, it also presents a unique challenge for cash-based clinics who are required to keep up with plan of care compliance. This becomes particularly challenging as many cash based clinics do not have a full time office administrator. 

As of February 2021, only 20 states have full unrestricted direct access, and 27 states (plus Washington, DC) have their own specific requirements for plan of care compliance. For those of you in Alabama, Missouri, and Mississippi—fire up that fax machine because a physician is waiting to approve your plan of care before you can legally provide treatment. 

Whether you are seeing three cash-based patients on the side or starting up a full-time cash-based practice, you must adhere to your direct access laws. The APTA offers specific guidance on direct access laws on this page.

Understand wellness and licensure requirements. 

Many PTs in cash-based settings find that wellness clients are a reliable and recurring source of revenue. The impact we as PTs can make on a patient’s lives can extend so much further than just sick-care—and cash-based PTs across the nation are capitalizing on this opportunity. When pursuing wellness services, there are some important considerations to be aware of.

You will always be held to the highest standard of your license.

As long as you are a licensed physical therapist, you will always be held to the highest standard of your license. What does this mean? Let’s go back to Jane Doe PT. 

Jane Doe PT has a thriving cash based practice made up primarily of high level olympic weightlifting athletes looking to improve performance. One of her weight lifting clients has a big competition coming up in a month, but starts complaining of low back pain. The goal of their work together is to set a personal record at the competition, so Jane Doe decides to continue to focus on the training regime and not directly treat the back pain. Is this justified?

Even though Jane Doe PT is no longer practicing in a traditional rehabilitation setting and has a niche practice in performance enhancement, legally she will still be held to the standards of a doctor of physical therapy. In this scenario, Jane is not required to treat her client’s low back pain. However, she is required to screen for red flags, modify the exercise regime to prevent undue harm, and then refer to the appropriate healthcare providers (inclusive of a different PT who will directly address the source of pain.) Jane Doe is also required to adhere to her state’s CEU requirements, specific for PT practice (no, those weight training seminars likely don’t count). 

You must always know your practice’s regulations.

If you decide to forego your license as a physical therapist and just practice in a wellness setting, you must make sure you know your new profession’s regulations. For example, as a personal trainer you may not perform manual therapies or manipulation. Additionally, you will need to re-evaluate how you will address a client’s complaints of pain, ensure you are not providing treatment for a specific injury, and have to monitor how you market yourself to clients. 

The liability implications involved with seeing clients in a wellness setting is just as important as that of traditional healthcare, so make sure you protect yourself by knowing how your license entitles you to practice.

Compliance is essential for your safety and the safety of your patients, but don’t let any of the above scare you away from entrepreneurship. WebPT and MovementX have collaborated to bring you plenty of resources to get successfully started in cash-based practice. Here are a few recommendations from those who have been through it time and time again: 

  • Set aside time to focus on administrative work and compliance. You won’t be able to squeeze it in between patients. As a business owner, you owe it to yourself to schedule deep work time. 
  • Ask for help. Find mentors who have owned or operated PT practices in the past. You should not have to reinvent the wheel. 
  • Hire the pros. When it comes to compliance, you don’t have to know it all. Invest in professional help if you have met your bandwidth—it will be worth every penny. 

Now go forth, comply, and prosper!


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