Whether you’re a therapy business newbie or a seasoned pro, there’s a lot to keep straight when it comes to the rules, regulations, and policies that govern billing—to Medicare and private insurance carriers alike. That’s because, while these third-party intermediaries serve as a bridge to reimbursement, they don’t always have your best interests at heart. Shocking, right? As a result, more and more providers are shifting their payment strategy, opting to reduce their reliance on—or in some cases, flat-out ditch—third-party payers in favor of a cash-based business model.

Deciding if “Green” is Good for Business

Switching to a cash-based business model (that’s right—straight cash, homie) could be highly lucrative for your practice. The benefits of this model are twofold:

  1. It removes the insurance middleman (patients instead deal directly with their insurers), and
  2. It emphasizes a quality-over-quantity approach to patient care—that is, one that often requires fewer total visits and allows patients to get better, faster, stronger (thanks, Kanye)—all in a timelier fashion.

This strategy is gaining tremendous popularity among clinicians and patients alike—but, how do you know if it’s right for you?

Justifying the Switch to a Cash Model

There are a few factors to consider as you suss out your cash-based potential, including your own comfort level, your market, and your current payer mix. Remember, if you currently accept Medicare, you’ll need to pay special attention to your responsibilities as a cash-based provider—especially if you choose to change your relationship with Medicare as a result. There are three types of relationships PTs can have with Medicare:

  1. They can be participating providers. This means you’ve signed an agreement with Centers for Medicare and Medicaid Services (CMS) to accept all patients and provide them with any Medicare-covered services.
  2. They can be non-participating providers. This means you still have a contractual relationship with CMS—and cannot turn away Medicare patients altogether—but you don’t have to accept assignment for all Medicare-covered services. Furthermore, providers can, under certain circumstances, charge more than the Medicare-approved amount for any covered services; they cannot, however, charge more than what’s referred to as the “limiting charge.”
  3. They can have no relationship with Medicare. This is pretty simple: if you have no relationship with Medicare, you have not enrolled in CMS (as a participating or non-participating provider). Thus, you cannot treat—or collect payment from—Medicare patients for any Medicare-covered services. However, you can still accept out-of-pocket payment from Medicare patients for non-covered services—including once-annual fitness or wellness checkups.

Keep in mind that when you provide services on a cash-pay basis—to either Medicare or non-Medicare patients—you become responsible for collecting payment directly from your patients. However, some patients may want to work with their insurance carriers to obtain reimbursement for the services you provide—in which case you may need to provide an invoice detailing the charges. So, while going cash-based may relieve you of the claims submission process, it is still imperative that you document thoroughly and maintain detailed patient records (as Ann Wendel explains in this blog post).

Getting Patients Through Your Doors—and Keeping Them Happy

Earning and maintaining patient trust is crucial—not only with respect to clinical outcomes, but also in terms of your potential for business success. After all, as this blog post explains, loyal customers are “the ones who keep your lights on and doors open, and are most likely to advocate for your brand.” So, if you decide to switch up your business model, you’ll need to pay special attention to how that change affects your current patients. Some will welcome the change, some won’t bat an eye, and some may consider abandoning ship to receive care elsewhere. For those patients who fall into the last bucket, you’ll need to provide some type of explanation. It might seem tricky, but your best bet is to be honest and transparent. Luckily, sticking to the truth might not be that difficult, as shifting to a cash-based business model could actually have a positive impact on many of your patients.

To see how, take a look at this handy chart; it shows the costs associated with receiving four weeks of therapy services at a cash clinic versus an insurance-based clinic. Surprisingly, while a patient’s per-visit costs increase in the cash-based setting—he or she is no longer just paying a deductible—the total one-on-one time with the therapist also increases, and the number of visits decreases by more than half (talk about a time-saver). Comparatively speaking, patients may spend a tad more—or potentially about the same amount—for cash-based services than they would otherwise. However, research indicates that their level of care increases exponentially.

Now, if you decide to go cash-based, you may receive questions from patients who are curious about that cost difference. After all, from the patient’s perspective, the out-of-pocket costs (i.e., deductible, coinsurance, and/or copay) associated with a single visit may be lower if that patient stays in-network. Make sure you explain to those patients that, while they’ll likely pay a little more upfront for cash-based therapy, they won’t have to visit your clinic as often, because they’ll receive highly personalized one-on-one treatment. Ultimately, it boils down to what patients value—and you’ll probably find that many of them are willing to pay more if it means receiving more individual attention. Plus, as this blog post notes, there’s always a chance that the patient will receive reimbursement from his or her insurance carrier—even if it only covers part of the cost: “If the insurance company reimburses the patient for 50% of the services provided, that patient’s out-of-pocket costs [could] decrease to…nearly half the cost of attending an insurance-based clinic.” Talk about a win-win.

Sizing Up Your Cash-Based Profit Potential

Taking yourself out of the insurance claim game—and eliminating the need to hire someone to handle claim submissions, denials, and appeals—means reducing your overhead. It also means gaining more control over your practice’s cash-flow. That’s one of the hallmarks of cash-based PT: more freedom and peace of mind as you go about building your business. As Wendel puts it, spending more quality time with patients to help them reach their treatment and rehab goals is also a win-win.

In private practice rehab therapy—and in any in business—decreasing overhead and having more options at your disposal is never a bad thing. If you’re tired of dealing with ever-increasing scrutiny from third-party payers—and you’d rather focus your efforts on providing exceptional patient care—cash-based therapy might be the perfect fit for your practice.


What ongoing issues have you run into while working with third-party insurance carriers? Which factors would you consider before switching to a cash-based business model? Leave your comments below to join the conversation.