If you’re starting—or have ever started—a private physical therapy practice, then you’ve almost certainly grappled with the decision of whether to accept Medicare patients. And unless your patient demographic absolutely demands that you do, I’m guessing it is—or was—a pretty tough call to make. I’ll be upfront: the title of this post is perhaps a bit misleading, because honestly, there is no one-size-fits-all answer to this question. As such, I can’t, in good conscience, definitively tell you to either accept or not accept Medicare patients in your particular clinic. What I can do, though, is shed some light on the super-wonky, super-confusing rules governing physical therapy’s relationship with Medicare so you can make the most informed decision possible. So, put on your thinking cap and grab a cup of coffee, because we’ve got a lot of ground to cover.

First off, let’s talk about the three types of relationships PTs can have with Medicare, as explained in this blog post by Dr. Jarod Carter:

1. No relationship whatsoever.

If you choose not to associate with Medicare in any capacity, you cannot treat—or collect payment from—Medicare patients for any Medicare-covered services. You can, however, treat Medicare patients on a cash-pay basis for non-covered services, which I will discuss in greater detail below.

2. Enrolled as a participating provider.

If you decide to participate in Medicare, you must bill Medicare for all covered therapy services that you provide to Medicare beneficiaries—even if you believe Medicare will deny the claim. Thus, you cannot collect cash payment for such services directly from a patient—even if the patient wants to pay cash. With this type of relationship, you can still collect cash payment for services Medicare will not cover, either due to statutory exclusion (i.e., services that Medicare never covers) or lack of medical necessity.

  • If the patient would like to pay out-of-pocket for non-medically necessary services, you must issue an advance beneficiary notice of noncoverage (ABN), which serves as a record that the patient agrees to accept financial liability in the event that Medicare denies payment.
  • If the patient would like to pay out-of-pocket for non-covered therapy services, no ABN is required. However, you do have the option of issuing a voluntary ABN, or a similar consent form, as a courtesy to the patient. As Dr. Carter writes, “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.”

3. Enrolled as a non-participating provider.

When you enroll with Medicare, you can choose to do so as a “non-participating” provider. This means that you can collect cash-payment from Medicare patients for covered services that you provide, but as you will see on this Medicare.gov page, there are a couple of major caveats to consider:

  • The fee schedule that non-participating providers must use is 5% below the standard fee schedule
  • You still must submit claims to Medicare; the patient will then receive the reimbursement directly.

Even though you can bill up to 115% of the reduced fee schedule, many providers feel the “extra” reimbursement potential does not make up for the headache of dealing with Medicare and its myriad regulations and complexities, especially if the practice’s patient population is not Medicare-heavy.

“Non-participating” vs. “Opted Out”: What’s the Difference?

Perhaps the most important thing to understand about the non-participating provider designation is that it is not the same as “opting out” of Medicare. This is a major point of confusion for many PTs, because they’ve probably heard that term being bandied about the healthcare community. Essentially, as noted in this Pelvic Health & Rehab Center (PHRC) blog post, “opting out” means a provider “agrees that he or she will not receive payment from Medicare for any patient who visits the practice. The provider can then bill the patient directly.” Unfortunately, physical therapists are not included in the list of healthcare providers who are allowed to opt out of Medicare. Why? Because, as the PHRC article continues, “they are considered a ‘service’ rather than a ‘provider.’” Last year, Rep. Tom Price introduced a law that would change that designation—HR 1310 (The Medicare Patient Empowerment Act of 2013)—but according to Congress.gov, nothing has happened with the bill since March 2013, when it was referred to the Subcommittee on Health. On a side note, you can make your voice on this issue heard by visiting this APTA advocacy page.

The Murky Pool of Non-Covered Services

According to Dr. Carter’s analysis of Medicare policy, there are three main reasons why Medicare would not cover a particular service:

  1. It is a “statutory” exclusion. For PTs, such exclusions typically fall into the “prevention,” “wellness,” or “fitness” categories. In Dr. Carter’s words, “If you can document that the patient is not at your clinic due to a specific pain/injury/dysfunction, but rather to maintain a certain level of wellness/strength/fitness or prevent issues such as falls or health decline, then you should be able accept out-of-pocket payments from them.”
  2. It is an exclusion by “technicality.” For example, if the patient’s plan of care were missing a physician signature, Medicare would not cover the service.
  3. It is not considered “reasonable and (medically) necessary.” In this blog post, I present an in-depth discussion of what, exactly, that term means. But the following excerpt sums up the gist of it:

To help both physical therapists and payers better understand and apply the concept of medical necessity as it relates to therapy services, the APTA adopted the Defining Medically Necessary Physical Therapy Services position in 2011. According to this statement, “physical therapy is considered medically necessary as determined by the licensed physical therapist based on the results of a physical therapy evaluation and when provided for the purpose of preventing, minimizing, or eliminating impairments, activity limitations, or participation restrictions.” Furthermore, therapy treatment is considered medically necessary “if the type, amount, and duration of services outlined in the plan of care increase the likelihood of meeting one or more of these stated goals: to improve function, minimize loss of function, or decrease risk of injury and disease.”

To Enroll, or Not to Enroll: That is the Question

For most PTs, the number-one drawback to treating Medicare patients is the combination of shrinking reimbursements—due to initiatives such as Multiple Procedure Payment Reduction (MPPR)—and ever-increasing regulations and compliance requirements. As physical therapy business expert Chuck Felder writes in this blog post, “In my discussions with practice owners around the country, I hear frustration and resignation. CMS is demanding more and more from us: PQRS, functional limitation reporting, onerous documentation standards, and post-treatment audits. Many are considering dropping Medicare patients. Most want to continue to treat this needy population, but are concerned about the fiscal and frustration implications.”  

It’s not a decision to take lightly, but as I alluded to above, the most important thing to consider as you weigh the pros and cons of contracting with Medicare—at least from a business standpoint—is your payer mix (or, if you’re opening a new clinic, your projected payer mix). According to Dr. Carter, you need to ask yourself:

  • Is your practice located in an area where the majority of people seeking PT are over the age of 64?
  • Could you generate enough business if you did not accept Medicare patients?

For a quick lesson on how to calculate your Medicare payer mix percentage and your average revenue per Medicare visit, check out this blog post. Based on these metrics, if you know your practice would struggle to survive sans Medicare, then you will definitely want to enroll—either as a participating provider or a non-participating provider. If you go the non-participating route, keep in mind that some patients may be hesitant to pay for services upfront if they can get those services from a participating provider without having to pull out their own checkbooks. Also, bear in mind that—as WebPT COO Heidi Jannenga explains in this blog post—over the next 17 years, 10,000 baby boomers a day will turn 65. That’s a business opportunity many PTs simply can’t afford to ignore—especially when their competition won’t.

For many PTs, of course, it doesn’t all boil down to dollars and cents. As Dr. Carter points out, “…I know some [PTs] who couldn’t imagine practicing PT if they were not allowed to treat Medicare-aged patients.” But whether your decision to accept Medicare patients is based on financial reasons or personal ones, if you just don’t want to deal with the stress of waiting for Medicare to process your claims, then the non-participating provider option might be worth considering. Another scenario in which it might make sense to be a non-participating provider, according to Dr. Carter: You’re a participating provider looking into switching to a cash-based model, but you do not want to stop treating Medicare patients. “The infrastructure, staff, and processes are already in place to bill Medicare, so it makes sense if you still want to (or need to) treat this part of the population,” he writes.

On the flipside, if you don’t plan to treat a lot of Medicare-aged patients, then you might not want to bother with enrolling at all—and that’s totally fine. Just make sure the demographics of your customer base support that decision.


Does your practice currently participate in Medicare? Will you continue to do so for the foreseeable future? Why or why not? Share your thoughts in the comment section below.