Founder Letter: Rebelling Against Reimbursement Cuts With Alternative Revenue Streams

Star Wars is never far from the thoughts of any pop culture fan; how could it be, when there’s always a new show airing, or about to air? (Not that I’m complaining.) But Luke, Leia, Han, and company certainly come to mind when I think about the current state of rehab therapy: a skilled and scrappy group trying to make positive changes in the face of setbacks and long odds, up against a constantly looming threat (more reimbursement cuts) and an imperious, impersonal organization (CMS). And like our favorite band of space rebels, we’ll have to get creative if we want to keep our movement going long enough to score some decisive victories.

CMS has taken a lightsaber to reimbursement rates— and clinic budgets.  

If this blog had an opening crawl, it would inform readers that it’s a dark time for rehab therapy budgets. Payment cuts have become the norm in each year’s Physician Fee Schedule; our lone reprieve in the past five years has been CY 2022, when we were fortunate to skate by with no adjustment to the reimbursement rate whatsoever. To add to this, the conversion factor has decreased from $36 to $33.59 since CY 2018, with another drop to $33.09 slated in this year’s proposed rule.  

These cuts are taking a toll on clinics and therapists as they struggle to make up the difference year after year. As our 2022 State of Rehab Therapy report found, patient volumes are increasing to compensate for shrinking payments per visit, and rehab therapy is experiencing a growing burnout crisis, resulting in an uptick of resignations. With rising inflation and the mounting student debt crisis, clinic expenses have skyrocketed, stretching private practices to their limits.

The bottom line? Well, those are shrinking too—and without better options for increasing clinical revenue, we risk losing more and more therapists to job dissatisfaction, career disenfranchisement, and low pay in the coming years.  

Diversifying revenue is “the way.”

Maybe the comparison to a galactic struggle for freedom is a stretch, but the years spent fighting against these cuts only to see another round of reductions can leave even the most stalwart rehab professionals believing that nothing will ever change. But as Obi-Wan Kenobi taught us in disabling the Death Star tractor beam, there’s something to the idea of attacking a problem with a new approach—and a bit of guile.  

Despite our advocacy efforts, there’s still work to be done to reverse the overall trend of payment cuts—which is why every therapist should take advantage of new services and alternative revenue streams to diversify their income and improve their cash flow.  

Advanced Diagnostic Testing 

Musculoskeletal (MSK) ultrasound testing, electromyography (EMG) testing, and nerve conduction studies (NCS) are incredibly useful in augmenting clinical diagnosis for MSK, muscle, and nerve conditions—and are all billable services that can potentially increase your revenue per visit depending on the payer. These tests help clinicians better understand a patient’s underlying issues and develop a comprehensive treatment plan based on that information. The result? Better, more informed care decisions—think of it as plugging R2-D2 into the Millenium Falcon. 

And it’s not just clinicians that benefit from improved knowledge; in this study of patients who received EMG or NCS testing: 

• 89.8% better understood their condition; 
• 92.45% were reassured about their condition;
• 89.1% were better able to manage their condition; and  
• 92% reported high or very high perceived value from the test(s).  

Diagnostic testing also opens up more CPT codes that clinicians can bill for. As Dimitrios Kostopoulos, DPT, MD, PHD, DSc, ECS, co-founder of Hands-On Companies pointed out in this blog post, a single session of EMG with neuro-ultrasound typically reimburses for $700, compared to the current national reimbursement average of $97 for an hour of physical therapy.

It can also make rehab therapy clinics more appealing for referrals. As Kostopolous explained in this article, MSK ultrasound, EMG, and NCS testing offer a high degree of sensitivity and specificity in determining a patient’s condition, especially for difficult diagnoses. And as he noted later in the article, “Insurers love it when physical therapists are positive in their diagnosis, rather than pretty sure”—a sentiment no doubt shared by physicians and patients alike.     

The barriers to entry for diagnostic testing can seem daunting; as Kostopolous also explained, implementing diagnostics in your clinic requires money for equipment, as well as training and mentorship. For those clinicians seeking the latter, Hands-On Diagnostics offers a Residency in Clinical Electrophysiology as well as a Fellowship in MSK Ultrasound.    

Remote Therapeutic Monitoring

Like the stolen Death Star plans, remote therapeutic monitoring (RTM) is a gift that has fallen in the laps of clinicians as it’s an incredible option for any rehab organization looking to improve patient outcomes while increasing revenue. 

The introduction of RTM CPT codes in the 2022 final rule meant therapists can actually bill for the remote care and communication they were likely already providing patients. This ability to expand high-quality care beyond the clinic walls can help our profession keep pace with the ongoing shift toward value-based, digitally driven care. 

As Therasa Bell, President and CTO of Kno2, stated in our industry report, “Rehab therapy should not be contained in a session or series of sessions. Engaging with the patients remotely and allowing them to manage their care in their environment, while assisting them through the process and being able to provide options to accelerate their outcomes is critical, as is reducing the cost of care delivery.” And RTM is a key player in this.

Additionally, RTM can provide significant revenue advantages. As we laid out in this blog post, a clinician billing for RTM codes 98975, 98977, 98980, and 98981 with the appropriate medical software (like the Keet app) could potentially be reimbursed for $160 per patient, per month, as opposed to the $90 market average. Apply that math across all RTM-eligible patients, and that’s a considerable boost to your clinic’s bottom line—all without having to change up your organization’s workflows drastically to make RTM work. 

Cash-based Services

One of the more prominent trends in revenue diversification is offering cash-based services. In fact, according to our 2022 industry report, it remains the leading strategy for offsetting declining reimbursements. In total, 56.9% of the clinic owners who responded to our survey said they already offer cash-based services, and another 23.8% stated that although they don’t offer these services yet, they have a strong desire to do so in the future.

The reason for this is fairly straightforward: cash-pay models enable therapists to cut out costly expenses and revenue lag times. It can also provide a path to severing ties with low-paying insurers. Substituting these subpar revenue streams with straight cash can go a long way to bolstering your clinic’s profit margins. 

What’s more, cash-pay services can also help improve the patient experience and alleviate therapist burnout. Susan Lofton, MPT, Digital Health and Transformation Specialist at WebPT, elaborated on this in our report: “In many ways, incorporating cash-based services is a ‘win-win’ for burnt-out practitioners who are often governed by the insurance policies rather than by what they feel is best for the patient, and for patients who want more personalized care that is more proactive or preventative in nature and in the long run may even be less expensive than insurance. My prediction is that this will be a big wave of the future.” 

So, if you’re thinking about taking your “first step into a larger world,” some common cash-pay wellness and fitness services you can incorporate are:

• Massage and acupuncture;
• Personal training, aftercare and group exercise;
• Nutrition counseling;
• Retail sales; and 
• Telehealth.

If you’re considering any of these, I recommend taking a peek at our guide to adding cash-based health and wellness services. Not only can it help you create a cash-pay game plan, but it’s also full of useful tips to help you toe the line when it comes to Medicare compliance.

Dry Needling

Dry needling is a popular and in-demand treatment that, if permitted in your state, can be another great addition to your clinical offerings. While its efficacy is proven, it has yet to gain widespread acceptance within the healthcare community—perhaps in part due to some initial objections from acupuncturists. What’s more, PTs are still not allowed to bill Medicare for dry needling. And while many private payers may reimburse for dry needling, others are not yet on board, leaving it as a largely cash-pay service at the moment.     

Dry needling fits into your current workflows—from a certain point of view.

Current CMS restrictions means that therapists have to get creative in how they perform dry needling with patients to bill for it. For example, if you have the patient completing movement while you’re employing dry needling, you may bill it as therapeutic exercise. Similarly, incorporating dry needling into your manual therapy or neuromuscular re-education activities can allow you to bill it as such, but is still subject to state and payer regulations.

And just because CMS doesn’t allow PTs to bill Medicare for dry needling doesn’t mean that Medicare patients are off the table (pun intended) for these services. As APTA outlines in the article linked above, PTs can bill a beneficiary for dry needling services if they:

• Provide patients an Advance Beneficiary Notice (ABN);
• Include codes 20560 or 20561 on the claim; and
• Affix a GA modifier to the claim. 

Dry needling may not be the top profit driver for many therapists, but its popularity can make it a great tool for getting more patients through the door, and into the rehab therapy funnel.

Home-Based Care 

COVID-19 didn’t offer many silver linings, but it did highlight the convenience of home-based health care. And as the pandemic recedes, more patients are looking to continue with at-home services rather than returning entirely to in-person visits. As such, in-home visits can be a new avenue to reaching more patients, whether they have mobility issues, live in isolated rural areas, or are simply looking for a more convenient rehab experience.

As Yoda might say, “Already know clinicians that which they need.”

In-home treatment is less about expanding what you’re offering patients and more about how you’re offering it; you’ll still be billing payers (or taking cash payment) for many of the services you’d otherwise offer in your clinic. And as we laid out in this blog post, most brick-and-mortar clinics should already have much of what they need to transition to providing in-home rehab services. Depending upon how fully you want to embrace in-home care, you can devote certain days of the week or certain staff members to house calls. 

Perhaps in a galaxy far, far away, reimbursements are commensurate with the value rehab therapists provide to patients on a daily basis, and clinicians can discuss new technology and services entirely through the lens of improving patient outcomes. But while we remain stuck on the Outer Rim as far as respect and compensation are concerned, alternative revenue streams offer a new hope to therapists struggling to make enough money in this current environment.