Pricing Cash-Pay Physical Therapy Services

Declining reimbursements have been a serious concern in the rehab therapy industry for a long, long time. But now, in the wake of the financial strain caused by the COVID-19 pandemic, these concerns are coming to a head. Strapped for cash—or more specifically, for stable revenue—many clinics are turning to cash-based services as more than just a source of supplemental income. 

Some clinics are even turning to cash-pay as a way to provide better care. After all, they can spend more one-on-one time with each patient, and they’re no longer beholden to the time-consuming—and often restrictive—insurance billing process. 

But for all its virtues, cash-pay therapy is new territory for many clinics—and the idea of correctly pricing services can feel overwhelming. So, we’re going to lead you through the process—step by step. 

Craft a fee schedule around actual CPT codes. 

It’s easier to work with others when you’re all on the same page and using the same lingo at every turn. That’s why WebPT billing expert John Wallace, PT, MS, recommends using actual CPT codes when crafting your cash-pay fee schedule. “Use a cash fee schedule based on the actual CPT codes. For example: one unit of 97110 costs $35,” Wallace advises. “This way, it’ll be easier for patients to bill their insurance companies if you aren’t. Use ICD-10 codes for the same reason—and be sure to follow your state practice act when it comes to diagnosing patients.”

In fact, Wallace believes that one of the biggest pitfalls therapists fall victim to during fee schedule creation is making up their own codes for 30-minute, 45-minute, or 60-minute treatment sessions. This complicates the billing process and makes it difficult for you (or the patient) to obtain payer reimbursement. 

Consider charging a fee if you bill payers on behalf of patients. 

Remember that cash-pay providers are not absolved from working with payers. While you’re not contracted with insurance companies—and therefore do not have to accept their rates—patients may still try to get their insurance to pay for their care. They can do this by sending a receipt to the payer for reimbursement—or having you do so on their behalf. If you choose to assist with the reimbursement process (and you’re not in-network with the payer), then Wallace says you can usually charge the patient a reasonable fee for each claim you submit. But don’t go overboard; Wallace says these fees typically run $5–$10 per date of service.

Price your services to turn a profit. 

When it comes to setting cash-pay prices, follow one golden rule: price your services to turn a profit. This sounds simple, I know—but it may surprise you to learn that not all clinics adhere to this principle. We’ve heard stories of providers who accept payer contracts so low that they lose money with each patient they see. This is a recipe for disaster, as it sets you barreling toward financial hardship. 

Calculate what you need to charge, at minimum, to stay in business. 

Before you can price your services to turn a profit, you must know the total expense associated with treating a patient. In other words, you must calculate your cost per visit. To do so, add up every expense that goes into providing patient care and running your practice on a daily basis, including—but not limited to—building and equipment rent, software, payroll, supplies, and insurance. Then, divide this number by the average number of patients you see in a day. That should leave you with your average cost per visit. 

From there, you know exactly how much you must earn to stay in the green—and you can tweak your prices to add profit on top of that. 

Consider what your local market will support. 

Keep in mind that patients don’t have bottomless pockets. While they may be willing to shell out a little extra money to receive high-quality care, there’s a limit to what they’ll pay—and that is largely dictated by your local market. Consider the income levels of your patients. If your clinic is located in a higher-income neighborhood, you may be able to charge a little more for your services. Conversely, if you’re located in a lower-income neighborhood, you’ll want to keep your prices lower and more accessible to your patient population.

Additionally, sneak a look at your cash-pay competitors and figure out what they’re charging for the services you want to offer. If there’s some service overlap, be sure to price within a small range of their fee schedule. You don’t want to scare patients away with high prices when a nearby competitor offers the same services for significantly less. 

Keep your pricing transparent. 

Over the last few years, healthcare pricing transparency has evolved into a pretty hot topic. While there aren’t many pricing transparency laws that affect outpatient therapists, that may not always be the case. So, when setting your fee schedule, consider creating a menu for cash-pay services and letting patients have full access to it. This will put you ahead of the legislative curve—and your patients will appreciate knowing more about their healthcare costs. 

Expect to make some legal considerations. 

While cash-pay providers can side-step many of the restrictive regulations that govern the lives of contracted providers, they still must follow some legal rules and guidelines. For one, Wallace warns, hybrid cash-pay providers (i.e., those who still hold some payer contracts) should not bill patients who are insured by contracted payers. In other words, if a provider is still a BCBS preferred provider, then they should not accept cash payments from a patient who is insured under BCBS—even if the patient has a large deductible. This is because many provider agreements explicitly forbid providers from collecting cash payments from covered patients.

Be mindful of Medicare.   

Medicare can be problematic for fledgling cash-pay providers, too. According to Wallace, “If you have billed Medicare under your NPI number within the last two years, you may still fall under your Medicare participation agreement. That means you may not bill Medicare for services that are normally covered.” To learn more about the nuances of Medicare and cash-pay, check out this article.

Setting a cash-pay fee schedule may feel intimidating, but all it takes is a little research and some thoughtful planning. The world of cash-pay has ample opportunities for rehab therapists. Are you ready to carve out your share?

Before you set off into the world of cash-pay PT, let me—or rather, John Wallace—leave you with one final nugget of advice: be sure to collect 100% of your fee at the time of service!