Top 3 Drawbacks to Cash-Based Practice, and How PTs Can Address Them

Those of us interested in private practice physical therapy can’t go a day without hearing about the rise in cash-based practices in our industry, and for good reason! With cash-based practices, there is autonomy to design the physical therapy experience in a way that is best for the patient—and not predicated by the insurance giants.

There are many benefits to offering cash-based physical therapy services: 

• lower overhead costs, 
• streamlined documentation, 
• diminished billing and claims issues, 
• fewer staff are needed, 
• higher profit margins, and (most importantly) 
• the ability to provide a higher level of personalized care. 

Based on these benefits of cash-based, who wouldn’t quit their jobs and open up their own practice? At MovementX—one of the largest out-of-network clinic models in the US—we have studied cash-based practices (large and small), and have found some common themes that we believe will dictate whether this trend continues to expand or whether it will remain just a trend. 

Insurance: You can run, but you can’t hide. 

When MovementX speaks with clinicians who want to start a cash-based physical therapy practice, we often see a loss of attention to insurance operations. However, if your patients are submitting for reimbursement through a superbill, there are many regulations you will have to follow. A non-exhaustive list includes:

• Billing and Coding Requirements: You will have to have a good understanding of and adhere to special modifier and coding requirements. For example, UHC requires a G-code on their superbill, while many others may deny your superbill if it has a G-code. And don’t forget to use modifier 59 when billing certain codes together! 
• Prior Authorization: For a patient to be reimbursed—even if you’re out of network and don’t engage with the billing process at all—you will still have to obtain prior authorization if it is required. Without it, reimbursement to the patient will be denied. 
• Compliance Requirements: Even if you decide to forgo using a superbill altogether, you still have to stay compliant with certain ethical billing practices and compliance requirements—most of which are regulated by CMS and other government payers. We won’t get started on Medicare in this article, but please consult these resources for more information. 

To provide the best experience to your patients, we recommend doing an insurance verification prior to any cash-based session where a superbill will be involved. With benefit coverage, referral, and prior-authorization information on hand, patients can predict their reimbursement and you can make sure all administrative needs are taken care of on your end. Collecting payment upfront has obvious benefits for your practice, while collaborating with insurance on the backend has obvious benefits for your patients. 

Considering the superbill route for your cash practice? Check out our free, customizable superbill template here.

Compliance: It’s the Wild Wild West out here.

Many small practices struggle to stay fully compliant with all of the state and federal regulations that impact healthcare businesses—and cash-based physical therapy practices are no exception. To help this business model grow so that cash-pay providers can ultimately help more patients, it’s essential to take healthcare compliance seriously.

All your state practice acts still apply. 

Accepting cash for a service that isn’t approved by your state’s practice act doesn’t make it legal. A common example in our profession is dry needling. If it isn’t allowed, you cannot accept insurance or cash for the service. Take this opportunity to develop a referral relationship with an allied healthcare provider, such as an acupuncturist.

You must follow HIPAA policies and procedures.

While HIPAA is specifically designed around the exchange of health information with insurance companies (talking to you, superbillers), your state’s privacy and security policies can be even more restrictive and specific than HIPAA. So, make sure you don’t skip out on that yearly audit and writing policies and procedures for your company. I promise your patients will appreciate your attention to detail. 

You must be licensed to practice physical therapy. 

Expanding your wellness services is an incredible way to help improve the health of society. However, the differentiation between wellness and PT comes in many shades of gray. We’ve seen therapists let their license lapse because they classify their work as non-skilled wellness. However, the second you start to treat pain, injury, or perform manual therapy, you are likely practicing physical therapy. Even in a wellness-based cash model, you must maintain active continuing education and state licensure requirements just in case you cross that gray line. Finally, you must be licensed in the state you practice if you are performing telehealth services for cash.

This isn’t exactly a comprehensive list, but it should give you an idea of how much there is to keep track of—even with a cash-based practice. To provide you with the rest of the details, I strongly recommend consulting a healthcare attorney when setting up shop. 

Marketing: Go above and beyond to demonstrate your value.

Unlike our friends in chiropractic, massage, and acupuncture, physical therapy has long been ingrained in the medical model of insurance-based health care. With cash-based services, however, you have the freedom to think outside the box in regard to how and where you deliver your services. While the possibilities are endless, patients will inevitably ask you why you don’t accept their insurance. Thus, you must be able to confidently articulate your value.

PTs are inherently compassionate people and struggle to “sell” their services—and in the cash-based model, you will have to work harder to prove your value to patients and referral sources. Therefore, you must be very targeted with your marketing efforts. This is not necessarily a negative—rather, we believe this kind of focused quality and branding can elevate the entire profession. 

At the end of the day, you have the unique ability to help patients accomplish their goals. And if you’re able to prove that, most patients will see value in your services regardless of price point. For those who truly cannot afford care, see the section below or refer them to an in-network clinic, which has no deficit in talent. 

Access to care: Think outside the box.

Last, but definitely not least, most cash-based practice models that exist are focused on a certain population that can afford to pay out of pocket. After all, if your goal is to see only one patient per hour and have low productivity requirements, inherently you will have to charge a premium for your time. While cash-based practices dramatically improve the quality of life for the provider—and oftentimes the patient—it is not the solution to the health inequities that exist in our country. 

At MovementX, we have worked extensively to understand how selectively contracting with payers, as opposed to operating strictly as a cash business, can help offload the cost of care for patients while still maintaining our core values. We have also implemented sliding fee schedules for those with poor access to health care and designed group exercise classes that offload the cost of care per session. There are many ways to get creative that don’t involve high cash-based physical therapy rates. Every human deserves to move their best and access the quality of care that cash-based services can provide.

At the end of the day, cash-based physical therapy is an incredible tool we can use to prove to payers that when we focus on quality and not quantity, our outcomes will improve and providers will have a higher quality of life. However, please remember that this model isn’t a get-out-of-jail-free card. It may be tempting to build a cash-based island for yourself and forget about the struggles that the physical therapy industry—and the greater healthcare community—is facing. So, do your part by staying compliant, demonstrating and measuring your value, and continuing to innovate ways to expand access to care. Now is our opportunity to utilize the privileges that come with a strong cash-based model to elevate the entire profession—and ultimately impact our patients’ lives.