As some of you might have noticed cash based Physical Therapy practices are a growing trend throughout the United States. But why? I know a lot of you are thinking “I pay a lot for my insurance, and I want to use it for my health care” and you absolutely should! I am here to explain what most people don’t know about Medicare insurance and what coverage for outpatient rehabilitative services includes, which will help explain why private practices are switching to a cash based model.

Each year the Centers for Medicare and Medicaid Services (CMS) establish and put into effect something called “therapy caps” for the upcoming year. These therapy caps are applicable when receiving therapy (speech, occupational and physical therapy) at any outpatient venue which you would like services to be covered through Medicare Part B.

As determined in December 2016 the therapy cap for outpatient therapy from January- December 2017 is set at $3,700. Now remember this is only applicable to outpatient therapy, which refers to a clinic that you physically drive to on your own time. Therapy services provided in a hospital or inpatient rehabilitation center follow completely different rules, so don’t think of those here. But overall $3,700 seems like a lot of money right? Well, kind of. With how the Medicare law is written this number is actually split into two categories of therapy. Occupational therapy itself has a cap of $1,980, while speech and physical therapy share $1,980. This is an important part, because individuals with certain neurodegenerative conditions such as Parkinson’s Disease or a stroke are typically people who require both physical and speech therapy at the SAME TIME.

So let me throw an example at you so you get an idea of why this can be, and typically is, a problem. I am a Doctor of Physical Therapy, so I will provide examples using physical therapy only, since this is the billing system that I can discuss with complete certainty. Physical therapy services are billed in two different ways, “timed codes” and “untimed codes”. Keeping things simple, a new timed code unit can be billed every 15 minutes. Billing for one unit of therapy does vary based on what is being performed so lets use a safe and easy number and say that one unit is worth $30.

The first step to any physical therapy services is an initial evaluation. Typically you do not just get an evaluation done on day one, you also have some form of treatment provided and the therapist will keep you for about an hour. So lets keep numbers simple, you had 60 minutes of therapy on your first day. For the evaluation itself your insurance company will get billed > $250.00. BUT! This evaluation is an untimed code, so that therapist can still bill out for the remaining 60 minutes of treatment. Lets pretend you had a nice therapist that only billed 3 additional units on top of your evaluation, lets add 3 x $30 = $90. Now add that $90 to the untimed $250 evaluation. Day one of physical therapy now costs $340.  Therapy cap $1980 –  $340 = $1,640.

Lets say you have a 45 minute therapy appointment from now on, three times per week. So your therapist is billing 3 units for therapy during that 45 minutes that’s 90$ per visit, but everyone likes heat or ice right? Well that’s another $10. Oh, your clinic also couples that with TENS, add $18. Why not have a massage, that feels good right? $35 per 15 minutes! So your $90 this session just went to $140.00 (yes I’m being nice) and every session is about the same so lets take our $1,640 we had left and divide it by $140 to see how many sessions you can afford.  $1640 / $140 = 11 visits / 3 sessions per week = < 1 month of therapy that your insurance will cover. And please remember, I gave you a nice therapist who didn’t bill as much as possible. Unfortunately most private clinics don’t want nice therapists on their staff and highly suggest that therapists bill out more, to prove that they are being “productive”.

Going back to day one of therapy, you had a lot of paperwork didn’t you? I’m POSITIVE that you signed something along the lines of…. “I agree to pay in full for any services in which my insurance company will not cover”, whether you realized it or not. So back to our example, just because I gave you a treatment that I told your insurance company was worth $140, they are not required to pay the entire $140 back to my clinic. They can come back and say, well that massage did feel good, but Medicare does not reimburse for services not being provided directly by a Physical Therapist, so we will not pay that $35. They can also say, well you said that one unit of exercise was worth $30, but I only think its worth $20. Yes, this happens all the time. Insurance companies also don’t pay your bill until at least 6-8 weeks after it’s filed. So when I evaluated you on January 1st 2017, submitted the bill to your insurance on January 7th, I don’t get notice of what they do not want to pay for until about March 4th. By this time you are no longer receiving therapy, because we couldn’t make it through the end of January without crossing the therapy cap, and my clinic is left with a few options. I can either eat the cost of what they wouldn’t pay, argue with them, re-submit and take a chance that they might pay OR just mail you an invoice because you agreed to pay for everything not covered!

Now the therapy cap is not an end all, you are allowed to cross the cap and take a chance that Medicare will still pay. But you best have a great therapist that is able to justify why therapy is still medically necessary and how their services require high skill so insurance should cover it all, or you get stuck with the ENTIRE bill months later.

Oh wait, you also needed speech therapy? I guess that will have to wait until next year.

Enough Medicare talk, what are the restrictions with a cash practice? Nothing! All cash practices are run a little differently. Some will charge you flat fee per visit, some offer specialty services with additional charges or some (like mine) offer packages for monthly treatment at a set price. The beauty of a cash practice is that you know before you start how much you are paying and there are no surprise bills. I can’t tell you how many patient’s I’ve had that come to therapy three times a week happy as can be, thinking they aren’t paying a dime for their extended 80-90 minute sessions, then three months later get a $8,000.00 bill in the mail. It’s not fun for you and it’s not fun for the clinic. Ultimately the decision is yours, hopefully you are just a little more informed with how Medicare and outpatient therapy coverage actually works.

For more information regarding medicare go to

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