Cash Practice and the Medicare Program

Federal law does not allow physical therapists to opt-out of the Medicare program. If a physical therapist is providing a Medicare-covered service to a Medicare beneficiary, the physical therapist must be an enrolled Medicare provider, and a claim must be submitted to Medicare. If a non-Medicare enrolled physical therapist accepts payment directly from a Medicare patient for a service that is covered under Medicare, he or she could be subject to federal investigation and financial and other penalties.

If the service is not covered under Medicare, the physical therapist can collect out-of-pocket payment from the patient. Before delivering the noncovered service, the physical therapist must decide which one of the following three conditions applies in order to properly inform Medicare beneficiaries about their responsibility for paying for the service.

• Services are noncovered because they are not defined as a Medicare benefit under the statute. An example is eye examinations for prescribing, fitting, or changing eyeglasses. In these instances, it is advisable (although not mandatory) to have the beneficiary sign an Advanced Beneficiary Notice of Noncoverage prior to providing the services so that the patient clearly understands that he or she is obligated to pay for the service. You are not required to notify the beneficiary before you furnish an item or service that Medicare never covers or is not a Medicare benefit.
• Services are noncovered because they are not considered "reasonable and necessary." An example is a patient who has been receiving skilled physical therapy and further therapy services are not supported as reasonable and necessary. As such, the services would not be covered, because they are no longer covered as a Medicare benefit under statute. In these cases, an ABN must be issued prior to providing the additional therapy services.
• Services are noncovered even though they may be a Medicare benefit, if coverage requirements are not met and would result in a technical denial. An example is a skilled nursing facility stay that is not covered under Part A because the patient did not have the prior three-day inpatient hospital stay. In these cases, an ABN is not required but advisable to ensure that the patient understands the obligation to pay out of pocket for the services.

You should not ask every patient to sign an ABN form. ABNs should only be used when you believe there is a reason that Medicare will not pay a specific service. ABN forms can be downloaded from the CMS Beneficiary Notices Initiative webpage.

CMS's Medicare Learning Network booklet Medicare Advance Written Notices of Noncoverage offers information on when to furnish an ABN.

Questions often arise about possible exceptions to the laws that require physical therapists who treat Medicare beneficiaries to be enrolled and to submit claims for covered services to Medicare. The short answer is that no exceptions allow providers to bypass these requirements. APTA has developed scenarios to address potential situations in the article Cash-Based Payment and Medicare Services: No Exceptions to the Rules.

Cash Practice and Medicaid

Medicaid laws and regulations vary from state to state. However, a physical therapist who is a Medicaid provider agrees to accept the payment provided by Medicaid for services to covered patients. The ability of Medicaid-enrolled providers to accept direct payment for noncovered services may vary by state. Physical therapists both enrolled and not enrolled in Medicaid should check their individual state regulations prior to accepting payment for services from Medicaid beneficiaries.

Additionally, federal law bars Medicare providers and suppliers from billing an individual enrolled in the Qualified Medicare Beneficiary program for Medicare Part A and Part B cost-sharing under any circumstances. This program provides Medicaid coverage of Medicare Part A and Part B premiums and cost-sharing to low-income Medicare beneficiaries and is an eligibility category under the Medicare Savings programs. In 2018, 9.9 million individuals (more than one out of eight beneficiaries) were enrolled in the program. Medicare providers and suppliers may not bill people in the program for Medicare deductibles, coinsurance, or copays, but state Medicaid programs may pay for those costs. Under some circumstances, federal law lets states limit how much they pay providers for Medicare cost-sharing. Even when that's the case, people in the Qualified Medicare Beneficiary Program have no legal obligation to pay Medicare providers for Medicare Part A or Part B cost-sharing.

Cash Practice and Private Insurers

Physical therapists with in-network or participating provider relationships with private payers are generally obligated to accept the payment provided to them by the insurer and any required out-of-pocket copay from the patient as payment in full. To provide noncovered services to in-network patients, such as treatment beyond the authorized visits, maintenance therapy, and fitness services, the physical therapy clinic owner should review their contract and understand and comply with the policies of each individual payer.

Cash Practice and Workers' Compensation

In workers' compensation cases, all but a few states ban the practice of balance billing—requiring the injured worker to pay for the portion of the bill that the employer or insurer will not pay. Because laws vary by state and can change, refer to your state law for guidance.

Cash Practice and TRICARE

Physical therapists may choose to be either in-network or out-of-network providers for TRICARE, the government insurance for US military and their families. However, TRICARE policies are complex and vary by region (East and West), and it is important to review current TRICARE policies before providing out-of-network services to this beneficiary group. In many situations, a beneficiary may access the services of an out-of-network provider if there are no in-network providers in a certain geographic area. For information on out-of-network providers, visit TRICARE's Non-Network Provider Directory.