Table of Contents

• Do I have to get on insurance plans?
• Is it hard to become a provider on HMO & PPO plans?
• How well do they pay? 
• Where do I begin?
• What will I need to provide during the credentialing process?
• Major insurance companies - A sample list
• Health insurance terms you must know
• Key to success!
• Important reminder!
• Resource Links

Do I have to get on insurance plans?

You do not have to accept insurance plans to succeed if you minimize overhead expenses.  Cash based practices are becoming more and more popular as the quality of care diminishes in traditional HMO and PPO facilities.  And consumers are paying more out-of-pocket for their healthcare services than ever before.  If massage therapists, acupuncturists, and chiropractors can thrive with cash-based practices is there a reason why we as physical therapists can't? It's important, however, you minimize expenses because cash-based practices take time to build.

There are many payment types for your physical therapy services:

1. Self-Pay

• cash or check - use the quickbook POS system
• credit card
• monthly payment plans:  automate it by using recurring billing online. 

Reasons why self-pay is the best way for your patients to pay:

• Discount off your regular fees.
• No assignment of benefits or other administration fees.
• Reimbursement available to those with insurance plans.
• Typically, they receive higher quality care.
• They have the option of keeping the physical therapy treatment information off their medical record system.  Their medical records stay with them for LIFE and in some cases can lead to higher premiums in the future.
• In some cases, physical therapists have to make a patient's condition sound worse than it really is in order to ensure reimbursement from the insurance company (denials due to a lack of medical necessity happen frequently).

2. Med-Pay or PIP

Drivers living in “no-fault” states are required to buy either Personal Injury Protection (PIP) or Medical Payments (MedPay) coverage. PIP and MedPay cover the medical bills of patients and the passengers in their vehicles after a crash, regardless of who's at fault.

 

Having both MedPay and health insurance can be confusing for the policyholder.

If the patient has MedPay as part of their auto insurance, filing a claim requires several steps.

• They would first have to pay for their treatment up front, get a receipt from you.*
• Send that receipt to the insurance company, and wait for their reimbursement check.

*If you attempt to accept assignment of benefits and bill the insurance company directly be aware that many insurers will still send the check directly to the patient. In this case you may have difficulty (certainly more work) collecting from the patient. Sometimes our specially worded "Assignment of Benefits" form can get the check sent directly to your office. But nevertheless, it is recommended you collect at the time of service.

Some insurance companies let the policyholder decide which coverage (MedPay or health insurance) to use.  The patient should use MedPay first, if they were injured in an auto accident.

MedPay or PIP is designed for "immediate and short-term care" and is generally used first. Once the patients MedPay or PIP limits are exceeded, their health insurance then should be used. In no-fault states such as Pennsylvania and New York, MedPay or PIP is the primary coverage if the patient was injured in an auto accident.

If you practice in a state without no-fault insurance, and the patient has MedPay or PIP on their auto policy, use it first to cover services relating to the auto accident. The patient’s health insurer might deny coverage, until the patient has exhausted any MedPay or PIP benefits. If you practice in a "no-fault" state, patients have little reason to buy both MedPay and PIP: That's because PIP provides coverage equal to and beyond MedPay (although PIP often has a 20 percent deductible and MedPay has none). MedPay generally covers reasonable and necessary expenses for medical, surgical, dental, and chiropractic treatment.  It also covers hospitalization, ambulance services, X-rays, nursing services, prosthetic devices, and funeral services.  PIP, on the other hand, covers the same services as MedPay.  PIP also covers psychiatric, physical, occupational therapy and rehabilitation, plus any other professional health services. (Check your policy for exact details.) In addition, PIP covers lost wages, reasonable costs other than medical and work-loss expenses, and a small death benefit.

In many situations, having both MedPay and PIP is duplication of coverage. There are certain situations in which MedPay can be valuable, such as when the patient is driving with someone who's not in their family. MedPay covers everyone in the vehicle at the time of the accident, so the patients friends will have coverage, even if the friends don’t have health insurance. MedPay can help offset the deductible that comes with PIP.

If the patient has health insurance or belongs to an HMO in a state without no-fault, they may not have MedPay because they do not need it. Also, MedPay reserves are not much.  Few companies are willing to sell more than $25,000 worth of MedPay coverage.  Learn more about auto insurance laws in your state.

Learn how No-Fault insurance works.

3. Third-Party Auto Insurance

Some patients may come to you after a motor-vehicle accident (MVA) where the other party admitted guilt and so the "at fault" party's insurance will be covering the medical expenses. The same steps noted above should be followed. 

4. HMO (contract required and most pay very minimally)

A Health Maintenance Organization is better known as an HMO. With an HMO patients are expected to get all their care from a list of doctors, physical therapists, and other providers affiliated with the plan. Patients are expected to select a primary care doctor-usually a general practitioner, family practitioner, internist, or (for children) pediatrician - to provide their basic care and to be the "gatekeeper" who refers them to other services.  The plan won't pay for care by a physical therapist or specialist unless pre-approved by the gatekeeper (except in an emergency). Participating physicians get no financial gain and may even bear a share of the costs if the quantity of services (days in hospital, office visits, etc.) their patients receive is deemed by the plan to be too high.  The plan pays physical therapists, doctors, and other participating providers without the patient having to file claims. The patients out-of-pocket costs are minor-though they may have to pay providers modest "co-payments" of, for example, $10 or $20 per office visit.  Beginners should not attempt to handle HMO contracts until they are very well established.  It is the most difficult way to build a practice! In the 102 course we teach you how to get HMO contracts.

5. Indemnity Plans

Another payment type you'll come across is a traditional, indemnity plan. This is a plan where people pay a premium and In exchange for their premium, the plan agrees to pay all or a share of the cost of services the patient uses. There is typically a list of covered services, such as doctors' office visits, physical therapy, and hospital stays, and a set of limitations or exclusions, such as an exclusion of coverage for cosmetic surgery. The patient can use virtually any licensed provider of the covered services - physicians, physical therapists, etc. - and the plan pays the provider or reimburses the patient when they file claims for what they paid the provider. The patient can decide for him or herself when and where to get services.  These indemnity plans once dominated the market, but now-because they have less control of costs than other types of plans, they are much less common.

6. POS

The Point-Of-Service organization is referred to as a (POS) HMO. This model is an HMO combined with an indemnity insurance plan. If the patient selects a primary care doctor from the HMO's list of doctors and uses only that doctor and the providers that doctor refers to, the plan functions just as any other HMO does. But the patient also has the option of using any other physician and referring him or herself to specialists and other nonparticipating providers, just as they would in a traditional indemnity insurance plan. If the patient goes outside of HMO procedures in this way, however, they will have deductibles and coinsurance requirements and are responsible for charges above the plan's fee schedule, just as they would be if they were in an indemnity plan or if they went to nonparticipating providers in a PPO. Like PPOs and indemnity insurance plans, most POS HMOs have an annual limit on what the patient has to pay out of pocket. (As in those other types of plans, the limit does not apply to charges in excess of the plan's fee schedule.)

7. PPO (contract required and most do not pay well)

A Preferred Provider Organization is also known as a PPO. The plan falls between an HMO and a traditional indemnity plan. A PPO typically has contracts with many individual physicians, physical therapists, and other providers in the community. A provider may be a member of several different PPOs and several HMOs and may also serve many non-PPO, non-HMO patients. A PPO's providers agree to a discounted fee schedule for the PPO's patients. If the patient uses a PPO provider, they pay the provider either a percentage (say, 10 percent) of the discounted fee or a fixed co-payment (say, $10 per office visit). But they can also use any other provider who is not connected with the PPO if they are willing to pay more for the service. If the patient goes outside the list of PPO providers, they may pay extra. So a PPO does give people more flexibility than an HMO to go to a world-renowned treatment center or just to use a particular doctor their brother-in-law thought was great. Another important difference between PPOs and HMOs is that PPOs allow the patient to get specialist and hospital care without having to be referred by their "gatekeeper" primary care physician. As a PPO member, if the patient wants to go directly to a dermatologist, orthopedic surgeon, psychiatrist, or other specialist, they can simply call the specialist and set up an appointment.  Health plans are beginning to allow patients to go directly to physical therapists in states with direct access.

8. Worker's Comp

Most employers are required to have worker's compensation insurance in the event an employee is injured on the job.  In most states, a physician must determine whether or not a person's injury is job related except for California.  Get more information about worker's compensation in your state at  http://www.comp.state.nc.us/ncic/pages/all50.htm.

In some states you may be able to find a local company that provides a list of all industrial insurances in your area along with the appropriate contact people. (ie. CA,  Lockard Industrial Insurance Company's List 818-708-8677)

9. Lien

Sometimes when a person is injured or involved in a motor-vehicle accident they may hire an attorney to try and get damages paid including their medical bills.  This type of patient may want your services but request you accept a promise to pay when his/her case settles.  This promise to pay is made binding with an attorney lien agreement where the attorney promises to pay you once the case settles. 

It may take years for some cases to settle and in most cases you will be asked by the attorney to accept a discount.  For this reason I recommend you have the patient pay at the time of service and let them submit the receipts to their attorney.

10. Medicare

It's important to understand Medicare because CMS (Center for Medicare and Medicaid Services) sets standards other payers follow.  All payers follow Medicare documentation guidelines.  Many Payers follow Medicare payment methodologies. Payers often adopt Medicare coverage rules and payment limitation. Baby boomers are the fastest growing sector in our society who will require physical therapy.

You can see medicare patients before getting a unique provider number issued to you.  Just complete the application as soon as possible because until you are in their system they will not accept bills and pay on services.  They retroactivate all prior services once you get your number.

Highlights of Medicare:

• Beneficiaries have an annual deductible
• A 20% copayment is applied
• Eligibility is determined by the Social Security Administration
• Part B is a voluntary program with monthly premium
• Part A is premium free.  All medicare recipients have it.

Structure of Medicare

Time-based coding

Rules of Supervision:

• Therapists must personally perform or provide "Personal Supervision"
• "Personal Supervision" = "in the same room"
• "In the same room" = line of sight
• Assistants must be employed directly by the same group or therapist.

Medicare Tips

• Medicare does not pay for equipment unless it is categorized as a DME (durable medical equipment)
• No separate reimbursement is allowed for heat or ice.
• Modalities are not treatments stand alone
• Medicare no longer recognizes 97014 for EMS, use G0283
• Use -GP modifier with all medicare claims

The Centers for Medicare/Medicaid Services hire contractors to process the enrollment application and enroll you in the Medicare program. At this time, you should contact the Medicare carrier in your area to obtain information about physical therapist enrollment. The carrier will provide you with information concerning the application(s) you need to complete and other supporting documents that need to be attached to obtain a Medicare billing number. Once you complete the application and have obtained the necessary supporting documentation (license, certifications, etc.) you should submit the information to the carrier. The carrier should process your application within 60 days, absent extenuating circumstances.

If you have already submitted an application, and have a problem with the carrier, you should contact the CMS Regional Office. The regional office has responsibility for monitoring the carrier's performance and will be glad to assist you.

11. Health Savings Account (HSA)

This is the new health insurance plan that will change the face of healthcare as we know it.  It became available at the first of this year (2004) and is already becoming the "rave".  It is a consumer driven health plan which gives them control over their health plan dollars.  Get more details and information at USA Today or First MSA

Every insurance plan uses different ways of determining the "usual, customary and reasonable (UCR)" rate  for physical therapy services. Many use arbitrary figures.  Subsequently each will request you discount your fees differently.  In most cases, the rates they offer will be extremely low.  Remember, if you don't like the contracted rate they offer you can always decline (make sure to read your agreement for specifics) but that will mean if that type of patient wants your services then most likely they will have to pay more out-of-pocket to see you versus someone who has joined their network by accepting the lower rates.

Back to top

You should begin this section once you have a business address.  Most credentialing processes will require it.  

1. Start by making a list of all insurance companies in your area. Check your State's Insurance Department Website and get familiar with their office and resources. Call local insurance agents and they may be able to provide a comprehensive list. The local yellow pages are a great source as well in most states. We have provided you with website links to most major insurance companies. You'll find them later in this section.

2. Once you have made a list, contact the provider relations department for instructions on how to become a provider for their programs. You will have to go through the credentialing process.  Basically, it's a systematic approach to collecting and verifying your professional qualifications (see the required items below).

3. Complete the applications and return to the insurance company. The process may take 60-90 days so start early! You may want to go through a marketing company for convenience but it is not required.  At the same time, some plans may only be available through this type of marketing company (not recommended).

• PTPN
• Preferred Therapy Providers