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Table of Contents
Determine Prices for Your Services
As a physical therapist you are capable of providing a variety of services that have value to the public. Designating the prices for your services will be one of your first tasks. Follow these important steps when determining your fees:
1. Send the message of high quality and affordability.
Your prices should accurately reflect the quality of your work but charge too much and people will think you are taking advantage of them.
2. Gear your fees to a self-paying (cash) clientele.
Many practices will inflate their prices in hopes of offsetting the insurance company discounts. This is a mistake in every way. If your prices are unreasonable you make it nearly impossible to consistently collect the patient's portion of the bill. Not only because the patient will refuse to pay (ie. $40 for a moist heat treatment) but because your conscience will not allow you to make a good willed attempt at collecting inflated fees from your patients.
Some therapists will determine their prices by using 120-150% of their local medicare rates. To get the medicare fee schedule in your area ask the local carrier in your state. Some may attempt to determine their cost for service and apply a profit margin on top of that. What I recommend is charging an amount you yourself would be willing to pay for a particular service. If you would pay it than it is easier to expect patients to pay it as well.
3. Offer a discount to all cash (self-paying) patients but make it a policy across the board.
You may offer a discount to cash-based clients legally because you don't have the overhead and the administrative burdens of generating billing, etc. however it must be standardized into a policy according to the federal governement (ie. 30% off regular rates for all self-paying patients, etc.).
Do not make the mistake of playing the insurance company game. Remember that the relationship you have with a patient is just that, between you and the patient. It does not involve the insurance company. You do not even have to accept assignment of benefits if you do not want to. Assignment of benefits is the concept that a patient who has benefits from their insurance plan can release those benefits to you in order to collect the monies typically intended to be due to the patient as a reimbursement for the medical expenses.
The way it is designed to work is the patient is supposed to pay you cash for your services and then get reimbursed by their insurance company. It's just that years ago, many consumers did not understand the complexities of their insurance plan and how to make a claim and get reimbursed. Therefore, the practitioner took it upon themselves to do it for them as a courtesy. It has now become common practice and has been taken for granted.
If you accept assignment you will spend time and money during the billing and collection process so you may charge a nominal fee for handling "assignment of benefits", however, be aware that some patients may take offense to the fee because it is not common practice.
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Establishing Your Payment Channels
There are essentially two ways you can collect payment for your services, (1) at the time of service from the patient or (2) bill their insurance company later.
The first way is less expensive and complicated but more skillful to build while the second requires more work for you but with fewer patient dissatisfaction.
Listed are the most common forms of payment types available for physical therapy private practices. It's in your best interest to learn about all of them. Regardless of the payment type, it should be your policy to collect at the time of service.
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Self Pay
- Med-pay or PIP
- Third-Party Auto Insurance
- HMO
- Indemnity Plans
- POS
- PPO
- Worker's Comp
- Lien
- Medicare
1. Self-Pay
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 their 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.
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
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.
Highlights of Medicare:
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Beneficiaries have an annual deductible
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A 20% copayment is applied
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Eligibility is determined by the Social Security Administration
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Part B is a voluntary program with monthly premium
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Part A is premium free. All medicare recipients have it.
Structure of Medicare
Time-based coding
Rules of Supervision:
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Therapists must personally perform or provide "Personal Supervision"
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"Personal Supervision" = "in the same room"
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"In the same room" = line of sight
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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
- If you know medicare will not cover a certain procedure but feel it is warranted to render to patient, use the Advance Beneficiary Notice to justify charging patient out-of-pocket. Download now
http://www.cms.hhs.gov/BNI/02_ABNGABNL.asp#TopOfPage
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.
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Understand Coding
It's important to understand coding even if you have patients pay at the time of service because patients will still require your service codes to get reimbursed from their insurance company. You should assist them in completing claims for their insurance reimbursements.
Each of your services must fit under a certain category recognized by the insurance industry in order for the patient to get reimbursed. These categories have codes called the CPT. CPT stands for "Current Procedural Terminology", and it was first published in 1966. It is published and revised annually by the American Medical Association (AMA). It provides a "common language" for physicians, physical therapists, and other health care professionals to use when submitting claims for payment. CPT codes are 5 digit numeric codes that are used to report medical procedures/services on health care claims. The most common form used to bill claims is the HCFA 1500.
The CPT has two categories of interest for physical therapists. We call them the "HCPCS" (hik-piks) levels. HCPCS stands for "Health Care Procedural Coding System"
Level 1 is a progressive structure. The most significant to physical therapists in private practice. It includes the 5 digit numeric codes.
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Section Medicine
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Subsection Physical Medicine & Rehab
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Heading Modalities or Therapeutic procedures
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Code ie. 97001
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Description Physical Therapy Evaluation
Level 2 involves alphabetic codes A-V. It has 16 sections however only four are of interest to us.
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E0100-E1830 are codes for durable medical equipment (DME)
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G0001-G0148 are codes for temporary procedures or professional services. EMS billed to medicare is a "G" code.
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K0001-K0530 are codes for prosthetics and orthotics and supplies and dressings
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L0100-L4398 are codes for orthotic procedures
(If you hear of a level three they were codes for local state codes but those have been eliminated. A very good thing for private practice!)
Modifiers are code endings that can be added to any HCPCS level 1 codes to more describe the procedure. For example:
Modifier -59:
Identifies the code it is attached to as being a distinct procedural service: When "unbundling" you may use the modifier 59 which means that services performed are medically necessary and distinct separate services from each other. They may look related but indeed are distinct. This may be a different session, patient encounter, a different body area or a separate injury or illness.
Modifier -22:
Identifies the code it is attached to as being an unusual procedureal service. It says that the service is greater than that usually required for the listed procedure. It may be added by adding "-22" to the usual procedure number or by use of the separate five digit modifier code 09922. A report may also be appropriate.
Modifier -52:
Identifies the code it is attached to as being a reduced service: When a service or procedure is partially reduced and you don't want to disturb the identification of the basic service use this modifier. Modifier code 09952 may be used as an alternative to modifier "52".
If you are planning to handle assignment of benefits and manage your own billing and would like more information about the use of modifiers contact us at 1.800.801.4511
I recommend these products tailored for physical therapists. These three resources are all you'll need to handle your own billing if accepting assignment of benefits:
 
Here is a list of the most common HCPCS level 1 physical therapy codes.
|
PT Evaluation |
97001 |
|
PT Re-evaluation |
97002 |
|
OT Evaluation |
97003 |
|
OT Re-evaluation |
97004 |
|
Therapeutic Exercises |
97110 |
|
Neuromuscular Reeducation |
97112 |
|
Aquatic Therapy |
97113 |
|
Massage |
97124 |
|
Ultrasound |
97035 |
|
Manual Therapy |
97140 |
|
Gait Training |
97116 |
|
EMS – unattended |
97014, G0283 |
|
Ice/Heat |
97010 |
|
Paraffin Bath |
97018 |
|
Mechanical Traction |
97012 |
|
Whirlpool |
97022 |
|
Iontophoresis |
97033 |
|
Diathermy |
97024 |
|
Infrared Therapy |
97026 |
|
Ultraviolet Therapy |
97028
|
|
|
|
|
Therapeutic activities |
97530 |
|
Group Therapeutic procedures |
97150 |
|
Work Hardening |
97545 |
|
Wound Care |
97601 |
|
Acupuncture |
97780 (no MC coverage) |
|
Lyphadema Therapy |
S8950 |
|
Finger splint** |
29130 |
|
**Supplies for splinting can be reported by using 99070 or HCPCS Level II codes |
*Use this code only when billing Medicare for unattended EMS.
This is not a comprehensive list of all CPT codes available to PT's.
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Choose Your Billing Software
The billing software needs is unique to each office. Many offer download demos and free trials so try them out before purchase.
*Recommended
|
Software Name |
Features |
Cost $ |
| *Quick Practice *IndeFree Members get $100 discount |
billing |
low |
| Easy Billing |
billing, scheduling |
low |
| EZ Claim |
billing, clearinghouse |
low |
| Clinicient |
billing, scheduling, documentation |
high |
| Medigraph |
scheduling, documentation |
low |
| PTOS |
billing, scheduling, documentation |
high |
| Therassist |
billing, documentation |
high |
| Turbo PT |
billing, scheduling, documentation |
high |
| TherapyOffice |
billing |
high |
| EON Systems |
billing, scheduling, documentation |
high |
| ReDoc |
documentation |
- |
| Talk Notes |
documentation |
high |
| Hands On Technology |
Documentation |
-- |
| Medical Info. Mgmt Sys. |
billing, scheduling, documentation |
high |
| DB consultants |
billing, scheduling, documentation |
high |
| Spectrasoft |
scheduling |
- |
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Design Your Tools
You will need the following tools in order to properly handle new patients and their payment information.
The Fee Slip is an essential tool to maximize your collections. It's a convenient invoice for you to complete at the time of service to log and calculate your service fees. Patients can then pay their portions and if an assignment of benefit is made and you wish to bill their insurance company, all the services rendered is conveniently recorded for the biller. You may choose to modify this form. All the above forms are included in the "Tools for Success" CD.
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Generating and Sending a Bill
When accepting assignment of benefits and needing to generate a bill for insurance claims, you could technically do it manually, however, save time and money by purchasing a billing software program to eliminate double entry. You can get one for as little as $600 all the way up to $6000.
The HCFA 1500 form is the most widely used form to generate a health care service claim. HCFA stands for the Healthcare Financing Administration the government body that created the form and 1500 is the number of the form. This government body changed there name recently and are now known as the Centers for Medicare and Medicaid or CMS for short. We still call the form the "HCFA 1500". Many practices do not even print out paper claims anymore and electronically send a "print image" file to a clearinghouse.
- The top half is essentially the patients personal and payment information
- The lower half is essentially the coding and clinical information
- See sample
Billing success virtually begins as soon as a patient wants to make an appointment. Don't make the mistake of being so zealous for new patients that you skip important steps prior to arrival. Most beginning therapists don't mind giving free services thinking it will help them earn business and become better known. Become known through better ways and for better things than free services. Most free services are not viewed upon as highly skilled and valuable.
1) Have a template prepared for the "First Contact" or encounter with a prospective patient. If someone calls inquiring about your services, find out important facts by asking these questions (see the First Contact and Payment Verification form for reference):
- "What is your exact problem or complaint?"
- "When did it start or significantly worsen?"
- "What caused it?"
- "Who is your primary physician?"
- "How will you pay for our services?"
- (if insurance) "Do you know the type of your program and its benefits?"
- "How did you hear about us?"
Have your front office person well trained in dealing with the variety of questions a caller may have. The better informed the patient is prior to coming into your office, the better your chances of getting paid for your services whether they are an insurance or cash paying patient. From the beginning, establish their payment method to prevent any misunderstandings later. If they do not agree with your service cost structure or payment programs, you may not want them as a patient anyway because they may be more trouble than it's worth. Most people with valid and real problems will not haggle about the cost of resolving it. (This is especially true if you are one of the only ones providing that particular type of service).
Before concluding make sure the patient understands to bring the following required items with them to their appointment.
- A valid form of identification
- Proper attire
- Insurance card (if applicable)
- A physician referral (if applicable)
2) When the patient arrives for their initial appointment, make sure to collect any remaining necessary information not collected at time of initial contact and properly orient the patient on your financial policies and procedures. Good forms, procedures and good staff training make this critical process easy.
3) If billing the insurance company than after the evaluation, make sure these critical pieces of information are collected and indicated for the biller:
- ICD-9 code(s)*
- CPT code(s)* for the evaluation and any other procedures rendered that day
- Referring MD name
See sample HCFA form for other required information
Other useful information:
- Plan of Care (POC)
- Frequency & Duration
*Bold items required for billing
4) Once all information is collected it is time to input them into your billing software. There are many ways to accomplish this and therefore unique to each practice
5) Once your data is in your computer, the best way to send your claims is through the use of a clearinghouse?
A commercial clearinghouse serves as a transaction processor between provider and payers (insurance companies) much like VISA or MasterCard handles transactions between a store and bank. A provider only has to establish one relationship with a clearinghouse instead of each insurance company. Most commercial clearinghouses use an electronic format called a "Print Image".
Entering data for the Print Image format is a much simpler process than data entry for Direct submission (electronic claim submission directly to an insurance company), using the NSF or ANSI formats. A provider prepares a batch file and sends all of their claims to one location (the clearinghouse). The clearinghouse then sorts the claims and sends them on to the appropriate insurance company. The clearinghouse will provide the biller with instructions and any necessary software (may be a minimal charge) for transmitting the batch file to the clearinghouse.
How much does a clearinghouse charge?
Commercial clearinghouses charge the provider for their services. Generally clearinghouses charge:
- a start-up fee
- a monthly flat fee and/or
- possibly a per claim transaction fee based on volume.
Clearinghouses are always introducing new features and many now offer other services including eligibility inquiry, claim status and patient billing. Most will also mail claims to insurance companies that do not offer electronic billing options. It is best to shop around for the best pricing to meet your billing needs.
Why use a Clearinghouse?
If you submit claims to multiple insurance companies there are many advantages to using a clearinghouse:
- Simplified data entry
- Claims sent to one location
- No lengthy testing process
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