Medicare Cuts Physical Therapists Deep with 8% Cut

Unless you’ve been living under a rock, you’ve probably heard about the first proposed, now accepted, 8% cuts to Medicare reimbursements for Physical Therapists. It’s a sign of something bigger happening to our profession and it’s time we look at what we can do about it. We talked about this a few episodes back on the podcast, but let’s revisit.

Let’s start by taking a non-bias view of our political climate, and the rumblings of a single-payer health care system. The Affordable Care Act was basically a tax on the American people whether you enrolled in a plan or not, with the exception of a small percentage of uninsured. Most are now paying far more for less, and those who were uninsured are now being subsidized by the working and insured people in our society. 

According to the Advisory Board, an organization that is made up of 350 health care professionals with a network of greater than 4,400 members, health care spending will become greater than 20% of the US GDP by 2025 topping more than 5.5 trillion dollars annually according to CMS projections. By the government wedging themselves into this sector of the market, they could raise billions – if not trillions – of dollars each year in fees and taxes for their own self interests. However, in order to get there, they need to create a big enough problem for which a single-payer/universal health care system looks like the solution.

CMS Accepts Proposed Changes 

In recent years, CMS has passed over-burdensome regulations that have resulted in more complexity and higher costs to small private practice owners. This while cutting reimbursements to make it even more challenging for the private practice owner – such as the physical therapy assistant cut of 15% coming in 2022 and the most recently accepted 8% cut. 

According to the APTA, these changes are deep within the proposed 2020 PFS. CMS says the reductions are driven by changes to reimbursement formulas for evaluation and management (E/M) services furnished by physicians and other providers. While the APTA Director of Regulatory Affairs, Kara Gainer says “The changes to reimbursement for office/outpatient E/M codes are itself positive ones and we fully support access to primary care services, but the idea that these changes must be accompanied by deep cuts to other crucial services is outrageous. At a time when our aging population is in need of greater access to physical therapy, with its proven benefits and track record for reducing overall costs, CMS has instead decided to turn its back on the facts and put patients at risk.” 

Still though, as of early this month, CMS forged ahead with the proposed changes despite the thousands of comments and letters calling for reconsideration of the cuts. However, the APTA did acknowledge a win when CMS backed off an ill-advised system that calculates when services are delivered in part by a physical therapy assistant that would have triggered a 15% lower Medicare Part B payment. You can read more about the final rule here. 

Meanwhile, those of you working for the hospital systems are collecting in some cases 2-3 times what the private practice groups are for the same services. Nevermind the fact that these hospital systems have been exempt from the therapy cap since it’s inception 20 years ago. 

All of this has created is an environment that favors the larger corporations, franchises and hospital systems. These changes are demoralizing to the individuals working in private practice by going directly after how they are paid and forcing many owners to raise production and clinical efficiency standards to unsustainable levels.   

As a result, many staff therapists are now seeking shelter under the umbrellas of these large healthcare corporations, franchises, and hospital systems. To make matters worse, insurance carriers have been passing their increased costs onto the patients and restricting access to care by reducing weekly visits and the number of overall treatment sessions allowed.

New York and New Jersey are ground zero for this mis-treatment of therapists who are in private practice, as evident by the following measures: 

• Physical Therapy Providers are now being charged for verifying benefits.
• Receiving reimbursements on average as low as $56/visit and in some cases carriers are paying as low as $35/visit. 
• Adjusting out of network benefits to pay out as “in-network rates”. 

Now, we see that government-funded and/or subsidized health insurance programs such as the ACA, encouraged and financially rewarded, newly proposed groups to be developed such as Clinically Integrated Networks and Accountable Care Organizations (CIN’s and ACO’s) and more recently we are hearing from the campaign trail a “Medicare for All” plan that there is no way to pay for. 

What are CINs? 

A CIN is a group of independent physicians who come together to identify and improve the quality of their offerings. A CIN grants the group a safe harbor against antitrust laws to collectively negotiate for better payment rates with insurers. However, documentation is critical therefore a system must be in place to accurately track patient outcomes. 

What are ACO’s? 

Physicians, hospitals and other healthcare providers who join  together  voluntarily to provide improved care to Medicare patients. This type of organization covers the entire continuum of care. The ACO shares savings and may receive further benefits from payers in the form of bundled payment options and global risk. The Centers for Medicare and Medicaid (CMS) defines and provides rules for ACOs here. 

The above are the facts of what is actually happening but behind the scene i believe there is much more going on. If we acknowledge that the government is dead set on universal health care, and in order to gain traction for this, they need to create a big enough problem where their proposals look like the solution. Then the following are the key action steps that had to have happened or have yet to happen in order for their plan to go through: 

• Take over the student loan industry forcing all students to have to come to the government for their education financing, which in turn gives them unlimited amounts of borrowing to fully fund our colleges and universities without limitation. Check.
• Allow the Colleges and Universities to go on a binge raising tuition greater than 200% over the last ten years resulting in 43 million students now owing greater than 1.3 trillion dollars.  Check.
• Pass sweeping over-regulation changes that add more complexity and cost to the small private practice owners, all while cutting reimbursement to make it more difficult for them to survive and less appealing to enter private practice. Benefitting the large corporations, franchises, hospital systems and government-funded ACO’s.  Check.
• Demoralize the individual private practice owners by over regulations, documentation burdens and cuts to reimbursement. This will force owners to raise production and clinical efficiency to unsustainable levels. Ultimately driving some to seek shelter under the umbrella of the larger healthcare corporations, franchises, and hospital systems. Check.
• Encourage (and allow) the private insurance carrier to increase financial burdens on patients so they are forced to give up their freedom of choice and ultimately, can only afford the government-funded health insurance programs. 
• Merge only the largest remaining private health insurance carriers into a for-profit network to be subsidized by the government. Do the same with all the larger healthcare corporations, franchises, and hospital systems.   

The apparent end result being a for-profit universal health care system paid for by you and I through our taxpayer dollars with reimbursement levels considerably lower than what they are today. This leaves us to believe that salvation will be found by converting over to a high-quality, cash-only practice servicing those who can afford to pay out of pocket.

Now is the time to question all of the assumptions that we have been running on for the last four decades with physical therapy private practice. Forget the benchmarks. They’re based on false assumptions and the rules of the road have changed so much that they no longer hold true. If you are playing in any game where the rules keep changing and the manipulation of its purpose goes on behind the scenes, then the smartest thing to do is to stop playing.  

We must stop participating fully in this insurance-based system, however all cash is not the answer either –  for obvious reasons. It’s time to create something new – the hybrid model – where you capture the best of both worlds, set new standards of action, and achieve higher levels of exchange that we deserve as private practice owners.

This is a great reason why we as a profession need to advocate for ourselves – get involved with the APTA, become members of PPS, and take advantage of lobbying days. The APTA is working hard to preserve our livelihood and we, as physical therapists and Physical Therapy Practice Owners, need to do what we can to support them. I just recently lectured at PPS about how to create the hybrid model, and I have been helping so many owners make it go right. If you are ready to make a change, and take your future back then contact us to have a discussion about how you can make changes to your practice.