Are you thinking about moving to a cash-based private practice model in 2022? Here are some benefits and considerations to help you get started.
The Benefit of Cash-Based Services
Cash pay service offerings are increasing because they have many perks for private practices, especially those overburdened with the claims process. Beyond skipping the insurance struggle, cash pay services offer other benefits to your private practice:
Diversification of services. Diversifying your physical therapy services and revenue streams allows for a more balanced practice that can grow despite any changes in healthcare trends.
More face time with patients. Extending therapist time with patients can make them feel more satisfied with their care and loyal to your private practice.
Reduce claim processing burden. Many therapists experience burnout from handling the reimbursement process with insurance companies.
These are just some of the benefits of a cash-based private practice. You’ll need to choose what benefits will create the most growth in your practice so you can shape your offerings around that strategy.
Set Your Payor Relationship
If you’re considering moving to a cash-based physical therapy business model, the next step is to determine your relationship with payors. Different strategies will work for different practices, from entirely cash-based to a hybrid method.
The most straightforward method for the private practice (though more complicated for the patient) is zero interaction with the insurance company. Using this method, you charge the patient directly for their session based on the fee schedule. Patients may be reluctant to choose this method because they’ll have to do all of the work of getting reimbursed from their insurance and may not be able to recoup any of the costs.
Patient Managed Reimbursement
In this option, you charge the patient directly and receive payment up front, but give the patient a superbill they can use to take to their insurance company. This hybrid method is more easily adopted by patients because they receive documentation that makes it easier to seek reimbursement.
Bill on Patient’s Behalf
This option charges a co-pay, billing the rest to insurance, and then collecting what insurance doesn’t cover. This method is least friendly to the private practice because you have the work of billing and then also recovering unpaid balances from patients. Still, they’ll likely appreciate not working with the insurance company directly, so there is less resistance to covering the remainder in this scenario.
You can use multiple methods to set pricing. The key is to make pricing easy to understand for the patient. The most common forms are using a fixed hourly rate or setting prices based on each service you provide. You’ll want to set pricing after determining your payor relationship to pick the option that makes the most sense.
Compliance and Legal
Becoming a cash-based private practice doesn’t void the legal considerations of operating a private practice. You’ll want to be sure you’re compliant with:
- Data security
- State laws
- Payor regulations
We recommend consulting a lawyer before starting as a best practice to protect your business.
To learn more about physical therapy compliance, check out MEG’s Ethics and Compliance Program – and don’t miss our Zoom Cast event this month to answer all your compliance questions!
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