WHY YOU SHOULD SEE A CASH-BASED PHYSICAL THERAPIST

Look, let’s just be honest - you’re probably hesitant to go to a physical therapist that is not in-network with your insurance company.  And we don’t blame you. After all, you pay good money (or have good money taken out of your paycheck) for health insurance! It would make sense to want to use a service you already pay for.  

But does it really make sense?

Insurance is a funny thing in that it’s something we hate paying for and hope to never have to use, but when we do need it it’s extremely helpful and we’re glad we have it.  Imagine needing a life saving surgery and not having insurance to help offset the cost. Most of us at Headquarters Physical Therapy have children and without health insurance the medical costs in their first year of life would be astronomical.  

But do we need to use insurance for everything?  Should we?

Here’s how insurance based (i.e. “in-network”) physical therapy companies typically work.  

1. Patient arrives (either independently or with a medical prescription depending on the state you live in).  

2. Therapist performs evaluation (anywhere from 30-60 minutes depending on their clinic’s productivity standards and negotiated reimbursement rates with insurance companies).

3. After evaluation therapist spends anywhere from 5 minutes to 20 minutes writing the evaluation depending on the complexity of the case and the therapists’ experience.

4. The clinic takes the evaluation and treatment codes along with the billable units for each (either using the 8-minute rule or the Substantial Portion Methodology) and submits them to the patient’s insurance company. 

5. The insurance company pays their portion depending on the patient’s insurance benefits.

6. The clinic then bills the patient for the remainder.

7. This process is repeated for every subsequent follow up visit until discharge. 

Sounds pretty simple, right?  Well, let’s talk about a few things that happen behind the scenes.  Stay with us here, some of this can get convoluted but we promise there’s a reason to it all.

Productivity Standards

Physical therapy clinics are businesses.  At the end of the day, regardless of how well-intentioned the therapists themselves are, there will be some degree of pressure coming down from above to maximize each minute of the day to get as many billable units as they can from the various insurance companies that they are in-network with.  A 60 minute evaluation is typically billed as 5 units (1 untimed unit for the evaluation, 4 timed units for whatever treatment was applied). That 60 minute evaluation will be billed to insurance companies at anywhere between $225 to nearly $300 for that evaluation alone. The follow ups will likely be 30-45 minutes which can range from 3-4 units depending on what magical mix of treatments are performed.  These sessions are often billed anywhere from $175 - $225 depending on who is being billed.  

While this sounds rather straightforward these billing standards, coupled with operational costs (rent, equipment, liability policies, salaries, etc), create the formula that the clinic uses to determine how long each patient’s session should be and how many sessions they should expect their therapists to schedule each day to keep the lights on and make the clinic profitable.  Now, while there’s nothing wrong with this (there’s no point in having a business if it doesn’t make money, and a growing healthcare business ultimately allows for more people to receive treatment). However, let’s take a look at our next topic and how a clinic’s productivity standards may be impacted by more than their own financial desires.  

Financial Control of the Insurance Companies

So let’s say the clinic says that they want to be reimbursed $300 for an evaluation and $225 for a follow-up.  What happens is they will tell an insurance company that they want a certain amount for each billable unit to make the magic mix of $300 or $225.  The insurance company comes back and says, “Great, but we will pay you a fraction of that price for each billable unit. Don’t like it? Don’t be one of our in-network providers and all of the people out there with (insert your insurance company’s name here) will think twice about coming to see you for care.”  

But the standards that the clinic needs to meet do not change.  Rent doesn’t go down, salaries can’t go down (except by laying people off), and other operational costs are likely to remain the same.  What does the clinic do? They get creative in how many people they try to see daily to make ends meet and they also become more creative in how many and which units they bill.  Something most people don’t realize is that there are some treatments that are UNTIMED codes and these treatments tend to be passive modalities. What this means is that the clinic can slap some modalities on a patient at any point in the treatment and automatically check that box and bill that code.  Unfortunately, these passive modalities are largely shown to be “low-value” treatments (i.e. treatments that don’t do what they promise to do but don’t pose a physical threat to the patient). These passive modalities are often reimbursed very low, but if you put those little e-stim pads on EVERY SINGLE PATIENT then you can make a decent chunk of change at the end of the day.  

What does this mean?  Insurance companies dictate how much clinics get paid and if it isn’t enough to make the clinic happy then the clinic has to get creative and often times that comes at the expense of the patient’s quality of treatment and time spent with the therapist.  

How does this affect a patient’s time spent with a therapist you ask?  Great question. Many clinics employ support staff (aides, techs, assistants) to off-load the therapists schedule.  For example, Neville (one of Headquarters Physical Therapy’s owners and therapists) once worked for a company that scheduled patients every 15 minutes.  Therapists were encouraged to keep patients in the clinic for 60 minutes so they could each be billed 4 units. The only way Neville was able to maintain this schedule for 9 hours a day was to spend very little contact time with each patient and have an aide fulfill 75% of each patient’s treatment plan for the day.  

Another problem patients don’t realize is that each insurance company reimburses physical therapy clinics at DIFFERENT RATES.  In other words you might have a plan that reimburses your therapist at $175 per visit but the person in the waiting room next to you has a plan that reimburses at $200 per visit.  While some clinics actually do incentivize their staff to prioritize the patients with more generous insurance companies on their schedules, most clinics just shorten visit times so that they can hope to squeeze in more higher paying visits in while still accommodating the lower paying insurance plans.  In the end, everyone gets shorted on their time spent with their provider.  

The Rules Keep Changing

The fact that there are various types of insurance policies per company is probably necessary.  After all, not everyone can afford a high premium only to have a lower deductible and not everyone needs that type of coverage either.  A single 25 year old that is relatively healthy likely does not need the same coverage as a 50 year old weekend-warrior dad with 2 kids that play contact sports.  Don’t get us wrong, we absolutely think you need health insurance. It would be silly to suggest someone in this day and age go without some sort of financial backing in the event of a catastrophe.  However, it would also be foolish to believe that a health insurance company was actually more interested in your health than in their own bottom line.  

This is where it starts to get really frustrating.  Insurance companies are free to change their policies and offerings whenever they feel like it.  Once your (or your employer’s) contract ends there is a high likelihood that either your deductible, your copay, your out-of-pocket max, or any combination of those variables will increase in cost.  In other words, your insurance company is more than happy to provide the same coverage to you year after year, but what you will be paying more for it. So while you may have a plan that says you are only responsible for 10-20% of the bill (coinsurance), the deductible you have to meet to have that benefit is probably higher than it previously was.  Don’t like it? Find a new provider.  

Guess what else changes with time?  Reimbursement rates. There is a proposal out right now for Medicare reimbursements to be decreased by 8% in 2021.  This is not the first time Medicare has decided to do this, and once Medicare decreases their reimbursements the private insurance brands are usually quick to follow suit.  So not only do the insurance companies increase profits by keeping members on the hook longer before assuming responsibility, they double dip by taking money out of the pockets of healthcare providers.  The end result is usually that your provider then has to shorten their contact time with patients in order to squeeze more patients onto the schedule.  

Now let’s get into the changes from an administrative standpoint.  Insurance companies are always trying to find ways to spend less on their subscribers.  There really is no other way to put it. One way they do this is by hiring third-party regulators to manage authorizations.  An authorization is basically a request that your provider has to submit in order for your insurance company to approve reimbursement for treatment.  This has been happening for a long time in traditional medicine (you can’t just have surgery because you feel like it and expect your insurance provider to pay for it) and it is becoming increasingly popular with physical therapy services as well.  Regence Blue Cross Blue Shield, Aetna, United Healthcare, and MODA all have plans that require authorization. So while you may have 30+ visits of physical therapy allowed to you per calendar year, you are not necessarily allowed access to all of those visits whenever you like.  Even companies that are all in house (e.g. Providence, Kaiser) are requiring third-party medical necessity reviews for therapy, thereby limiting even further who you can see, when you can see them, and how often. While the insurance companies will argue that they are doing this to promote evidence-based medicine (i.e. efficacious treatment) the fact of the matter is they are trying to find ways to protect profits by refusing to cover physical therapy that goes beyond “basic activities of daily living”.  In other words, they won’t cover you if you can’t play basketball without pain, run without pain, or do anything else that you value.  

Get What You Pay For

So why should you see a cash-based physical therapist?  Value.

When you see a cash-based physical therapist you are taking the power of authority back into your own hands and out of the hands of the insurance companies.  Do you value playing basketball on the weekends? Let’s work on that. Do you value being able to run that marathon well rather than just sort of ok?  We can work on that too.  You set your goals and no one can tell you how much they are worth.

When you see a cash-based physical therapist you are also likely getting more time with your therapist per dollar than going through insurance.  Let’s look at the following scenario:

Insurance-based Clinic

1 evaluation (45-60 minutes) + 3 physical therapy visits (30-45 minutes) = 135-195 minutes.

1 evaluation ($275-$300) + 3 physical therapy visits ($175-$225) = $800-$975 billed to insurance.

Sometimes the insurance company will show a “discount” on a patient’s EOB (Explanation of Benefits) and an amount like this will come out to $700-$850 after discounts are applied.  That “discount” ultimately reduces the clinic’s bottom line.  Guess how clinics typically respond after a number of discounted rates come in?

In this scenario you are spending $3.58-$4.35 per minute in the clinic.  If this clinic happens to use support staff (aides, techs, or assistants) to administer care then you are spending a fraction of that time with your actual therapist.  Let’s just hope that all that money for your time is actually being spent on treatment that has been proven to be effective.

In this day and age it is likely that your deductible is going to be close to or greater than $1000 per year.  This means that you will be responsible for the entire bill (which you will receive anywhere from 4-8 weeks from appointment date.  This scenario doesn’t even factor in copays per visit if you have them. 

Cash-based Clinic

This one is pretty simple.  The costs vary widely amongst clinics but for the most part the math is all the same.  

1 evaluation (60 minutes) + 3 physical therapy visits (3 x 60 minutes) = 240 minutes

1 evaluation ($100-$150) + 3 physical therapy visits (3 x $100-$150) = $400-$600 billed to patient upfront or paid in installments

No copays, no deductibles, no out-of-pocket maxes to meet (that are rarely ever met without some sort of medical catastrophe).  

That equates to $1.67-$2.50 per minute in the clinic.  Not only does this route get you a better dollar per minute ratio, but it also gets you the following.

1. A therapist that is not drowning in paperwork

2. A therapist that is not drowning in other patients

3. A therapist that crafts a plan of care that is not predicated on “playing the game” of insurance authorization

4. A clear and concise plan towards the goals that matter to you and your quality of life.

Not to mention that most insurance plans still allow for out-of-network benefits and will accept “Superbills” (basically itemized invoices) from providers for partial reimbursement (Even CHEAPER per minute!)

The Choice is Yours

Don’t get us wrong, there are fantastic therapists that work in insurance-based clinics and some of you reading this have insurance plans that would make sense for you to find and visit those therapists in those clinics.  

But for the majority of you, cash-based providers are likely the way to go if you want to be unwavering in the goals that matter to you.  It really comes down to what you value as an individual.  

We realize that the concept is scary for some.  Believe us, the decision for us to become cash-based is not one that we take lightly.  However, our decision to pass up on insurance contracts means leaving the convenience of a revolving door of patients in the name of pursuing value based treatment for our clientele.  

At Headquarters Physical Therapy we want to provide care to our patients that is not dictated by billion dollar insurance companies.  We want to provide a value to our communities that operates outside of the norms of a traditional healthcare company. We want to develop teams of therapists that are not victim to the typical causes of burnout that plague our profession.  

What do you want?