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Private Pay Physical Therapy vs. Insurance Based Physical Therapy

physical therapy Jan 14, 2022
deciding between private pay and insurance based therapy.

Private Pay vs. Insurance based physical therapy. What are the differences in treatment experience? Based on available research which one costs more. 



 Private pay or sometimes referred to as cash based physical therapy (PT) is a relatively new, but growing part of the physical therapy profession.  Private pay PT offers some distinct advantages for the person who is dealing with pain or functional limitation and is looking for a personalized treatment plan.  Direct Access laws allowing the client to go to PT first, before seeing their primary care doctor or specialist has made these services accessible for people who want hands on custom care.  


At the time of this writing, I have been doing cash based physical therapy for a little over 5 years. I want to discuss why I believe cash based PT is the future of orthopedic health care and pain management.  We will talk about why seeing a PT first may be able to reduce your overall healthcare bill. I will also discuss basics of insurance billing as it relates to PT and dive into the actual cost per visit  and per injury episode when compared to more traditional health care service routes.  If you don’t want the background information and just want the cost comparison skip to total health care costs. 



What is private pay or cash based PT? 


These terms are typically used to signify a practice that charges a fee for service that is typically required at the time of service.  The term cash pay is the buzz word but typically clinics will accept most forms of payment including credit card and HSA /FSA spending accounts.  


It is a simple transaction, no different than getting a massage, working with a personal trainer, or diet coach. You find a good one, that can help you solve your problem, and you pay for their expertise, and quality service.  The difference is these things are not normally covered by insurance and historically PT is. 


Some private pay clinics will also provide an option for a superbill or detailed/itemized receipt that will allow the client to submit to their insurance company for out of network reimbursement.   This can be useful for a small subset of insurance plans that do not have high deductibles for out of network care.  Some PPO plans or small business plans offer significant out of network coverage.  I personally consider this to be an add on and as the owner of a cash PT clinic believe for our clients to be successful our services must stand alone for their value / cost ratio irrelevant of the out of network billing policies. 



What is traditional In-Network PT? 

Traditional PT that runs through your insurance, looks more like your trip to the doctor or dentist.  You come in, you pay your co-pay if you have one, and you leave.  Except for the copay, there is no other transaction of money at the time of service.  Like going to the hospital, some months later you will then get a bill after the charges have been processed through your insurance benefits.  Here’s the rub… no one knows what that bill is going to be until you are done receiving services.   Besides health care, I can’t think of anything else, where you have no idea what the services are going to cost before you receive them.  


PLEASE do not assume because PT is a covered service that it is going to be cheap.  It may be quite expensive!  You need to understand how your benefits and billing work, before we can compare costs. To make a comparison of in-network, vs. out of network, vs cash pay we need to have some understanding of how health plans work.  Insurance bills are super confusing  so let’s take a quick second to do a quick explanation of insurance health plans .  Skip ahead if this something you already know. 



Health Insurance Benefits and Terminology. 


In network vs. Out of Network.   When you look at your explanation of benefits (EOB) under your health insurance plans you will see that there are different benefits for providers that are in network vs. out of network.  To further complicate things some of these new PPO plans will also have tiers to the in network providers.  The level of coverage for service is going to be different under each tier.  When looking at physical therapy you also need to look specifically to see where it falls within your plans.  Some plans it will be covered under speciality services, which are typically more expensive.     


Deductible:  Your deductible is the amount you must pay prior to any of your health insurance benefits.  For example. If your plan has a $5000 deductible, you receive services that cost $8,000. You will be personally responsible to pay for the first  $5000 out of your own pocket, the remaining $3,000 will be applied to any insurance benefits. This is still subject to potential co-insurance.  


Copay- This is an amount that you must pay prior to receiving service.  It is an upfront charge.  It does not typically apply towards your deductible 


Co-Insurance - This is a percentage of your bill that you will be responsible for.  For example, if you have a 50% co-insurance and a $1000 bill.  You will have to pay $500.  


Max Out of Pocket.  This should be the most you have to pay for any combination of deductible and co-insurance.  



Physical Therapy Insurance Billing Basics (In-Network) 


In physical therapy all the services are broken into billing codes. For example, the code for Manual Therapy is 97140,  Therapeutic Exercise is 97110… every service has its own code.  


The codes are billed based on 15 min blocks and must be performed for at least 8 minutes to be able to charge for it.   So in a 30 minute session, you will typically get billed for 2 units (15 in each), maybe 3 (8 minutes each) depending on the provider rules. There are specific guidelines with each insurance company to how many codes you can bill per visit and time and if you are grouped with another patient.  The most common guideline follows the standard set by medicare called the 8 min rule.  Here’s an external link if you want to learn more about the 8 min rule. Not all commercial insurances follow the 8 minute rule. 


As you go through your physical therapy visit your therapist will document what you did and the associated billing to that code. For example in a 60 minute session. You may see 2 units of  manual therapy 97140, 30 minutes; and 2 units of therapeutic exercise 97110 30 min.  


There is a charge associated with each of these codes that gets sent to your insurance company.   If your provider is a medicare provider the cost of these codes should be based on the standard medicare fee schedule for your area.  If not a medicare provider there may be some variability. 


Remember that in-network, means that your provider has a contract with your insurance company. Part of this contract includes negotiated fee schedule for the codes. So even though it gets billed out at whatever fee schedule, the insurance company has already negotiated what they will actually pay for it.  This is why it can be difficult to estimate what the visit will cost ahead of time for different plans and coverages.   Just like in the hospital, you will see the charge was say  $100, insurance company covered $X, your responsibility is $Y.  


Different codes do have different associated rates. I hate this,  As a client you’re paying for physical therapy, not codes.  There should not be a financial influence on what treatment is provided to accomplish those goals.   I don’t want to get too far down a personal soap box, but I truly hope that what each code pays doesn’t effect treatment decisions.  I can’t help but think that if one code pays $50 and another isn’t covered, that there may be an incentive to promote the $50 code… but I digress. 



Physical Therapy Insurance Billing Basics (Cash Pay)


For private pay PT, you typically know the cost of the visit ahead of time.  The therapist should have made it clear to you that there will be a fee for service and the 60 minute visit is going to cost $X.  This way no matter what happens, and what you already know your financial responsibility for that visit.   



 On the back end the same billing process is happening.  The PT will have a set fee schedule for each of the billing codes.  For example, 97140 and 97110 are $50.   You are there for a 60 min so you are going to be billed 4 units. 97140 X 2  = $100. 97110 X 2 = $100.  Visit cost $200.  A cash pay discount can then be applied after to bring the total cost to whatever rate was predetermined.  


If you ask for a superbill from your visit you will be able to see all of this information.  This is what you could potentially send to your insurance company for out of network reimbursement.  


The beauty of this is there is no financial incentive to do something.  Whether your therapist does 60 minutes of manual therapy 97140 or 60 minutes of exercise 97110 you pay the same thing.  Your therapist makes the same thing. Hopefully, this encourages the most applicable treatment decisions at all times.  


The PT Business Side. 


I think it’s important to have some understanding of what’s happening behind the scenes. As much as we don’t like to say it, healthcare is a business.  Businesses have to be able to pay therapists, for their training, risks, and general time at work. Separate topic, but on a global healthcare scale,  it’s going to be scary.  Historically our best and brightest wanted to be doctors because you got to help people and you could make lots of money doing it.   In today’s world there are much easier ways to create wealth.  It will be curious to see if there is a shift in where the youth look for careers. In countries where physicians don’t make as much money you already see this.  Less doctors and less incentive to be really good at it.  Back on topic….


On the in-network side of things insurance reimbursement has declined significantly in the last 15 years.  From talking with colleagues, reimbursement for a visit 15  years ago may yield the value of $200 per visit.  For perspective, talking with colleagues who are still doing the insurance billing game  today, their average reimbursement for a 60 minute visit (4-5 units) seems to live around the $80 mark. Some as low as $40 per visit some pushing $100.  Thats a big decline! Even worse when you think how much more expensive everything is today from cost of goods, to lease, to malpractice insurance, etc.  


On top of the reduced reimbursement don’t forget that insurance companies are getting really good at denying payment and access to service.  So the PT business has to pay or hire a billing person to run the insurance, which costs 7-10%, hire a manager to submit the bills and fight through all the denials and all the authorizations and rigamarole it takes to actually get paid.  


It becomes simple math, if businesses are getting less reimbursement, they have to do something to maintain their bottom line.  One strategy is to see more people, instead of seeing one person in 60 minutes, let’s see 2 and get pretty creative on how we utilize billing units. Or, instead of having the patient see a physical therapist, have them work with a physical therapy assistant who typically gets paid a little less.  You are also now seeing things like “facility fees” to bump up the cost per visit.   The margins are small, so the business of PT becomes more about volume.  How many people can we get through the door each day.  This is where the term “PT mill” comes from. 


On the cash pay side,  things operate more like a traditional service business.  Here is the cost, if the value add is better the cost,  you will be happy, refer your friends, and the business is successful.  Rates are typically established so that the therapist can work with clients one on one and not have to see 15-20 people per day.  The rate is set for the business to be healthy enough to attract high quality therapists passionate about delivering exceptional value, and avoid the clinic burnout so common in PT and other healthcare professions.    


So what does all of this mean and why should you care?

Let’s discuss how this effects the treatment experience and overall health care costs. 



Treatment Experience 

What kind of experience are you looking for?


I did this high volume PT clinic thing once.   In my first job, I was asked to average 5 billable units per visit, which based on the 8 min rule, equates to a minimum of 68 minutes. We scheduled patients every 30 minutes.  So now you have 3 or even 4 patients at a time.  You have one go ride the bike (not billable) while you do something with this person, while that person over there is on heat (not billable) and then shuffle here…  It was crazy. People were there for 90 minutes so I could get my 5 billable units.  I found myself making decisions not on what I thought the person needed but what I thought I could get done while trying to manage my insane schedule.  Let alone find the time to clinically think. 


Im not saying in-network PT doesn’t work.  It can, I think I was able to help a lot of people while I was there.  There are some really amazing PT’s that work at in network practices.  I will say that it is vastly different experience compared to what I do now in a cash practice setting. 


As a therapist you go from trying to manage 2-3-4 people at a time to being able to sit down and get to know and treat 1.  


What this means for the client.  


When your therapist has 50-60 minutes with you they have the time to do an assessment on EACH visit.  This is huge.  They can look for change and see what is better or worse compared to what was done on the previous visit. This helps identify trends and make decisions and changes on what to do next.  When the therapists has 3 people at a time, it gets real easy to just keep running you through the “routine.”


At our clinics we provide hands on therapy at each session.  In my opinion, if there is pain involved, there should be some type of manual therapy in each session.  Pain is a gate keeper and will alter movement patterns.  Exercising out pain is not an easy task.  Manual therapy, amongst other things, helps us reduce pain, normalize movement patterns so that you can later use exercise to re-enforce progress.  Therapists need time to perform manual therapy. 


You get our full attention.   When it’s one on one and you see the same therapist on multiple sessions you learn things. You have the opportunity to build a professional relationship.  If you have to see a new therapist, or an assistant on every other visit it makes personal adjustments to plans more difficult.  There is that getting to know you phase at the start of a plan of care.  When you switch therapists each session, you have to keep going through that process.  




Total Health Care Cost.  

The immediate reaction to cash PT is that it is going to be more expensive because it doesn’t utilize your insurance.  Again, I think there is huge value on the treatment experience side of things, but irrelevant of quality, let’s talk about how cash PT may actually be cheaper.  Three main points to consider. 


  1. Cost per visit. 
  2. Visit utilization and Lost time.
  3. Direct access compared to physician first care. 



  1. Comparing your cost per visit on an individual visit.  


If we assume the physical therapy services are equal in quality how do you compare cost per visit and cost per plan of care based on your insurance plan.  Cash pay, you know the cost.  Simple. Most of the time the therapist can even give you an average plan of care. For example we typically recommend either a 6 or 12 visit plan of care depending on needs. Our average visits per client right now is 4.2. 


For insurance (including if you’re going to try and do out of network reimbursement) you need to consider your copay, co-insurance, and deductible. 


If you have a copay you have to pay that up front no matter what.  So just add that to the following discussion. 


You should ask your provider is to provide the average charges per visit, including facility fees.  Again, this is going to vary depending on what services/codes are used for your visits but they should be able to give you some averages.  


They may tell you that you are responsible for the negotiated rate or the full rate.  I have seen these costs to be in the $150-200+ range per visit. So ask! 


The next thing to consider is your deductible.  Remember you have to pay your deductible before your benefits kick in.  So if you have not yet met your deductible, and they bill $150 per visit, you will get a bill in the mail for $150 multiplied by your number of visits.   If you typically hit your deductible in a calendar year then this is less of a big deal because you are going to end up paying it as some point any way.  If you have an extremely high deductible plan, like some of the HSA plans or disaster style plans then you really need to consider this.  


Before getting married I had plans with deductibles around $7,000.  At that time in my life. something bad medically would have had to happen for me to hit that.  This means I essentially paid cash for services.  I quickly learned to ask for cash rates and not use my insurance because it was way cheaper to just pay cash for things instead of whatever they were going to bill the insurance company.  The same is true with PT.  If you aren’t going to hit your deductible a lot of the time you are going to find that cash PT is actually CHEAPER than in network PT. 


The last thing to consider is co-insurance.  This is where you become responsible for a percentage of your bill.  Say you have met your deductible and you now have a 40% co-insurance.  This means you will be responsible for 40% of the bill.  So if you had a $1000 bill, you would still owe  $400.  



2. Visit utilization, convenience, and lost time. 


I can’t speak towards all in network companies but my first job they wanted us to get everyone in 3 times a week.  Let’s just say you have a $40 copay and nothing else.  That’s still $120 / week. Now factor in the time it take to travel to the clinic, spend 70 min in therapy, plus time off work… you get the idea.  


Our most common recommendation is once a week, occasionally we do twice a week. We like to use this frequency until the pain is managed and then switch to once a month to make progress with strength, functional gains, and check ups. You can do the once a month as long as you see value.  


We can do once a week for a few reasons.  I’d like to think we are very productive with our visits which helps but most importantly we support your work at home with video based home exercise programs you can follow and make progress at home.  We know that you taking an investment in getting better on your own encourages improvement and we emphasize this from day 1. 




3. Overall Health Care Costs.


A high percentage of our clients come to see us first through direct access. That means we get to have the first conversations about their pain and limitations.  That is a big responsibility that we do not take lightly. We are very well versed on when to make the appropriate referrals to other health care providers or for imaging. Everything in my mind is risk vs. reward.  Our goal, when appropriate, is to conservatively manage your pain without medications, injections, or surgeries.  A recent systematic review published in the PT Journal, demonstrated that the average cost of care was reduced by an average of $1828.03 compared to seeing a physician first.  (Hon 2021).  There are several reasons why this may be true.  The authors demonstrated that less physical therapy visits were utilized with direct access and evidence based treatments were provided.  This makes a lot of sense to me.  When we see a patent first we are able to make a clinical diagnosis and many times can reduce pain without over utilization of imaging.  Early MRI’s are not always helpful.  If you get an MRI, that’s a $2000-$4000 bill right out the gait.  Early MRI’s are not typically necessary and may result in increase costs.  Take this snippet from a 2020 study.  “Early scans are associated with excess surgery, higher costs for other care, and worse outcomes, including potential harms from prescription opioids” (Jacobs 2020).  



I believe private pay physical therapy is the way of the future.    Physical therapy is a service based, health care practice.  We want to help clients get out of pain and back to the activities they love. We all know the negative effects of opioids and excess surgery. Private pay offers distinct advantages to deliver exceptional care to the client.  In this article I tried to highlight a few of the many reasons I think private PT is the best choice for many people.  Whether you choose cash PT or insurance based PT I hope you choose to get PT first and are able to stay injury free and mobile well into your future.  Stay healthy and get PHYT. 


Written by: Nick Sanders PT, DPT, CSCS, CIDN. 


Written by Dr. Nicholas Sanders PT, DPT, CSCS, CIDN.  Dr. Sanders is the founder and owner of PHYT For Function where we provide a convenient and simple solution for people to continue to do the activities they love without muscle, joint, or nerve pain.  He is a national instructor for Integrative Dry Needling and Co-Creator of a Neuro-Inflammatory Manual Therapy course. 

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