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  • Cash-Based Opportunities and Regulations with Medicare Beneficiaries – Part 2

Cash-Based Opportunities and Regulations with Medicare Beneficiaries – Part 2

By Jarod Carter, PT, DPT, MTC

In last month’s online edition of Impact we began our exploration of Medicare and cash-pay opportunities by describing the three possible relationships a physical therapist can have with Medicare: the enrolled providers, either “Participating” or “Nonparticipating,” and the nonenrolled option of having no relationship at all with Medicare.

It was explained that due to the Mandatory Claims Submission rule (for covered services), only enrolled practitioners can provide covered services to beneficiaries because they are the only ones with the ability to send claims to Medicare. For that reason, in most scenarios, nonenrolled practitioners are not allowed to provide covered services to beneficiaries.

So now we need to define which services are covered and which are not covered, as well as the scenarios in which covered services may become noncovered.

The Three Scenarios in which Medicare will Not Cover Physical Therapy Services

  1. The first is called a “Statutory” reason. The most important example of this is when a service would be considered “prevention,” “wellness,” or “fitness.”
  2. The next reason a service would not be covered is due to a “technicality.” An example of this is a missing physician signature on the Plan of Care (POC). (It probably goes without saying, but the POC missing a physician signature does not make it okay to collect self-payments from Medicare beneficiaries).
  3. The third reason is that the services are not considered “reasonable and (medically) necessary.” Section 220.2 of the Medicare Benefit Policy Manual gives clear criteria that must be met for a therapy service to be considered reasonable and necessary.

    Here are some examples of when services are not considered reasonable and necessary:

    A. The service could be performed by the patient or by unskilled personnel without the supervision of a therapist. To expand and define this further, here are two excerpts from section 220.2 of the Medicare Benefit Policy Manual:

    1. “To be covered, services must be skilled therapy services as described in this chapter and be rendered under the conditions specified. Services provided by professionals or personnel who do not meet the qualification standards, and services by qualified people that are not appropriate to the setting or conditions are unskilled services. A service is not considered a skilled therapy service merely because it is furnished by a therapist or by a therapist/therapy assistant under the direct or general supervision, as applicable, of a therapist. If a service can be self-administered or safely and effectively furnished by an unskilled person, without the direct or general supervision, as applicable, of a therapist, the service cannot be regarded as a skilled therapy service even though a therapist actually furnishes the service. Similarly, the unavailability of a competent person to provide a nonskilled service, notwithstanding the importance of the service to the patient, does not make it a skilled service when a therapist furnishes the service.”

    2. “The services shall be of such a level of complexity and sophistication or the condition of the patient shall be such that the services required can be safely and effectively performed only by a therapist, or in the case of physical therapy and occupational therapy by or under the supervision of a therapist. Services that do not require the performance or supervision of a therapist are not skilled and are not considered reasonable or necessary therapy services, even if they are performed or supervised by a qualified professional.” 1

    (Please note: In the cases where a service can be self-administered or furnished by an unskilled person, the training of the patient or unskilled personnel may be a covered service depending on the situation. You will need to contact your area’s Medicare contractor to enquire about these specific scenarios and what they will or will not consider reasonable and necessary.)

    B. Occasionally Medicare contractors do not consider certain commonly used treatments/modalities (like iontophoresis) to be reasonable and medically necessary and will therefore not cover them.

    C. As of 2013, the Medicare “Therapy Cap” coverage denial was moved into this “medical necessity” category. At the time of this writing, if you are a Participating or Nonparticipating provider treating a beneficiary who has met the Therapy Cap, but you believe the physical therapy services are still medically necessary, you are not supposed to begin taking self-payment from the beneficiary once that beneficiary hits the initial cap. You should submit the claims with a KX modifier (if the total annual billing is between $1900 and $3,700) and make sure your documentation supports the medical necessity. At $3,700, there is a manual medical review process. You can only begin taking self-payment if you get to a point at which you believe (or Centers for Medicare & Medicaid Services (CMS) decides) that the services are not medically necessary.

Maintenance Care and Cash-Pay Practitioners

Up until early 2013, “maintenance care” also fell into this medical necessity category of services that Medicare was not covering, and physical therapists could therefore accept private payment from beneficiaries who were receiving our services to maintain a certain level of functioning. The Jimmo vs. Sebelius case had an effect on how Medicare views and covers “maintenance” care.2 It is not the case that Medicare will now cover any and all care that would be considered “maintenance.” It is a little more complex than that.

Medicare contractors who, for years, have been denying coverage for Medicare beneficiaries if they were no longer showing improvement were actually going against established Medicare policies (at least in the Skilled Nursing Facility (SNF) settings):

  • For example, in the regulations at 42 CFR 409.32(c), the level of care criteria for SNF coverage specify that the “. . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.”2

The plaintiffs of Jimmo v. Sibelius just finally called them out on this practice and won in court.

Here is the most pertinent segment of the above-referenced fact sheet:

  • A beneficiary’s lack of restoration potential cannot, in itself, serve as the basis for denying coverage, without regard to an individualized assessment of the beneficiary’s medical condition and the reasonableness and necessity of the treatment, care, or services in question. Conversely, coverage in this context would not be available in a situation where the beneficiary’s care needs can be addressed safely and effectively through the use of unskilled personnel.

    Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves.

I highly recommend you also read the section on “maintenance programs” at section 220.2 of the Medicare Benefit Manual.1 As you will see, there is still quite a lot of “maintenance” care that would not be covered by Medicare, and could therefore be provided on a self-pay basis. It really comes down to whether or not the interventions can be provided by “unskilled personnel” without the supervision of a physical therapist.

So here is my personal interpretation of what this all means to us:

  • If physical therapy treatment/service is preventing or slowing a patient’s deterioration, and this service cannot be provided or reproduced by nonskilled personnel (like a spouse, caregiver, personal trainer, etc.), then that service is a covered service (unless it falls into other noncovered categories like “prevention, fitness, wellness,”), and a physical therapist cannot accept private-payment from the beneficiary to provide it.

    If the service can be self-administered or provided by unskilled personnel like a personal trainer or caregiver, Medicare is not going to cover it, and physical therapists should be able to provide that maintenance service on a cash-pay basis. In these situations, you may occasionally find a beneficiary who wants the service provided by her physical therapist rather than “unskilled personnel” and understands that she will be required to pay out-of-pocket because Medicare will not cover such a service.

So although these changes have decreased the amount of cash-pay services we can provide to Medicare beneficiaries, there are still opportunities for the provision of maintenance-type services on a self-pay basis.

We are getting into murky legal waters here so I feel compelled to state that I am not an attorney and that you should utilize an attorney when making any decisions around this self-pay Medicare topic.

From parts one and two of this article series, we now have an understanding of when a physical therapist can and cannot accept self-payment from Medicare beneficiaries for covered services. At this point, the next question most practice owners ask is how to delineate between covered physical therapy services and the noncovered services like “wellness,” “fitness,” and “prevention.”

The answer to this question will become increasingly important to practice owners as we search for ways to offset falling reimbursement rates with revenue from cash-pay services. I will cover this topic in the final of this three-article series next month.


1. Medicare Benefit Policy Manual, Ch. 15, Section 220.2. www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R179BP.pdf. Accessed January 2016.

2. Jimmo vs. Sebelius Fact Sheet – CMS.gov. www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Jimmo-FactSheet.pdf. Accessed January 2016.

Jarod Carter, PT, DPT, MTC, is a PPS member and owner of Carter Physiotherapy in Austin, Texas. He is an author and consultant on the cash-based practice model and can be reached at Jarod@CashPTMedicare.com.

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