Out-of-Network Billing for Physical Therapy: A Comprehensive Guide

Physical Therapists face a myriad of challenges when navigating the complex terrain of billing. One such challenge is understanding and successfully handling out-of-network billing. It's a concept that's often misunderstood but can significantly impact a PT's practice's financial health and client satisfaction.

In this comprehensive guide, we will delve into Out-of-Network Billing for Physical Therapy, contrasting it with In-Network billing, exploring the nuances of accepting and declining assignments, and tackling the ins and outs of Balance Billing, Superbills, and Courtesy Billing. We'll also address the question that's on every PT practice owner's mind: "Do out-of-network rates pay better than in-network rates?"

Understanding In-Network and Out-of-Network Billing

Before we dive into out-of-network billing specifically, let's first break down what it means to be in-network. Essentially, when a PT is in-network with an insurance company, it signifies that there's a contractual agreement between the PT and the insurance provider. This agreement mandates the PT to follow the insurance company's treatment guidelines and accept its payment rates. In exchange, patients covered by this insurance pay less for their treatment.

In stark contrast, when a PT is out-of-network with an insurance company, it means that there's no contractual agreement between the PT and the insurance provider. Consequently, the PT is not bound to follow the insurance company's guidelines or accept its payment rates. The PT can either bill the patient directly or bill the insurance company on behalf of the patient, demanding what they consider a fair payment for the services rendered.

However, it's important to note that while being out-of-network gives PTs the flexibility to set their prices, insurance providers usually cover a smaller portion of the bill for out-of-network care, leaving the patients to bear the brunt of the costs.

Physical therapy practices must carefully consider the benefits of in-network and out-of-network billing to determine the best approach for their practice. For example, accepting in-network contracts may result in lower revenue, but it may also increase patient volume and simplify the billing process. On the other hand, declining in-network contracts may result in higher revenue but also higher administrative costs and a greater risk of denied claims.

Ultimately, the decision to participate in in-network or out-of-network billing will depend on the specific needs and goals of each physical therapy practice. In this guide we will highlight the pros and cons of each option.

Out-of-Network Benefits

To get a full picture out-of-network billing in physical therapy you must first familiarize yourself with patient insurance and benefits. Specifically, a practice will need to interpret out-of-network benefits to the patient such as, deductible, co-pay, co-insurance, out of pocket maximum and more.

We recommend using real time eligibility checking to get a full breakdown of a patient’s out-of-network benefits.

Navigating the Waters of Out-of-Network Billing

Once a PT decides to go the out-of-network route, there are certain decisions to be made concerning accepting or declining assignment. Let's break down what these entail.

Accepting Assignment

When a PT accepts assignment, it signifies their willingness to receive payment from the patient's insurance provider. Despite being out-of-network, by accepting assignment, the PT agrees to the following:

1. The patient's case is under their care, and they should receive payments from the patient's insurance provider.

2. They accept the insurance provider's rate for the services rendered, even if it's lower than their fee schedule.

The process of accepting assignment involves filling out a claim form (If you’re manually filling out a CMS-1500, mark “YES” in box 27), indicating that you're accepting assignment, and sending it to the insurance provider

When accepting assignment, the physical therapist has two options for billing.

First, the physical therapist can collect a fee from the patient at the time of service and wait for the insurance provider to cover the rest of the claim. However, if the insurance company reimburses more than expected, the therapist must reimburse the patient for the overpayment.

Balance Billing

Alternatively, the therapist can bill the insurance company prior to billing the patient. Once the insurance company covers their approved amount, the patient is billed for the remaining cost, also known as balance billing. Typically it is illegal for In-network providers to balance bill, and it's restricted by laws for providers with Medicare or Medicaid patients. It's crucial for providers to consult their state laws before attempting balance billing.

By balance billing, the provider has the potential to receive the full amount billed, but patients may be confused or frustrated with the additional bill. Good communication with the patient beforehand can avoid misunderstandings and dissatisfaction.

Decline Assignment

If a PT chooses to decline assignment, they are stating their intention not to receive any payment from the insurance provider. Instead, they will collect all their payments directly from the patient. This can be achieved in two ways:

Superbill

The first is using a Superbill, which is a receipt of the services provided that clients can submit to the insurance company for potential reimbursement. Patients use the Physical Therapy Superbill to seek reimbursement from their insurance provider. Patients can submit a claim for reimbursement using the provided superbill.

Using Superbills ensures that the provider gets paid in full at the time of service and eliminates the risk of reimbursement denial from insurance companies.

Courtesy Billing

The other option is to bill the patient at the time of service and submit a claim to the insurance company on the patient's behalf. "Courtesy Billing" is a term used in out-of-network physical therapy billing, where the physical therapist bills the insurance company on behalf of the patient as a favor, with no expectation of reimbursement.

In this scenario, the physical therapist submits the claim to the insurance company and sends the patient a copy of the bill. With the goal, that the insurance company will pay some or all of the fee, but with no guarantee. This type of billing is done as a convenience for the patient, and the physical therapist is essentially "donating" their time and resources to create the bill. If the insurance company does choose to pay some or all of the bill, the payment goes directly to the patient, not the physical therapy practice. PatientStudio customers can submit out of network courtesy claims electronically through the integrating billing software.

Are Out-of-Network Rates Better Than In-Network Rates?

Most PT practice owners are wondering, "do out-of-network rates pay better than in-network rates?" The answer to this question isn't straightforward. When billing out-of-network, providers may sometimes receive more money from insurance providers than they would under a contract. Typically, insurance providers reimburse an uncontracted provider with what is known as the "Usual, Customary, and Reasonable (UCR) amount" for the provided service in that locality.

Usual, Customary, and Reasonable (UCR)

The Usual, Customary, and Reasonable (UCR) amount refers to the average cost that a particular medical service is charged in a specific geographic location. When a physical therapist is billing as an out-of-network provider, they can determine their own fee for their services. However, they must consider the UCR amount to make sure they are charging a fair and reasonable fee that is in line with what other providers in the area are charging for similar services.

HealthCare.gov defines UCR as "The amount paid for a medical service in a geographic area based on what providers in the area usually charge for the same or similar medical service." The UCR amount is sometimes used by insurance companies to determine the allowed or appropriate amount for a medical service.

However, the UCR isn't set in stone. An uncontracted provider can negotiate with insurance providers by presenting data that proves the UCR is too low. For example, if a particular service is not readily available in a geographic area, the provider has leverage to negotiate a better rate.

How to become an out-of-network provider

1. Check your contract with the insurance companies you are currently in-network with. There may be a clause that requires you to stay in-network for a certain period, typically one year.

2. Contact the insurance companies you want to be out-of-network with and let them know you want to terminate your in-network contract. You can typically find the contact information on the insurance company's website or by calling the provider services department.

3. Notify your current patients that you are transitioning to out-of-network status. You can do this through letters, email, or text messaging. Be sure to provide them with information on how to submit claims for reimbursement.

4. Set your out-of-network rates for your services. You will need to determine what you want to charge patients for your services when you are not contracted with an insurance company. You can set your rates at a higher rate than you would typically charge when in-network, but keep in mind that patients may be responsible for paying the difference between your fees and what their insurance company will cover.

5. Update your billing procedures to reflect your out-of-network status. Refer to above, decline or accept assignment. Make sure you have a clear process in place for patients to submit claims for reimbursement from their insurance company (courtesy or suberbill).

Still need help with Out-of-Network Billing for Physical Therapy?

As a physical therapist, you deserve to receive fair reimbursement for your services. With out-of-network billing, you can fight back against declining reimbursements and come out on top. Navigating Out of Network Billing for Physical Therapy might seem daunting, but with the right knowledge and resources, PTs can successfully manage it.

Don't get left behind, take control of your billing now! Schedule a demo with our expert team and learn how to maximize your earnings through out-of-network billing.