How to Guide: Out of Network Billing for Physical Therapy
Physical therapy billing can be a complex and confusing process, with different rules and procedures for in-network and out-of-network billing. Physical Therapy out of network billing can be an effective strategy to increase revenue and reduce administrative burden.
Understanding the key differences between the two is crucial for physical therapy practices to ensure they are accurately billing patients and maximizing revenue.
The difference between in-network and out-of-network billing.
In-network billing refers to when a physical therapy practice has a contract with a patient's insurance company and is considered "in-network." This means that the practice agrees to charge the insurance company a contracted rate for services, and the patient's insurance company agrees to cover a portion of those services. This type of billing typically results in lower costs for patients and easier claims processing for physical therapy practices.
Out-of-network billing, on the other hand, refers to when a physical therapy practice does not have a contract with a patient's insurance company and is considered "out-of-network." This means that the practice can charge the full cost of services, and the patient's insurance company may only cover a portion of those services. The patient is then responsible for paying the remaining balance, which can result in higher costs for patients. Out-of-network billing can also result in disputes over payment amounts and denied claims, putting physical therapy practices at risk for financial losses.
Physical therapy practices must carefully consider the benefits and drawbacks of in-network and out-of-network billing to determine the best approach for their patients and 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 post we will highlight the pros and cons of each option. physical therapy practices should understand the key differences, to ensure they are billing accurately and effectively, and protecting their financial well-being.
Foreword: 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.
Accept Assignment
In accepting assignment, the physical therapist continues treating the patient and is paid by the insurance company and, potentially, the patient. (If you’re manually filling out a CMS-1500, mark “YES” in box 27)
When accepting assignment, the physical therapist has two options for billing. First, the physical therapist can bill the patient when the service is provided and then insurance company. 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 on behalf of the patient prior to billing the patient directly. Once the insurance company covers their approved amount, the patient is billed for the remaining cost, also known as balance billing. In-network providers can't 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
When a physical therapist declines assignment, they continue to treat the patient but will not receive payment from the insurance company. Instead, they will receive full payment from the patient. They have two options for billing.
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.
Usual, Customary, and Reasonable (UCR)
As an out-of-network provider, the physical therapist determines their own fee and must consider the Usual, Customary, and Reasonable (UCR) amount in their area when determining their fee.
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.
It is important for physical therapists to be aware of the UCR amount when determining their fees for out-of-network billing, as overcharging can result in a loss of business and negative reputation in the industry. On the other hand, charging too little may result in underpayment and financial difficulties for the provider. Physical therapists should consider their costs, market conditions, and the UCR amount when setting their fees.
Are physical therapy out-of-network rates better than in-network rates?
When billing payers out-of-network, providers may have the opportunity to earn more than they would with in-network contracts. Payers will typically reimburse non contracted providers with the "Usual, Customary, and Reasonable (UCR)" amount for the service provided in their area. However, UCR amounts are not set in stone, and providers can negotiate with payers by presenting data that proves the UCR is too low.
Still need help?
Unravel the mysteries of out-of-network billing and win the game! 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.
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