There’s no such thing as a “cash-only practice,” yet you hear it all the time.
Doctors say, “I collect cash only, so I don’t have to deal with the headaches of insurance.” It’s understandable—insurance can be a pain to deal with. Not to mention the sky-high deductibles and copays these days.
And even if you take insurance, most of your patients are likely paying out of pocket.
A strict definition of a cash-only practice is one that doesn’t bill insurance nor one that accepts Medicare, Medicaid, workers’ compensation, or personal injury cases. It is literally 100 percent cash-only.
Some people choose this route to keep things simple. There are fewer headaches, fewer reports, fewer staff required, better profits, and more committed patients.
But the larger question is whether any of the patients you care for have insurance. Of course they do. Can they submit a receipt or superbill to get reimbursed? Yes they can. You must provide them a receipt if they ask for one.
But here’s the key point: As soon as they submit a receipt or superbill to their insurance for reimbursement, you are responsible for the same level of service and documentation as you would have been had you billed the insurance yourself.
More like cash-mostly
When we say there is no such thing as a “cash-only practice,” what we mean is that a cash-only practice is one that does not accept an insurance assignment of benefits. But a practice that only accepts direct payments from patients is still held to the same level of scrutiny as any other type of practice.
That’s because the patient can submit a claim, thus giving their insurance company the right to request records, billings, etc. And if your documentation is not up to their standards, the patient may lose out on getting reimbursed—creating an unhappy customer who can make a claim against you for not doing what your license requires you to do.
There are multiple benefits to being a cash-based practice; it’s more fun, more profitable, and can lead to better retention. But it requires expertise and knowledge. You don’t get to just say “the rules don’t apply to me because I’m cash.”
So why not accept insurance if you are still subject to the same rules and responsibilities anyway? Personally, I recommend being 80 to 90 percent cash and 10 to 20 percent insurance. It does not have to be either-or. In fact, the doctors having the greatest success are mostly cash, not all cash.
Ultimately, the healthiest practices are the ones that collect a lot of cash with recurring monthly auto-debits and a small portion of insurance. They’re not dependent on insurance, but they accept it. And most use outside billing companies to handle what insurance they do collect.
Review the rules
Here are the rules you must follow, whether you’re 100 percent cash or a blend of cash and insurance. You must correctly:
Diagnose correctly: You have to choose the correct ICD-10 codes to describe your diagnosis. A typical example might be “Cervical kyphosis with intersegmental dysfunction of C2/3 and associated cervical myalgia, complicated by cervical spondylosis without myelopathy or radiculopathy at C4/5.” Your coding should clearly define the patient’s condition so the insurance carrier understands the nature of the issue.
Document correctly: From treatment plans to treatment notes to progress reports, you must be able to show that any care covered by insurance meets the medical necessity requirements for reimbursement. There are many documentation experts in chiropractic. Take advantage of them.
Code correctly: There are some great resources in the industry who can guide you on CPT coding. A major issue involves up-coding and down-coding. This is the practice of choosing a CPT code that has a higher or lower reimbursement value than the presenting problem. Doctors have been known to up-code to get higher reimbursement and to down- code to make care more affordable for cash patients. These actions can lead to fines, post-audit reimbursements, and criminal charges of fraud.
Charge correctly: For each service you provide, your fee is your fee.
You don’t have one fee for insurance, another for Medicare, another for personal injury, and another for cash. It doesn’t matter who’s paying the bill, your fee is the same.
Discount correctly: There is a common misconception about fee schedules. There’s the Medicare fee schedule, the workers’ compensation fee schedule, the third-party fee schedule, and of course the cash fee schedule. But you don’t have different fee schedules—you have different fee discounts applied to your set fee schedule. For example, your fee for an adjustment is $60. But when you agree to take a Medicare or third-party insurance patient, you agree to reduce your $60 to their allowed amount.
There are only four legal ways to discount your services:
Medicare: You agree to discount your fee to the Medicare mandated allowed amounts.
Health insurance: You agree to discount your fee to the insur- ance-company-allowed amounts.
Discount medical plan organization (DMPO): You agree to discount your fee to the DMPO amounts for non-covered services. Some DMPOs allow you to set your own discount levels and cost nothing to join.
Hardship: You agree to apply a discount (defined by you) to any group of people you select.
Prompt pay: You agree to apply a discount when a patient promptly pays for non-covered care. In 2009, the OIG wrote an opinion limiting this discount to 15 percent.
Bill correctly: Your care plans comprise both your covered (paid by insurance) and non-covered (not paid by insurance) services. Covered services are only discounted due to mandates or contracts with insurance companies. Non-covered services can be discounted by DMPO contracts, hardship, or prompt pay.
Collect correctly: This can have a huge impact on patient retention. In fact, your patient visit average (PVA) can reflect how you collect your fees. The lowest PVA occurs when you collect per visit and the highest PVA occurs when you have patients on a monthly auto-debit.
The great debate of whether to accept cash or insurance is answered by being smart about it. The endgame is freedom from insurance dependence. The path to doing that is through high patient retention.
The most important factor in retention is creating compliant care plans that patients can say yes to. And these plans should incorporate both covered (insurance) and non-covered (cash) services to maximize the demographic of your patient base.
Miles Bodzin, DC, is the founder and CEO of Cash Practice Systems, which has trained thousands of DCs and CAs on how to run a cash-based practice. Cash Practice Systems offers web-based software for chiropractors to implement a four-step process resulting in increased patient retention. Bodzin can be contacted at 877-343-8950 or through cashpractice.com.