Understanding the Complex World of Medicare and Health Insurance: A Behind-the-Scenes Look

Written By: Dr. Katie Wadland, PT, DPT, Board-Certified Geriatric Clinical Specialist and Owner of Healthy Aging PT

As a physical therapist and owner of a private practice, I often have conversations with patients and clients about the state of healthcare and the challenges that come with it. Many people aren't aware of the complexities of Medicare and health insurance, and how these complexities impact the care they receive. I wanted to take a moment to provide some "behind the scenes" information about Medicare, health insurance, and the state of healthcare today.

The Reality of Medicare and Health Insurance Reimbursements

Let's start with Medicare. For those of you who aren't familiar, Medicare Part B is the part of Medicare that covers outpatient care, including physical therapy. While Medicare is an incredibly valuable resource for many, it's important to understand that the reimbursement rates for services provided under Medicare Part B have been decreasing steadily over the past two decades. This isn't a trend that's specific to Medicare; health insurance reimbursements, in general, have seen significant reductions over the years.

For example, due to legislative changes like the Balanced Budget Act of 1997, there have been continual cuts to Medicare reimbursements. Over the last 20 years, Medicare payments for outpatient physical therapy have been reduced by about 25%. These reductions are compounded by annual updates that often fail to keep pace with inflation or the rising cost of delivering care. In fact, it's projected that in the coming year, there will be another reduction in Medicare reimbursement rates, which could be as much as 4.5%.

In addition to the cuts in Medicare reimbursement, many therapy practices, including ours, are also going out of network with certain managed care plans. The reason for this is twofold. First, these plans often come with significant administrative burdens, requiring extensive authorization processes and paperwork just to begin or continue care. This not only takes time away from providing hands-on patient care but also adds to the overall cost of running a practice. Second, the reimbursement rates from many managed care plans are exceedingly low, often averaging only 60-70% of what Medicare reimburses, which is simply unsustainable for many practices. You may have seen recent news about large hospital systems going out of network with certain Medicare Advantage plans for similar reasons. These plans frequently offer even lower reimbursements and add layers of red tape that can hinder timely patient care.

However, even though we are out of network with these plans, we strive to remain as accessible as possible by accepting out-of-network coverage when your plan offers it. We frequently see patients with Tufts Managed Medicare, UHC/AARP, Humana, and other managed Medicare plans, and we currently remain in-network with BCBS. This approach allows us to continue providing high-quality care without the limitations imposed by the low reimbursement rates and administrative burdens of managed care plans. We encourage you to ask about what out-of-network benefits your plan may have, and we are always happy to check on this for you if you are interested in receiving care with Healthy Aging Physical Therapy.

The Impact on Private Practices

So, what does this mean for private practices like ours? Simply put, it's becoming increasingly difficult for practices to accept insurance and remain financially viable. Each year, while the reimbursement rates go down, the costs of running a practice—like rent, utilities, supplies, and fair wages for our staff—continue to rise. It's a challenging balance to strike.

Despite these challenges, we at Healthy Aging Physical Therapy have made the decision to continue accepting Medicare Part B. Why? Because we believe deeply in providing high-quality, concierge-level care to those who need it most. Our commitment is to serve our community, especially those who rely on Medicare for their healthcare needs. However, we also recognize the financial realities that come with running a small business in today's healthcare environment.

The Role of Cash-Based Services

This brings me to an important point about why you might see therapy practices, including ours, offering cash-based services like our Fitness and Wellness programming. I know it might seem surprising at first—after all, isn't insurance supposed to cover everything? The reality is that insurance often dictates not only how long we can see a patient but also what types of services we can provide. There are many scenarios where patients would benefit from additional or ongoing care that isn't covered by insurance.

By offering cash-based services, we are able to supplement our revenue, ensuring that we can continue to provide quality care, pay fair wages to our therapists, and keep our doors open. These services—whether it's our fitness coaching and personal training programs, therapy wellness sessions, or virtual and in-person fitness classes—allow us the flexibility to meet your needs beyond what insurance covers. They also empower us to provide long-term care that supports your overall health and wellness, beyond just your immediate therapy needs.

Supporting Local Healthcare and Small Businesses

I want to take a moment to thank each of you for your continued support of Healthy Aging Physical Therapy and other small businesses and private practices. We know that the healthcare landscape can be confusing and that there are many factors at play that affect both providers and patients. We hope this post has shed some light on the current state of healthcare and why practices like ours are making the decisions we do.

We're committed to continuing to provide the best possible care to our community, and we're excited to offer a range of wellness programs to support your health and wellness journey. Thank you for being a part of our community, and for supporting small, locally owned businesses that are dedicated to your well-being.

As I tell all of my Healthy Aging therapists when they start with us, I value kindness and transparency above all else, so hopefully this helped make our complicated healthcare landscape a little more transparent for you. If you have any questions or would like to learn more about our post-discharge wellness programs, please don't hesitate to reach out. We're here to help you live your healthiest life!