Can Physical Therapists Opt Out of Medicare? Cash-Pay Rules

This is the most misunderstood rule in cash-based physical therapy, and the cost of getting it wrong is high. Physical therapists cannot opt out of Medicare. That single fact means a cash PT who is not enrolled cannot take a Medicare patient's money for medically necessary covered care, no matter what the patient signs. What you can do depends on your enrollment status and on whether the service is something Medicare covers at all. This page covers Original Medicare (Part B). Medicare Advantage plans run on their own contracts; check with each plan.

Can physical therapists opt out of Medicare?

No, physical therapists cannot opt out of Medicare. CMS publishes the list of practitioner types eligible to opt out, which includes doctors of medicine and osteopathy, dentists, podiatrists, optometrists, physician assistants, nurse practitioners, clinical psychologists, clinical social workers and several others. Physical therapists are on CMS's separate list of practitioners who are not eligible, together with chiropractors, occupational therapists, qualified audiologists, speech-language pathologists and anesthesiology assistants (CMS). APTA explains that the private contracting rules that allow opt-out do not apply to PTs because PTs fall outside the statute's definitions of "physician" and "practitioner" (APTA). So when a colleague says they "opted out," what they usually mean is that they never enrolled. That is a different status with stricter limits, covered below.

What is mandatory claims submission?

Mandatory claims submission is the federal rule that a provider must file a Medicare claim for covered services furnished to a Part B beneficiary, rather than billing the patient privately. It comes from Section 1848(g)(4) of the Social Security Act, which says that for services furnished on or after September 1, 1990, a physician, supplier or other person must complete and submit a claim on a standard form within one year of the service, and may not charge for completing and submitting it (SSA). The same section sets penalties, including a 10% payment reduction on assigned claims that are not submitted. APTA states that the claims-filing and limiting-charge rules apply to enrolled and non-enrolled providers alike, so staying out of Medicare does not avoid them (APTA). See also our glossary entry on mandatory claims submission.

What are the ways a PT can relate to Medicare?

A PT can be a participating provider, a non-participating provider, or not enrolled at all, and each status sets different rules for collecting money from a Medicare patient. APTA describes participating providers as agreeing to accept Medicare's approved amount as full payment for all covered services. Non-participating providers can accept assignment case by case, are paid 5% less than the participating amount, and when they do not accept assignment can charge up to the limiting charge, 115% of the non-participating fee schedule amount. Rehabilitation agencies must be participating providers (APTA). Jarod Carter's summary for WebPT adds that a non-participating PT can collect full payment at the visit but must still submit the claim so the patient can be reimbursed (WebPT, 2015).

Can a cash-based PT accept cash from a Medicare patient?

A cash-based PT can accept cash from a Medicare patient only for services Medicare does not cover, or, if enrolled, under the non-participating rules above. APTA puts it flatly: a PT who furnishes Medicare-covered services and privately bills and collects payment from the beneficiary violates the law, and APTA notes that legal challenges to these rules have failed (APTA). WebPT's 2018 compliance article, drawing on Jarod Carter, says PTs can accept cash from Medicare beneficiaries only when services are not covered, either because they are statutorily excluded, with wellness and fitness services as the example, or because they lack medical necessity (WebPT, 2018). For a PT who is not enrolled, the practical policy is to offer Medicare patients only wellness or fitness services and to refer them to an enrolled PT when they need skilled, medically necessary care.

What is an ABN and when does a PT need one?

An Advance Beneficiary Notice of Noncoverage (ABN), Form CMS-R-131, is the notice a provider gives an Original Medicare patient before a service when Medicare payment is expected to be denied, so the patient can choose to accept financial liability (CMS). CMS's Claims Processing Manual, Chapter 30, sets the rules: ABNs should be delivered in person if possible and far enough ahead of the care for the patient to weigh the options, and they cannot be backdated or used to shift liability for care already given before the notice (section 50.8); and routine or blanket notices are not acceptable, because notice must reflect a genuine judgment about likely denial (section 40.2.2) (CMS Chapter 30). For a PT, the ABN matters when you expect a covered type of service to be denied as not medically necessary. WebPT's compliance guidance says the patient must sign the ABN before you collect payment in that situation (WebPT, 2018).

Our glossary has more on the ABN.

Do you need an ABN for wellness services?

You do not need an ABN for wellness services that Medicare never covers, though CMS encourages giving one anyway. Section 50.2.1 of the Claims Processing Manual, Chapter 30, states that ABNs are not required for care that is statutorily excluded from coverage, and that CMS strongly encourages providers to issue the ABN for care that is never covered (CMS Chapter 30). In that voluntary use, the notice is a courtesy that documents the patient understood Medicare would not pay. WebPT's compliance article makes the same point for wellness and fitness services (WebPT, 2018). Our take: issue the voluntary notice every time a Medicare beneficiary buys a wellness package. It costs you a page of paper, and it gives you a clean record that the patient knew what they were buying and why.

How do you tell wellness from medically necessary care?

The working test is whether the service needs a physical therapist's skill. WebPT's 2018 article frames it this way: covered services generally require skilled delivery, and if a non-skilled person cannot safely provide the treatment, Medicare covers it and you cannot charge cash for it (WebPT, 2018). A general fitness program, a group strength class or a supervised gym session for someone with no active condition sits on the wellness side. Evaluating and treating a painful shoulder, post-surgical rehab or fall-risk treatment for a patient with a diagnosis sits on the medically necessary side. The gray zone is a patient who finished skilled care and wants to keep training with you. Document the discharge from skilled care, describe the new program as fitness or wellness, and do not bill skilled CPT codes for it. When in doubt, ask a healthcare attorney before you sell the package.

What happens when a cash patient turns 65 during care?

When a cash patient enrolls in Medicare Part B mid-treatment, Medicare's beneficiary protections apply from that point, and a non-enrolled PT has to stop providing covered care or enroll and bill Medicare. APTA addresses this exact scenario and says no exception lets the patient and a non-enrolled PT continue outside Medicare for covered services (APTA). The same guidance covers a related case: a patient who had poor results with enrolled PTs and wants to keep seeing you anyway. APTA says the patient's dissatisfaction is irrelevant to the rule. Build this into intake. Ask every new patient over 60 whether they are enrolled in or about to enroll in Medicare Part B, and put the answer in the chart. A prepaid package sold to someone who turns 65 in month two creates a refund problem you can avoid with one intake question.

Can a Medicare patient refuse to have a claim submitted?

A Medicare patient can refuse to authorize a claim, but APTA says that exception is available only to enrolled providers, so a non-enrolled PT cannot rely on it. Jarod Carter's 2015 article for WebPT describes the exception as applying when the beneficiary refuses, of their own free will, to authorize submitting a bill to Medicare, and says such situations are limited (WebPT, 2015). APTA's guidance, using a patient who wants HIPAA privacy from Medicare as the example, says non-enrolled PTs cannot use the patient-refusal exception (APTA). If you are enrolled and a patient raises this, document the patient's free choice carefully and talk with a compliance attorney about how to handle it. Do not script your front desk to suggest it.

Does the Medicare therapy cap still limit care?

No, the hard therapy cap is gone, though a spending threshold still triggers extra steps. CMS states that the law repealed the Medicare outpatient therapy caps and exceptions process while keeping a KX modifier threshold and targeted medical review. For calendar year 2026, the KX threshold is $2,480 for PT and speech-language pathology services combined, and claims above it without the KX modifier are denied; the targeted medical review threshold is $3,000 (CMS). This matters for cash practices because owners sometimes assume a patient who "used up" their Medicare benefit can then pay cash for the same care. WebPT's compliance article warns against this: Medicare still covers medically necessary services beyond the threshold, billed with the KX modifier (WebPT, 2018).

Is Congress or a court changing the opt-out rule?

Possibly, but nothing has changed yet. In July 2025, Reps. Lloyd Smucker and Don Davis introduced H.R. 4204, the Medicare Patient Choice Act, which APTA endorses and which would add physical therapists to the providers allowed to opt out and contract privately with Medicare patients (APTA). Separately, a Florida cash-based PT and the United Physical Therapy Association sued in the U.S. District Court for the Middle District of Florida on August 12, 2025, challenging the exclusion. Pacific Legal Foundation, which represents them, reports that the government moved to dismiss and the plaintiffs responded on March 23, 2026, with no ruling reported on its page (Pacific Legal Foundation). Until a law passes or a court rules, plan around the current rules.

What should a cash practice's Medicare policy say?

A cash practice's Medicare policy should say, in writing, which of the three statuses you hold, what you will and will not provide to Medicare beneficiaries, and exactly what the front desk says when a Medicare patient calls. For a non-enrolled clinic, that usually means: wellness and fitness services only for beneficiaries, a voluntary ABN and wellness agreement for each, a referral list of enrolled PTs for skilled care, and an intake question about Part B status. For an enrolled clinic, it means clear rules on when an ABN is used and who decides. Train the team on it and review it once a year. The phone wording for Medicare callers is in how to answer "do you take insurance?", and the bigger decision about which payers to keep is in should I drop insurance.

This is general information, not legal or billing advice; check your state board and a healthcare attorney before you change how you bill.