Should I Drop Insurance? A Decision Guide for PT Owners

If you search "should I drop insurance physical therapy," almost every result is written for patients deciding whether to see a cash PT. This page is for the owner on the other side of the desk. The short version: dropping insurance pays when one cash visit is worth clearly more than one insurance visit after all the hidden costs, and when you can fill the schedule on your own. It depends mostly on your payer mix, how much Medicare you see and whether you have a working way to get new patients.

Should a physical therapy owner drop insurance?

A physical therapy owner should drop insurance when the cash math and the demand math both work, and not before. The cash math is simple: what you would collect per visit in cash, minus nothing, against what each payer actually pays after denials, write-offs and the admin hours spent chasing authorizations. The demand math is harder: if 40% of your new patients find you through a payer directory or an in-network referral, that 40% shrinks when you leave. Owners who drop insurance because they are angry at a payer, without a plan to replace that flow, are the ones who end up re-credentialing a year later. Owners who drop the worst payer first, watch what happens for 90 days, and then drop the next one, usually come out with a smaller caseload and a bigger profit per visit hour.

How do I know if my payers are worth keeping?

You know a payer is worth keeping when its real revenue per visit sits close to your cash price and its patients show up and finish their plans. Pull 12 months of collections by payer from your EMR and divide by visits, then subtract what you spend on that payer: billing fees, authorization time, denial rework. For a market reference, U.S. Physical Therapy, a large national outpatient operator, reported an average net rate of $105.54 per patient visit in the third quarter of 2025 (USPH). A small private practice often has worse contracts than a company that size. If a payer nets you $70 a visit and a cash hour would bring $175, that payer is costing you money every time it fills a slot a cash patient could have taken.

The numbers above are an illustration. Use your own.

Should I drop, phase out or keep insurance?

Most PT owners should phase insurance out one payer at a time, starting with the lowest-paying payer, and the decision table below shows where your clinic fits. Find the row that matches your payer mix and act on that row first. The top row is rare in a clinic that has been in-network for years. The bottom row is not a forever answer; it means fix demand first and come back to this in six months.

How much revenue will I actually recover after dropping insurance?

You will recover only the share of that payer's patients who agree to pay cash, plus whatever new cash patients your marketing brings in, so model it before you send the letter. Nobody publishes a trustworthy "percent who follow you" number. Our estimate, with arithmetic: a payer sends 15 new patients a month at $900 per episode. If 35% stay as cash patients at a $1,500 package, you collect 5.25 x $1,500 = $7,875 against the $13,500 you had, a $5,625 gap. At a 60% keep rate you collect $13,500, roughly break-even, while seeing 6 fewer patients. For a sense of real cash episodes, a 2019 study of one cash PT clinic found an average of 8 visits and $780.19 per episode, or $97.52 per visit, using charts from 2013 to 2016 (Pulford et al.). Put your own numbers in the cash vs insurance calculator.

Who should not drop insurance yet?

Owners with no working new-patient system should not drop insurance yet. If the phone only rings because you are listed in a directory, leaving the directory turns the phone off. The same goes for clinics where Medicare is a large share of visits, because leaving Medicare is not a simple cash conversion, and clinics in markets where a single employer or payer dominates and patients have little out-of-network coverage. Hold off, too, if you have less than three months of operating cash in the bank, since the first 90 days after a payer exit are usually the leanest. And if your front desk has never sold a cash plan of care, train and test them on cash-only services first. None of this means never. It means fix the weak link, then revisit the decision with numbers.

What happens to my Medicare patients if I drop insurance?

Your Medicare patients are a separate decision, because physical therapists cannot opt out of Medicare. CMS lists physical therapists among the practitioner types not eligible to opt out (CMS), and APTA's guidance says no exceptions let PTs bypass enrollment, claims filing and Medicare's charge limits for covered services (APTA). So dropping commercial insurance does not let you start charging Medicare patients cash for medically necessary care. Your choices are to stay enrolled and keep billing Medicare, enroll as non-participating, or leave Medicare and offer beneficiaries only services Medicare never covers, such as wellness work. APTA also notes that when a cash patient turns 65 and enrolls in Part B mid-treatment, a non-enrolled PT must stop treating covered care or enroll. Read Medicare and cash-based physical therapy before you decide.

Can patients still use their insurance if I go out-of-network?

Many can, through out-of-network benefits, which is why going out-of-network is often an easier sell than "cash only." You collect at the visit and give the patient a superbill, an itemized receipt with diagnosis codes, CPT codes and your NPI that the patient submits to their insurer for reimbursement. GoodRx notes that reimbursement depends on the plan having out-of-network coverage, that the out-of-network deductible usually has to be met first, and that insurers often reimburse only part of what was paid (GoodRx). Medicare generally does not reimburse superbills, so this does not help Medicare patients. For context on what patients compare you with, one practice consultant quoted by WebPT said many patients have a $30 to $50 copay per in-network visit (WebPT). Your script has to explain why your visit is worth more than that copay.

How do I tell existing patients I'm leaving their insurance?

Tell them early, tell them in person and give them a specific option, not just a letter. Start with patients in an active plan of care: explain the date, what their visits will cost as a cash or out-of-network patient, whether you will provide superbills, and what happens if they want to finish their care in-network somewhere else. Check your payer contract first, since some include continuity-of-care obligations for patients in active treatment. Then tell past patients through a short email and text that focuses on what stays the same: the same therapist, longer visits, no authorization delays. Avoid trashing the payer. Patients do not care about your reimbursement fight, and complaining about it makes the change sound like your problem instead of their gain. The front desk wording is in how to answer "do you take insurance?".

What should I do in the 90 days before dropping a payer?

In the 90 days before dropping a payer, lock down the contract terms, the price and the demand. Fierce Healthcare's guidance on ending payer contracts starts with reviewing the agreement for when you may terminate, since some allow it only on one date a year, and checking for a termination-without-cause clause (Fierce Healthcare). A healthcare attorney writing in Medical Economics adds that the plan must actually receive the notice by the deadline and recommends certified mail or overnight courier for proof (Medical Economics). In the same 90 days, publish your cash prices, train the front desk, set up superbills, and get new-patient ads running so you can see your cost per new patient before the payer revenue disappears.

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