Can PT/OT Clinic Accept Referrals from Outside Physicians?

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April 22, 2015
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Many orthopaedic groups are under the incorrect assumption that their physical and occupational therapists cannot accept referrals from outside physicians or that there is a limit on the percentage of patients that can come from outside referrals.

Your PT/OT clinic can accept referrals, including referrals of Medicare patients. However, to accept outside Medicare referrals, your therapists need to be enrolled with Medicare (in the same manner as your physicians), their receipts reassigned to the group, and you should be billing under Medicare’s therapist in private practice (TPP) rules (which are expressly permitted for therapists employed by physician groups). Most orthopaedic groups are already billing Medicare for therapy under the TPP rules, rather than the alternative “incident to” rules. You cannot accept outside referrals of Medicare patients if you are billing under the incident to rules because incident to patients must be under the care of one of your physicians.

In addition, the percentage of therapy patients that can come from outside referrals is not limited. In the past, most orthopaedic groups have not been able to attract a significant number of outside therapy referrals. However, as orthopaedic groups have expanded their therapy practice at main and multiple satellite offices and private therapy practices have shrunk or disappeared, outside referrals have increased and are more commonly becoming a significant source of therapy patients.

Increasing therapy referrals is key to maintaining and even growing PT/OT profitability. This is especially the case given that the average number of visits per patient has been steadily trending downward as deductibles and co-pays have increased and payers have adopted more stringent authorization requirements. For example, if your average visits per patient decreases from 10 to 9 (which is not unusual), you will need to increase the number of new patients by 11% to avoid a decrease in total visits. If your average visits per patient is decreasing and you are not offsetting this decrease by an increase in referrals from your physicians or outside physicians, the decrease in your total PT/OT visits will almost undoubtedly result in a substantial decrease in profitability.