Educational content only. This post explains how financial concepts and published data apply generally to healthcare practices — it does not constitute advice for your specific situation. Consult your accountant, lender, and relevant advisors before making any significant business or financial decisions.
Most US physical therapy and chiropractic practices bill some combination of Medicare, Medicaid, commercial insurance, and direct pay. The mix of those payers, and the rates each pays, determines revenue per visit more than almost any other variable. Understanding how the billing system works is foundational to understanding why two practices with identical fee schedules can generate materially different revenue.
The Fee Schedule System
US healthcare billing operates on a fee schedule system in which the amount a provider receives for a service depends on the payer, not on what the provider charges. Published CMS documentation describes Medicare fee schedules — the Physician Fee Schedule (PFS) and the Physical Therapy fee schedules — as setting the maximum allowable payment for Medicare-covered services. Commercial insurers set their own contracted rates, typically expressed as a percentage of Medicare rates.
A physical therapy practice might charge $180 for an initial evaluation, but reimbursement varies by payer. For example, Medicare may allow $90, a commercial insurer contracted at 133% of the Medicare rate may pay $120, and a direct-pay patient may pay the full $180. As a result, actual revenue per visit is a weighted average of payer reimbursements, determined by payer mix—not the practice’s fee schedule.
Medicare Billing for Physical Therapy
Published CMS documentation describes physical therapy as a Medicare Part B benefit, with coverage subject to medical necessity documentation, therapy caps (subject to exceptions), and the requirement that services be provided by or under the supervision of a qualified physical therapist. Published resources describe Medicare billing as generating the lowest reimbursement per unit of any major payer in most US markets — which is why Medicare-heavy practices tend to show lower revenue per visit than those with stronger commercial insurance or direct-pay components.
Published resources note that Medicare billing requires specific documentation standards — progress notes, plan of care updates, and functional limitation reporting — that add administrative overhead relative to commercial billing. Published practice management resources describe Medicare compliance documentation as a meaningful factor in the administrative cost of a Medicare-heavy practice.
Medicare Billing for Chiropractic
Published CMS documentation describes chiropractic Medicare coverage as limited to manual manipulation of the spine for the treatment of subluxation — a narrower covered service than physical therapy. Published resources describe this limitation as one of the reasons many chiropractic practices operate primarily on commercial insurance and direct-pay billing models, with Medicare representing a smaller proportion of revenue than in physical therapy.
Commercial Insurance Contracting
Published resources describe commercial insurance contracting as requiring credentialing with each payer, negotiation of contracted rates (expressed as a percentage of Medicare), and ongoing compliance with payer-specific billing and documentation requirements. Published resources note that contracted rates vary materially by payer and by market — a commercial insurer may contract at 120% of Medicare in one market and 160% in another for the same service.
Published resources describe in-network status — being contracted with an insurer — as affecting patient access (insured patients tend to seek in-network providers) and revenue per visit (contracted rates may be lower than the provider's standard fee). Out-of-network billing is possible with some payers but creates patient cost-sharing dynamics that affect utilization. The decision about which payers to contract with involves trade-offs between patient volume and revenue per visit.
The Direct Pay Model
Published practice management resources describe a growing direct-pay (cash-pay) model in both physical therapy and chiropractic — where the practice does not accept insurance assignment and patients pay at the time of service at the practice's own fee schedule. Published resources describe this model as producing higher revenue per visit than insurance billing but requiring different patient acquisition strategies and typically serving a different patient demographic than insurance-dependent practices.
→ See also: How Revenue Per Visit Actually Works
Published revenue and margin benchmarks for US physical therapy and chiropractic practices — calibrated to the US billing environment. See how your numbers compare to published data for your specialty.
Compare Your Numbers →Disclaimer: All figures referenced are from published industry sources and represent general patterns — not estimates for any specific practice. KlinDeck is not a financial advisor, accountant, lender, or lawyer. Tools are educational references only. Consult qualified professionals before making significant decisions.