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Physical Therapy Practices are Growing – But Also Face Increased Challenges

2006 was a monumental year for New York physical therapists – New York State passed a law permitting physical therapists to directly treat patients without a referral from a physician, triggering an explosion of private physical therapy practices. Over a decade later, private practice is still thriving in the industry.  As patient volume rises, and new locations open up, physical therapists must position themselves to meet the ever-increasing challenges that come with running larger, constantly growing practices.

Challenge # 1 – Increased Scrutiny of Billing Practices

As my Medicare revenue grows, the scrutiny over my billing practices grows as well

Medicare patients are a significant source of revenue for many physical therapy practices. The physical therapy field, as such, has grown into a prime target for Medicare contractors seeking huge recoupments, and practices must be ready to respond to this challenge head on.

Indeed, a 2018 report issued by the HHS Office of the Inspector General claimed that a staggering 61% of physical therapy claims submitted to the Medicare Program for payment did not comply with Medicare requirements pertaining to medical necessity, coding and/or documentation. Increased enforcement measures can be expected as a result. Physical therapy practices, in the face of this increased oversight, must take both proactive and reactive measures. Established compliance and billing protocols are critically important and can help a practice avoid audits.If a practice is selected for review, an aggressive audit defense is essential – audit findings are often reduced significantly through provider appeals.

Challenge # 2 – Business Expansion

How do I expand my patient base without running into regulatory issues?

Physical therapy practices continue to derive a sizable portion of their business from referrals. Practices often run into challenges when attempting to develop referral sources. Some physical therapy practices look to leverage close proximity to referring physicians by renting space or equipment from large medical practices. This arrangement is permitted but must be carefully structured. Large private practices also often seek to outsource certain administrative functions to management companies, in the hope that expert management will help grow the practice's patient base. Again, while such agreements are permitted, they are closely regulated under New York's fee splitting and corporate practice of health care laws, and must be properly drafted.

Challenge # 3 – Employment Issues

As my practice expands, so does the number of my employees.How do I protect my practice from employment-related legal issues?

Private practices in New York City face a triple employment-related challenge: federal, state and local employment laws that place overlapping requirements on employers. The healthcare industry has one of the highest concentrations of employment-related litigation. To meet this challenge, physical therapy practices must take seriously their role as an employer, by establishing a comprehensive employment strategy. This includes a detailed set of employment practices establishing acceptable workplace standards and conduct, and carefully drafted employment contracts protecting the practice's interests.

Sauchik & Giyaur P.C. provides comprehensive, expert counsel to physical therapy practices and other healthcare providers. If you are in need of guidance regarding the challenges facing your practice, please do not hesitate to call the experienced healthcare attorneys at 212.668.0200 or email the firm at

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Friday, December 01, 2023