120% Over Medicare: The Work Comp Playbook Every Private Practice Owner Needs With Josh Farley

120% Over Medicare: The Work Comp Playbook Every Private Practice Owner Needs With Josh Farley

We have a new guest, a new guy, Joshua Farley. We're going to call him Josh. Joshua is a Physical Therapist and a very seasoned therapist, has a lot of credentials and a very diverse background. Long story short is that Josh, you were the keynote speaker at our white coat ceremony when I graduated physical therapy school. That's where I think I first became aware. You were actually the president of the Mississippi Physical Therapy Association at that time.

Yeah, I think it was my first year in that position. Actually, now I think about it, Adam, we started those payment lectures, and I think your class was the first class I did the payment lecture it was messed up because they did it in the second year, which is very hard because you've had one rotation.

We're just trying to survive at that point.

It got lost. I can't believe it was that long ago, though.

That was 2016 or so. I don't know if you remember, you were working at a small clinic at the time and I came and saw you because I was having some knee pain. I was having some knee pain, I was having some funky stuff going on with my knee, I was trying to figure it out. I went to like 4 or 5 different physical therapists to try mostly to learn and figure it out. For those that are reading, I ran into Josh. As I mentioned, he's got a very decorated career, he's worked with big business, small business, he's worked on the legislation side of things.

He's very passionate about the profession, the physical therapy profession. Now he's doing consulting, specifically around workers' compensation, which I know not a lot about. I don't know a lot about it, I'm sure that there's people in this world that don't know a lot about it either. We're going to learn a little bit more about Josh, what he does, how he helps people and hopefully learn how to grow our businesses. Josh, what's up?

Work Comp As A High-Paying Payer Source (Net Rate vs. Medicare) 

Good to be on, Adam. Thank you. I really appreciate you asking me and I'm excited to have a discussion around this. I think it's something that everybody wants, the business that everybody wants because it's such a great payer and it really will increase your net revenue. On average, the fee schedule for work comp, and this was in 2020, so you know what Medicare's done, but work comp hasn't gone down like that. In 2020 or 2021, the average net rate was 120% over Medicare. In Mississippi, it was 160% over Medicare. I know Medicare's low, but if you're controlling your costs, you're still looking at you could have and easily have a $30, $40 margin on a visit, which, as a business owner, that's really robust.

It's a lot better than 6%.

Yes, or 6% or 2%, or giving it away for some of these payers. In the clinics when I was on the operational side with some of these companies, what I really went in and did was I started really focusing on trying to get work comp business and working with our work comp sales force. It was very eye-opening that it was much more complex than working with just directly with physician practices because of numerous things, but how a patient gets into the system is you have to understand how that works from a workflow standpoint.

If somebody gets injured, you've got these entities. There's a bunch of different entities that are involved in that care, and you have to be able to navigate those entities to understand where that where that referral is actually coming from. On top of that, you have to understand what your state statute says and your state law says about where they can come from.

For example, in Mississippi, it's patient-driven until they're under a doctor's care, then it's doctor-driven. In Alabama, it's case management-driven. The case manager, so if you're in Alabama and you're going and talking to the doctors about how you'd like to build your work comp business and these are the things that you do for work comp, you're talking to the wrong person. That's the wrong person. You're just barking up the wrong tree.

The other things that you have to understand is you've got to have your infrastructure set up in your clinic, whether it's through your networks, you have to have the right networks in place. What happens is even when let's say it's doctor-driven, these case managers and adjusters are taking care of these patients. What they're using is some of these companies then go into these networks, so like One Call, Align, all of these different networks that they used for cost containment and savings.

The case managers have to use those, the adjusters have to use those because at the end of the day, while we're treating the patient, the business is the client, which a lot of people misunderstand because they're the one footing the bill. You have to get your networks set up to where they can understand where they can actually then use you. We met with a potential client and we went and talked to this big case management group and they said, “They want to use us and all of these things and then they never send us any patients.”

Our first question was, “What networks are you in?” They're like, “We're not in any networks.” We’re like, “They're not going to send you any patients because you're not saving them any money and you're not able to help them because the client is going to be upset that you're not saving them that money and using the network that they've built.” There are things like that. There's the intake process to where you need certain information even looking at job descriptions and looking at what their job was prior to.

Have they had these injuries before? Was this a chronic injury that was exacerbated? All of these things that from a documentation standpoint is really important and then are you documenting the right body part? For example, if you treat somebody and they come in with shoulder and you know Dr. Jones and he sends you a lot of his patients, and not work comp, just private pay or whatever.

You know his shoulder pain is coming from his neck. It's a radiculopathy or radicular pain. What you would do is probably go ahead and treat the neck. With work comp, you can't do that because it's been documented across there. What happens is when you do something like that, it turns around and kicks the claim out and causes everybody a bunch of headaches. Even understanding the logistics of what you can and cannot do there's just a myriad of things that we come in and help you with to better grow your business because 10% to 12% work comp for your business is a game-changer as far as your revenue goes.

I think I know the answer to this. There are a few questions that I have. The one leading question is where do people get this wrong? What's the big mistake that most small private practices are making around work comp right now?

I think what happens is when you're a private practice owner having a lot of skin in the game. You're probably very attuned to what your net rate is and the networks you want to be in and the insurances that you will take because of the margins that you're going to have to have and you can't really have too many margins that don't work for you. The work comp, you actually have to have some of those networks that may not have the best margin. They're still going to be better than most but you're going to have to get in there because then it becomes a volume game. You're in a volume game where you're going to be in some of these networks that may not pay as well as others, but that's going to open you up to business on these other networks.

The loss leader.

Right, absolutely. It's a little bit of a scary undertaking and that's for a lot of people in our initial conversations of, “We don't want to accept anything below the fee schedule.” That's not the way that they're going to do that. You're going to have to take a hit. Considering the fee schedule's so high, even if you're 110% over Medicare versus 120% or 150%, you're still making money. It's just not as much as you may want to make, but it's going to open you up to those to those other things. That's probably one of the biggest ones. In the PT world, the other big one is communication. They don't understand that those case managers, they get a couple of things confused.

The nurse case managers actually go with those patients to appointments, they actually do that, but they don't approve the money. The adjuster approves the money. A lot of the times, what will happen is somebody will talk to a nurse case manager and the nurse case manager says, “Go for it if you want to do something. I want to dry needle or I want to do BFR,” or something like that. She's like, “Yeah, go for it,” even though it's not in the plan of care or something like that.

The adjuster hadn't approved it. A lot of the times, people will get verbal okay, but it'll be verbal okay from the wrong person, then it's not documented, and then what that does is it messes up the patient plan of care, messes up the ability of that patient to be seen, and then you lose out on revenue because the right person didn't approve it.

Key Players In The Work Comp System (Case Manager Vs. Adjuster) 

For somebody as ignorant as me, I don't even know what an adjuster is. I know that this is bad, so let's back up for a second. There's a patient. I know what the patient is. I know what the physician is. Case manager, adjuster. Are there any other players in this or is it just those two?

There may be a risk management person at the company that may be involved. It can be. The physician case manager and adjuster are generally the main players that you're going to have to focus with.

The case manager is just simply somebody that's working alongside the physician group managing that?

They're there as almost as an advocate for that patient.

They're like a work comp specialist for that hospital system or whatever?

Usually, it's contracted out. Adjusters and case managers generally work hand in hand. The adjuster is basically the money. They're watching the dollars. The case manager's actually watching the patient and can be an advocate for the patient. The adjuster is just worried about the dollars and cents. Adjusters may have upwards of 100 cases. Case managers generally aren't going to have more than maybe ten, something like that, but that's a lot for a case manager. They're more on the ground level.

They'll be who you talk to most of the time. In a lot of these big networks like One Call, I think for example, they don't have case managers sometimes. You're just talking to the adjuster. If you're talking to the adjuster and you're getting off in the weeds on these things that you want to do clinically, they don't care.

You need to know who you're talking to. Know the room.

They don't care. If you're talking to the nurse case manager, you're going to have more of a clinical discussion because that person's a clinician.

You have to know what that person's interested in, like what are they motivated by. You can position your interests. You can align your interests, right?

Right. You have to understand what they're looking for. They want to get that patient back to work. They want to get them back to work in a timely fashion at the highest level possible. That's all they want. Minimize risk and then put them back and they want to have that objectified and documented. That's it. There are other things that occur.

I’ve had conversations with nurse case managers where there has been an issue with a patient whether it's transportation or whether it's something then they'll try and help you out and do those sorts of things. It's all pointed towards trying to get that patient back to work at their highest capacity. Whereas the adjuster, they just want to know how much you need to spend and how much you're wanting to spend.

Can we talk about these networks now? I know when you're looking at work comp, like if I look in my AR, I see some work comp companies like MedRisk. Is that a network?

That’s a network. MedRisk, One Call, Align, Streamline. There's so many out there. What we do is help people with the bigger ones to get them in them first and then we can go after little other ones that may be in the area that you're in. You might not even realize they're there. There are a couple big employers that actually do their own. They're direct-to-employer stuff, but they're their own network.

I’ve got a few clients that have been very into that.

The Taylor Group, which is a big manufacturing company somewhere in North Mississippi, I think, they're a worldwide company and they do actually their own work comp. They are their own work comp network. It's all in-house. You have to understand who the players are and where the low-hanging fruit is and your area.

If you're on the coast somewhere, you may want to get into the shipping because maritime is a different world too. Anything that happens on that boat is a work comp injury, sickness, injury, it doesn't matter. I had a stroke, heart attack, that's all covered by the maritime companies. There's a lot of different things that we help people enter into to find the access points for getting the patients in the door.

Once you understand all the players, then I guess after that, it's like how to find them. How to find how to find where they're at, how to get in network with them. Is there some type of contract negotiation with them or is it is it pretty much standard flat thing across the board? How does that work?

It's one of those things. Some of them negotiate more than others based on what numbers they have. It depends on the size of your organization too, obviously, and their need. As you said, it's leverage. What's their need versus your need. Also, they won't talk to you about what everybody else's rate is. It gets complex and one of the things that we do help with is understanding what the average rate from each network is because we've got that that information. Getting in the network is key, but then if you negotiate and they say, “We're going to negotiate it. We want 135% of Medicare.”

They say, “Great.” The clinic next door to you or down the street from you, they took 120% Medicare. They're going to send them to that clinic. You may have priced yourself out. It's not just a process of getting in networks and turning on a switch. You have to then continue track your referrals and then you have to track and then you have to look at three months and every quarter and then go, “Have we received any referrals?”

If we haven't received any referrals, that's when we go back to the networks and go, “We've turned the switch on, we've negotiated the price, we still haven't seen anything. Do we need to drop our rate for 60 days? Do we need to drop our rate for 30 days to see if that turns things back on? You then know your price. There's a strategy to it as well because it's not just like turning on a switch and then the water starts flowing. That's another misconception that people have because you don't know what the person on the street's doing.

You can find out. It might take you a little bit of time, but you'll find out.

If you see that they're doing a whole lot of work comp, then obviously they're probably going to have a rate or they're going to have some other offering that is beneficial to whoever it is that's sending the patients.

Timeline For Work Comp Program Implementation & Financial Impact 

How long does that take, you think? Let's say you were to work with my practice and let's say we're like, “All right, come on, let's go to work. Let's get it done. Let's put let's set it all up.” Let's say we have some operational capacity to move things forward. How long does it take to get a network and start getting things humming, get your data set up to where you actually have things moving? Maybe the better question is you're actually seeing a financial impact in the clinic. Is that a three-month thing, a year-long thing? How long does it take?

I think you'll start getting some pretty accurate data if we get everything tweaked within the first quarter or whatever the first 3 months, and then at 6 months, you should have some robust data. If you're looking at it quarterly half a year of data, you should have, “We're moving in the right direction, we're not moving in the right direction.”

It's just one of those things that you have to look at. If we're working with somebody, we generally look at a six-month window and then we can extend if we need to because it is so relational and easy. For example, we had a gentleman that we worked with and he was in a different state. He wanted to do work comp and we helped him and a case manager sent him five patients. Busiest case manager in that state. Sent him five patients. They screwed up three of them.

They documented wrong. They caused her a lot of headaches. They caused her to get basically hand-slapped with the adjuster and all of these different things. We learned a valuable lesson from that. Number one, we weren't doing him a service by not requiring him to have training. He didn't want to do the training and all these things. We generally want to make sure that at six months that everything is good to go and then at that point, we can look at go, “Do we still have some touchpoints?” Six months humming hopefully to where you see a significant volume change in a year. If you get 15% work comp, you're rolling.

How important is it to have FCEs and being able to provide that type of work comp specific interventions? How critical is that?

Here's the issue with FCEs. Yes, it's good to have them. The challenge that I run into with FCEs, and this is speaking from somebody who did a bunch of them and also oversaw people doing them, it's a huge block of time.

Yeah, it's like a half a day or something.

Yes, it's half a day. If you're looking at your billable hours, what happens is a good FCE is going to depend on the ability of the patient. You have to have, number one, a rate that's big enough to cover that time, but not so big that you're scaring away people wanting to use it. There's that critical fee schedule type piece that you have to manage.

Strategic Use Of Work Conditioning (Work Hardening) Programs 

The other thing is if somebody comes in and their blood pressure's uncontrolled, you've just lost out. They're not paying that day. You've got somebody sitting on the clock for the four hours. You get 1 or 2 of those a week and it can kill you. I think it's important to do, but I think there has to be a real strategy around it. It can't just be, “We're going to start doing work, we're not start doing FCEs, we're buying $1,000 worth of equipment. Now we got 4 FCEs in the door and 2 of them couldn't perform. Now just half my revenue or loss.”

It's like most things. It's like start with the simple scalable stuff. Get that right. Once you're at capacity and you're cranking and you're looking for operation ways to expand your program, then maybe you can start adding bells and whistles FCEs and work hardening programs and all that.

Now the work hard Now the work hardening program you can do in-house really easily because it is a self-regulated program. Basically all it is, is you set up an exercise program for them. They're there for up to four hours. You don't have to be with them. It's a skilled intervention that you're setting it up, but you get paid every two hours. If they're there for the first two hours, you bill this one code. If they're there past two hours, you build a second code.

It is a them following their own plan of care. You set them up, you walk them through it day one, this is what we're going to do. We're going to do these things. Okay, now you're going to do this circuit. You're going to do this circuit for two and a half hours and they're over there doing it while you're working with patients, which is completely above board. That's actually work conditioning. Work hardening is actually a multidisciplinary team and a different code.

Work conditioning is every two hours. Everybody uses it interchangeably. That's actually something that I don't think we do enough as a profession. One of the biggest challenges that I had when I was doing FCEs, you're looking at their biometrics, you're looking at their the pulse ox, you're looking at are they satch, you're looking at their heart rate, you're looking at all these things while you're having them do really strenuous stuff for almost 4 hours or 2 hours.

You're giving them a rating based on their ability to perform that and you have all these other questionnaires and things to help with the validity and things of you know what you're finding. I had a bunch of them that could actually work at a higher DOT level, like a medium-heavy or a heavy. I really felt that way, but they were deconditioned and they couldn't perform at that level, so I couldn't recommend that level. If we get into work hardening, I think it gives the worker a better shot too to get back to work too.

I think a lot of the times, especially with work comp, we want to go, okay, “They're out of pain, they can bend over, they picked up a few things. If that person works 40 hours a week or more, we've done them a disservice. We haven't loaded them to the capacity that they're actually going to be loaded in a safe environment. I think I would advocate that everybody, if you're treating work comp, you really should look at continuing on with work conditioning. You can recommend that to the case managers. We have to be careful about it.

Do adjusters like that or not?

It depends. You have to be judicious with it like with anything else. You want to do what they need, not just what you want to do. If you've got somebody that had acute low back pain and they're 22-year-old fit kid that has been running or whatever, but and you get him out of pain, you get him moving, he's like, “I ran four miles yesterday, I felt great,” I wouldn't recommend it. However, if you do have somebody that's in the twilight of their career or they've had a chronic injury, they had a serious injury that caused them to get real deconditioned, then it would be a good idea to go in.

When I asked that question, I think about Humana. Humana is the new UnitedHealthcare, in my opinion. They're like if you build too many theracts, then they're they want to come in and they want to audit you and they want documentation. It's a pretty quick trigger, too. That's how it was when I was treating a lot more often. I'm not sure exactly how it is now.

There are some insurances that are like, “You can't build a theract and a manual at the same time.” They've got all these silly rules that they don't like. It’s just interesting to hear it from the work comp perspective. You don't find trends based on maybe it's MedRisk they like behave this, and One Call, they might behave a little bit differently.

It depends on what your negotiated, you know they may pay a per diem rate. It just depends on what the contract says. At the end of the day, the coding really doesn't matter. Now with the work conditioning, it does because it is a matter of time, two hours and that stuff. While there's more regulations as far as the different things you have to do, there's not as much red tape once you get them started and get them in the door and get them moving.

To me, it was easy because you could always go come back to the nurse case manager, come back and go, “I want to do X, Y and Z. They're really progressing here.” That's why communication is so important. They're really progressing to this point. “I really feel we need to start thinking about this, getting them into some real conditioning and maybe some therapeutic activity that's a little bit more robust. We're going to need more time.” That type of communication allows them to see you're actually helping that patient get back to work. I think a lot of people want to send over a note, and I know everybody thinks this, but nobody reads your notes when you send them to people.

I learned that about six months in. Six months into treating.

You write this beautiful, long note and yeah, and it took you twenty minutes or whatever, and then they call you, “What does this mean?” I don't care. If you're doing it judiciously, they're not going to. If everybody gets work conditioning, they just won't send you patients.

I got another question. One is more around some of the clients that you work with. Is it pretty standard that most of the clients that you work with have the same goal? In my mind, the goal is more work comp visits, more money. Is that generally the goal?

It's such a great payer. Most people understand it, but they don't understand how to maximize it. It's clinical people moving them towards a goal that's got to be there. Whereas you know with the total knee replacement, they just want to walk. That's all you're getting them. Whereas this is you're working them towards a specific goal and so you have to have understanding.

It's a whole different motivation, it's a whole different thing. It reminds me, because we do a lot of pediatric, it's not this but there's school-based therapy. There's the outpatient. It's two different perspectives. Two different frames. You have to understand what frame you're in. The next question I have is about legal. I’ve approached my team about this idea in the past and this was when I had a team that was a little bit more skittish, but they’re all like, “I don’t want to go to court.” I don’t think that way but what’s your take on that? Is that irrational?

It’s like anything else. You have to be able to justify it in your documentation. If you’re working within the bounds of the Practice Act and you’re working within the scope of that patient or working within the scope of the diagnosis and you’re documenting those things, then it shouldn’t be one of those things that you’re worried too much about. I’ve been doing patient care and I was full-time treating for fourteen years and I never once got called for a deposition. I will tell you that there were times that things happened.

Sure. We’ve all had that patient fall or hurt themselves.

It happened. You’re right. You’re judging the severity and the intensity of these injuries and your tolerances may be less than you imagined it would be. You maybe overdose them on exercise and they flare up or you’ve done a manipulation or mobilization that was maybe a little bit aggressive. It didn’t hurt them, but those types of things happen. What people need to realize is with anything, you have to be really negligent. Negligence means you’re working outside of the scope of your practice.

Your intentions may be impure, right?

Doing something that is not normal for that patient with the condition. If you’re doing something and something happens, the likelihood is you’re not going to be held liable for that because your intent is not what it is supposed to be. If you’re completely going there and your drawing needle, you’re using a 60 ml needle in the ribcage, you’re going to be held accountable for that. That’s gross negligence on the clinician’s part. I did a lot of FCDs. I did a lot of FCEs. I had a couple that went sideways. You have to be careful. One thing you have to do, especially with FCEs is you can quit. I tell them at the beginning, “You can quit anytime. You can quit and stop this.”

I had a couple of patients and they were doing fine and I won’t tell them after that because I don’t want to skew the results and ask them, “Do you want to quit?” They’ll be like, “He was telling me to quit the whole time.” You have to sit back. I had a couple go that way and then started to get involved, but nothing ever came of it because I did what was within the bounds of that. There are going to be things but the likelihood is as long as you do what you’re supposed to and document, you’ll be fine.

If people want to get in touch with you and maybe want to learn a little bit about, “Maybe this guy can help me,” because here’s the thing. I don’t know if you’ve heard, but reimbursements are going down. It getting harder to make this all work. How do they get in touch with you?

The Business/Legislative Motivation: Profitability Unlocks Possibility 

My email is Joshua.Farley@LighthouseComp.com. If you are a texter or just would rather call me, my number is 601-927-3011. I’d be more than happy to talk to you guys about it to help on getting their business up. I’m getting on a soapbox if that’s okay for just a second. What drives me in our business and our profession is we have to punch above our weight legislatively.

One of the things that is a real factor in legislation is your economic impact. Through having a more robust business across the board for our physical therapists, that economic impact is really important. For us to be able to treat patients at a highest level, we have to drive that economic impact not through just money grubbing but through good patient care, taking care of as many patients that we possibly can, doing what they need and billing for those services.

I think if we can do those things and all of our clinics have healthy businesses, we become stronger as a profession. That’s my outward motivation for helping people. At the end of the day, it really does help our profession. It is a cycle. We’re seeing these reimbursements go down and it’s not because we’re not advocating it, we’re not working at it.

It’s because the leverage that we have and the money that we have in the legislative cycle is very small in comparison to the AMA, MSMA, the chiropractors. The money just isn’t there and the economic impact, or at least us not showing it as well as we should across the board. That’s my motivation for getting into this. It’s the strength of the profession through helping others get better.

For the audience of this show, they’re all going to resonate with that. This is a very business-oriented show. This is what we talk about. We talk about business and we talk about money. We all recognize that profitability unlocks possibility. When you’re profitable, you create possibility for the profession, for yourself, for your team, for your community. You’re probably not going to get rich like Jeff Bezos. You’re probably not going to do that but you could make a real impact for yourself and for the people that work for you too. I think it’s going to take a pivot.

I was sitting down, having dinner with my partner and another really smart gentleman several years ago. I graduated PT school in 2017, so my initial big I think it was when the PTA reimbursement started getting cut. It's like, “They're really cutting it.” I said, “How are private practices going to survive?” The guy at the table said, “Those who pivot will survive.” I think things RTM that that's coming out now, things like leveraging cash-based services, leveraging work comp, we have to find ways to be better at business, quite frankly. I don't know how else to explain it.

We've got to diversify our services, we've got to catch different fish, we have we've got to do different things. The old, “I’ve got a clinic and I'm on paper charts and I’ve got a few primary care physicians that send me some referrals every now and then,” that's probably not going to work long term. We've got to look for ways and I think that what you're doing is awesome.

For those that are reading, I’ve never worked with Josh, but I know Josh as a person. He's a very hard worker, extremely passionate, give him a call. It's 2026. You've probably set some revenue goals this year and if you're interested in improving your revenue per visit, reach out to Josh. He's probably got a nugget or two he can share with you. Josh, anything else before we head out?

No, I think this is great. I appreciate what you're doing, appreciate you having me on. I think that if we all help each other and we'll just all get better. The goal that we have as therapists is to help people, and through helping people, then our financial goals are going to be met. We just have to find the ways to do it. We got to stop thinking that it's the ortho patient that's the piece of pie. It's the entire public and we need to start looking at the different ways you said. I couldn't have said it better. I think the more ways we find to help people and give them access to care, the better we're going to be for it and they're going to be for it.

Best of luck to you and maybe we'll have you on again.

I appreciate it.

Peace out.

Important Links

• Joshua Farley
• Joshua Farley Email
• Book a Call with Nathan
• PPO Club Linktree