Taking the Cap off of Outpatient Therapy Services

Posted in Administrative, Blog, Company News at Nov 14, 2017




Matthew Mesibov, PT, GCS
Clinical Physical Therapy Specialist

Back in 1997 congress created legislation known as The Balanced Budget Act and placed an annual and “arbitrary” financial cap on rehabilitation services reimbursement under Medicare part B. I use the word arbitrary because the decision of the total dollar amount was not based on needs related to a specific diagnosis and patient findings but due to the amount of dollars available to spend divided by the number of beneficiaries who were eligible for physical therapy, occupational therapy and speech language pathology services.  Due to federal regulations, the dollar cap which in 2017 is a shared $1980 for physical therapy and speech language pathology and $1980 for occupational therapy.

The program then included a way to apply for services beyond the financial cap if extenuating circumstances existed and were approved by the Medicare contractor.  So, picture an older adult who may have had a stroke or another neurological disease such as Parkinson’s disease or multiple sclerosis in need of necessary therapy services.  If the therapy cap was met, then you would have to check if the diagnosis qualified as an “automatic” exception vs. a manual exception.  Eventually the program changed to an exceptions process where it is up to the clinician’s clinical judgment which they must support in their documentation as to whether services should continue.

Over the years, through advocacy efforts with legislators by patients, concerned citizens, therapists and other medical professionals, congress has recognized the cap’s potential harmful effect on Medicare beneficiaries and has continually extended an exceptions process that enables Medicare to pay its share for therapy services after the patient reaches the therapy cap limits.  We almost had an elimination of the therapy cap this past year which in the 11th hour was dropped as part of a larger legislative bill.

Move forward to Thursday, October 26, the U.S. House Energy and Commerce Committee, the House Ways and Means Committee, and the Senate Finance Committee announced a bipartisan, bicameral deal on a permanent repeal of the annual outpatient Medicare therapy cap.

Here are some major points to the repeal plan:

  • The Medicare Part B therapy caps would be repealed beginning January 1, 2018.
  • There will be a targeted medical review process of therapy documentation beginning January 1, 2018 with the following details:
    • The dollar threshold for possible medical review targeting would be set at $3,000;
    • Therapy providers would be required to identify services exceeding the $3000 by submitting a billing code identifying this (known as the KX modifier)

Typically, when congress is going to repeal something such as the therapy cap, they will look to offset this cost by saving money elsewhere.  The current legislative proposal does not contain any offsets to pay for the provisions. As the current therapy cap exceptions is due to expire at the end of 2017, congress must act before the end of the year to either repeal the therapy caps or to grant another temporary extension for the exceptions process to protect beneficiary access to care.

We will have an answer as to whether the therapy cap comes off within the next month or so and I will be able to report on the results in our next quarterly blog.