Therapy Caps Force Providers to Adjust Operations

A cap on Medicare reimbursement of therapy is forcing providers to adjust their operations and advocate with increasing urgency to federal lawmakers.

Under a 1997 law, Congress put an annual cap on the amount of money that Medicare beneficiaries can receive for rehabilitation services. Therapy providers and other stakeholders have long advocated for the cap to be lifted, pointing out that it is an impediment to medically necessary care, and that Congress has repeatedly implemented an exceptions process that keeps the cap from being enforced.

Now, a permanent repeal of the caps appears to be imminent, in the form of a bill with bipartisan, bicameral support. However, that legislation stalled at the tail end of 2017, as Congress tackled tax reform and other matters. It also was not attached to the temporary spending bill that re-opened the government after a temporary shutdown last month. Meanwhile, the exceptions process expired as of Jan. 1, meaning the 2018 therapy caps are in effect. The cap is $2,010 for occupational therapy and $2,010 for physical therapy and speech-language pathology services combined.


“If each [therapy] visit is roughly $100 worth of billing … that’s roughly 20 visits or so, so we do have cases that are approaching this cap,” Travis King, vice president of quality assurance and professional development at Fox Rehabilitation, told Home Health Care News. New Jersey-based Fox specializes in providing PT, OT and speech therapy in people’s homes under what it terms a Geriatric House Calls model; its practice spans 16 states, and the company works with home health providers.

While King did not comment on the exact volume of patients approaching the cap, he noted that those receiving both PT and speech-language therapy are hitting the threshold more quickly due to the combined nature of that cap.

Fox leadership is meeting with regulatory advisors to evaluate cases where the therapy cap is coming into play. There are basically three options to consider, King said: issuing an advanced beneficiary notice, warning the patient that Medicare coverage may be denied; referring the patient to another provider; or discontinuing care. There is not necessarily a preferred option among these three, and the decision about what to do is made on a case-by-case basis, he said.


The Centers for Medicare & Medicaid Services (CMS) is also making changes to its claims processing in light of the caps. The basic idea is that CMS is trying to hold claims rather than process and deny them, in anticipation of Congress either permanently repealing the caps or granting further exceptions to them.

As of Jan. 1, the agency starting holding therapy claims with the KX modifier, indicating that the beneficiary had hit the therapy cap but met criteria for continued reimbursement under the previous exceptions process. But, starting on Jan. 25, CMS began releasing these claims for processing on a 20-day rolling basis. For instance, as of Jan. 31, CMS held the KX claims received that day but released claims from Jan. 11 for processing. On Feb. 1, CMS held KX claims received that day, but released those dated Jan. 12.

Under current law, the agency waits at least 14 calendar days to pay electronic claims and 29 days for paper claims, and generally pays claims within 30 days of receiving them.

It remains unclear whether denied claims would be paid retroactively if the therapy caps are repealed, compliance consultant Nancy Beckley noted in a Feb. 1 post on RACmonitor.

King is optimistic that the repeal—or at least another temporary fix—will be included in the next spending bill to come through Congress. Lawmakers must pass this bill before Feb. 9; that’s when the current temporary spending measure, negotiated during the government shutdown, expires.

Still, the situation is “nerve-wracking,” and Fox is continuing a full-court press approach to advocacy that it began last May, knowing this issue was coming down the pike, King said. The company’s leadership has systematically communicated with legislators and is still “speaking loudly.”

“It’s a sticky situation and one we’re keeping a very, very close eye on,” he said.

Written by Tim Mullaney

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