Without congressional action, new therapy caps became effective Jan. 1, 2018.

Going into 2018, Medicare beneficiaries will have therapy benefits capped at $2,010 for physical therapy (PT) and speech-language pathology (SLP) combined, and the same limit for occupational therapy.

Congress recessed for the holiday break without addressing the expiration of the therapy cap exceptions process or acting upon a bipartisan agreement to permanently end the therapy cap.

What does this mean? There are a few important points to keep in mind as rumors and misinformation circulate on listserves and social media, and some information posted by the Centers for Medicare & Medicaid Services (CMS) on the advising beneficiaries that the therapy cap exceptions process is still in place. The facts as of Jan. 1, 2018 are the following:

• The therapy caps exceptions process ended Dec. 31, 2017.

• Medicare beneficiaries are limited to $2,010 of therapy under each therapy cap in 2018.

• Therapy over the cap is statutorily excluded as a Medicare benefit in the absence of an exceptions process.

• The therapy caps apply to all therapy service locations, with the exception of hospitals. The therapy caps do apply to critical access hospitals (CAHs).

• Beneficiaries are financially responsible for all therapy costs over the therapy cap (again, with the exception of services provided in hospitals).

• Providers should issue a mandatory advanced beneficiary notice of non-coverage (ABN) to advise beneficiaries of non-coverage of therapy over the cap.

Exceeding the $2,010 therapy cap is not likely for beneficiaries under a single therapy plan of care in January; however, for those receiving both PT and SLP services, the therapy cap may be reached more quickly. In some instances, it may be reached prior to the end of January and/or prior to Congress enacting a therapy cap resolution.

The financial limitation for 2018 was set forth in the Medicare Physician Fee Schedule Final Rule (CMS-1676-F). The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which ended the sustainable growth rate, also extended the therapy caps exceptions process through December 2017. MACRA extended the therapy caps to hospitals, and on Dec. 31, 2017, that provision also ended with the expiration of the therapy caps exceptions process.

The U.S. House of Representatives and Senate had reached a bipartisan agreement to end the therapy cap, but again, it was not acted upon prior to the end of 2017. The proposed bipartisan agreement, when/if enacted, would permanently eliminate the therapy cap and institute a manual medical review process for therapy costing more than $3,000.

Representative organizations collectively called the “therapy cap coalition” have been advising their constituency groups that the first order of business for this new year is to continue their legislative efforts to permanently eliminate the therapy cap. This renewed effort for 2018 will mark the 21st year of the “Stop the Therapy Cap” campaign.


The Balanced Budget Act of 1997 (BBA) established a $1,500 therapy cap on PT and SLP combined and $1500 on OT. Except for a few stops and starts, and a nine-year moratorium, the therapy cap was not permanently instituted until spring of 2006. The therapy cap initially applied to all Part B and outpatient therapy venues with the exception of hospitals. Hospitals were subject to the therapy cap beginning in 2012 during the extension of the exceptions process, and critical access hospitals were added in 2013.

With the 2006 initiation of the therapy caps Congress also implemented an exceptions process wherein medically necessary therapy was excepted from the therapy cap. The therapists were instructed to append the -KX modifier to claims lines exceeding the therapy cap, and in doing so created an attestation that documentation was in the record to support the medical necessity of therapy exceeding the cap. In 2006 the exceptions process included a manual process and an automated process.

Since 2007 the exceptions process is automated and based upon the treating therapist’s documentation of continued medical necessity, and not based upon an excepted list of diagnosis codes. The therapy caps were extended to hospitals in 2012, and to CAH in 2014.

There are several upcoming opportunities for Congress to act of the therapy caps as part of upcoming legislation including legislations to keep the government operating (due by Jan. 19), and extension of the CHIP reauthorization by March 31, 2018. In the interim the therapy community is awaiting guidance from CMS regarding the caps in particular, the issues of claims submission and retroactivity provisions for beneficiaries that were denied care, and reimbursement for beneficiaries paying privately to continue care under provisions of a signed ABN.

Next Steps for Providers

1. Tune in to Monitor Mondays on Jan. 15 for the latest therapy cap update. Not registered for Monday Mondays? No problem: sign up now at this link, and join me along with host Chuck Buck for the first broadcast of the year.

2. Sign up for my annual RACmonitor therapy update, “2018 Outpatient Therapy Rehab Updates: The Year of Living Dangerously” on Tuesday, Jan. 16 – with all the uncertainty surrounding outpatient therapy, this is a webcast you can’t afford to miss if you provide such services at your facility. You can sign up for this here.

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