Therapy providers no doubt will take comfort in the familiar, as we are once again back to the future with the therapy caps exceptions process that is applicable to all therapy providers billing under Medicare Part B. 

The U.S. Senate voted Tuesday evening on HR-2, the “doc fix” bill, to repair the sustainable growth rate (SGR). Tied to the legislation, which had passed in the House prior to Congress recessing for spring break, was the extension of the therapy caps exceptions process through Dec. 31, 2015.

Points to note in the legislation include the following: 

  • The statutory authority for the therapy caps exceptions process for outpatient cases expired on April 1, 2015. This legislation extends the statutory authority to continue the therapy caps exceptions process through Dec. 31, 2017. 
  • Provisions were included to enhance the targeting of manual medical review (MMR), which is currently assigned by the Centers for Medicare & Medicaid Services (CMS) to the Recovery Auditors (RACs) for 100-percent review when beneficiary therapy services meet or exceed $3,700 in Medicare payments. 
  • The 21-percent fee schedule reduction for payments under the MPFS that were scheduled to take effect on April 1, 2015 has been averted.  The legislation freezes payment rates under the MPFS at current levels for 3 months (April – June) and then raises them by 0.5 percent for services rendered during the last 6 months of CY 2015.
  • Services provided and paid under the MPFS for 2016-2019 will be increased by 0.5 percent per year as a result of this legislation. MPFS payment rates would remain at the 2019 level through 2025, however, and beginning in 2019, the amounts paid to individual providers would be subject to new methodologies (stay tuned).

Also of note is that the Senate voted on a number of amendments to HR-2, including Sen. Ben Cardin’s (D-Md.) amendment to repeal and replace the therapy caps (which would have eliminated the therapy caps in their entirety). But approval of this would have caused the legislation to be returned to the House, creating further delay and subjecting providers to 21-percent reductions in MPFS payments.

What’s next?

The legislation must be signed by the president, who has given indication that he will act swiftly. Following the president’s signature, expect guidance from your Medicare Administrative Contractors (MACs) on claim processing. The MACs have updated providers via their email listserves (through yesterday) indicating that claims that were held (pending legislation) would be released beginning today (April 15) on a rolling, day-to-day basis in the order in which they were received.

Medically necessary therapy that is over the$1,940 therapy cap can be provided to Medicare beneficiaries. Submitted claim lines should append the –KX modifier indicting that documentation to support the medical necessity of therapy is on file. The –KX modifier will route the claim for payment as an exception. If therapy is not medically necessary and the beneficiary requests continued therapy, or if a denial is filed for the purpose of crossing the claim to the secondary insurance, advanced beneficiary notice of non-coverage is required to pass liability from the provider to the beneficiary. Be sure to follow CMS guidance in the use of the ABN as noted in CMS Issues Guidance on Recovery Auditor Manual Medical Review of Therapy Claims over $3,700.

As for manual medical review of therapy claims over the $3,700 threshold, guidance is anticipated from CMS on if this process will continue with the RACs or be assigned to the MACs or another program integrity contractor. An update to the claims selection process for manual medical review will be addressed. For information on the review of 2014 therapy claims over $3,700 see CMS Issues Guidance on Recovery Auditor Manual Medical Review of Therapy Claims over $3,700.

The therapy cap was mandated in the Balanced Budget Act of 1997, placing beneficiary financial limitations on outpatient therapy provided in a private practice setting, physician offices, rehab agencies, CORFs, and SNFs (Part B). It also mandated that such beneficiaries be subject to an annual financial limitation that for 2015 is set at $1,940. There are two therapy caps: $1,940 for physical therapy and speech language pathology combined, and a separate $1,940 cap for occupational therapy. 

Acute-care hospitals first came under the therapy caps in 2012, and they have been mandated annually in legislation. Critical access hospitals are permanently under the therapy caps; however, they are still paid on the basis of reasonable cost. However, beneficiary therapy is capped at the locality-specific Medicare Physician Fee Schedule amount. Therapy services for inpatient hospital and SNF stays, including observation, that are billed to Part B are also subject to the therapy caps.

About the Author

Nancy Beckley is founder and president of Nancy Beckley & Associates LLC, providing compliance planning and outsourced compliance services to rehab providers in hospitals, rehab agencies, and private practice. Nancy is certified in healthcare compliance by the Healthcare Compliance Certification Board. She is on the board of the National Association of Rehabilitation Providers and Agencies. She previously served on the CMS Professional Expert Technical Panel for Comprehensive Outpatient Rehabilitation Facilities. Nancy is a familiar voice on Monitor Monday where she serves as a senior national correspondent. 

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