Update on Therapy Cap Exceptions

VHCA (1/18/2008)

On January 10th, the Centers for Medicare and Medicaid Services (CMS) published Transmittal 1407 (Change Request (CR) 5871) which announces the dollar amount of outpatient therapy caps for 2008.  Effective January 1, 2008, the financial limits on outpatient therapy services will be $1,810 for combined physical therapy and speech-language pathology services; and $1,810 for occupational therapy services. Exceptions are allowed for medically necessary outpatient therapy services.

The Balanced Budget Act of 1997 enacted financial limitations on outpatient physical therapy, occupational therapy, and speech-language pathology services in all settings except outpatient hospital services. The 2006 Deficit Reduction Act enacted exceptions to the limits, and the Medicare, Medicaid, and SCHIP Extension Act of 2007 extended the cap exceptions process through June 30, 2008 when it is scheduled to sunset. The dollar amount of the cap is updated annually in accordance with the Medicare Economic Index.

The payment cap applies to outpatient physical therapy, occupational therapy and speech-language pathology.  The guidance addresses how clinicians can request an exception to the cap by attaching a KX modifier to the claim which indicates that the therapy is reasonable and necessary, requires the skills of a therapist and that there is documentation to support the exception.  

The American Health Care Association is actively engaged in lobbying to extend the exceptions process after the June 30th sunset. Simultaneously, AHCA is working with CMS and Congress to develop and implement a condition-based therapy reimbursement system that would eliminate the perpetual fight to stave off Part B Therapy Caps.

The CMS transmittal is now available.