Therapy Caps Back in Force on July 1

VHCA (6/30/2008)

Despite significant efforts to continue the existing provisions, the Medicare Part B Therapy Caps exceptions expire on July 1, 2008.  An annual cap of $1,810 for occupational therapies, and a separate $1,810 cap for both physical and speech/language therapies will go back into effect.  According to the Centers for Medicare and Medicaid Services (CMS) any such services that were provided between January 1, 2008 and June 30 will count towards the $1,810 cap. 

Last week, the House of Representatives voted overwhelmingly, 355-59, to pass the Medicare Improvements for Patients and Providers Act of 2008, H.R. 3101, which would have extended the current therapy cap exceptions process until December 31, 2009.  Unfortunately, the Senate was unable to pass the bill.

On July 1, skilled nursing facilities will have residents needing continued Part B rehabilitation services, however depending on the outpatient therapies provided earlier this year, they may have already exceeded the cap. Guidance taken from federal regulations suggests that the SNF must continue to provide necessary therapies. This presents a financial difficulty for facilities with dual-eligible residents who are unable to pay privately for such services. 

As stated in MLN (Medicare Learning Network) Matters article MM5871, exceptions to the $1,810 outpatient therapy caps were allowed from January 1, 2008 to June 30, 2008 for medically necessary services that were appropriately billed with KX modifiers. On or after July 1, 2008, the exceptions to therapy caps are restricted to those medically necessary services billed by the outpatient departments of hospitals. Use of the KX modifier will not be effective on or after July 1, 2008.

If, on July 1, 2008, a cap has already been reached, a beneficiary who is not a resident in the Medicare certified part of a skilled nursing facility will be able to obtain medically necessary services that exceed the cap only when the services are billed by the outpatient department of a hospital. A beneficiary in the Medicare certified part of a skilled nursing facility is restricted by consolidated billing rules from coverage of services that are billed by a hospital.

CMS is advising that facilities make sure that billing staff is aware that outpatient therapy caps apply to all services in calendar year 2008, with exceptions for medically necessary services in all settings on or prior to June 30, 2008 and with exceptions limited to the outpatient hospital setting after June 30, 2008.

The MLN article is available on the CMS website.  

The House and Senate are out of session this week for a Fourth of July recess.  The American Health Care Association (AHCA) continues to work aggressively to resolve this problem and anticipates that this issue will be revisited as soon as Congress returns to Washington, DC, on July 8.  In addition, AHCA is working with CMS to determine the best course of action – up to and including requesting that CMS suspend imposition of the monetary cap for 30 days while the legislation in Congress to extend the exceptions process is still pending. 

Discussions with our Washington contacts suggest that in July, Congress will reach agreement on legislation extending the therapy cap exceptions and that such an agreement will include a provision for retroactively reimbursing providers for therapy services subjected to the cap as of July 1st.  While far less than a guarantee, we want our members to know that our allies in Congress understand the financial hardship created by removal of the exceptions and are working to make sure that no gap in payment coverage occurs.