Therapy Cap Exception Provision Reinstated

VHCA (7/17/2008)

On July 15, 2008, the U.S. Congress overrode President Bush's veto of the Medicare Improvements for Patients & Providers Act.  The Act mandates a number of key changes to the Medicare program. 

The new Medicare law extends the Medicare Part B outpatient therapy exceptions process from July 1, 2008 to December 31, 2009, ensuring patient access to the therapy services they need under Medicare Part B. This is critical to long term care providers as it effectively eliminates the break in the exceptions process - so all Medicare beneficiaries whose therapy has been provided in the past two weeks will not be subject to the caps. In addition, the law precludes the 10 percent reduction in payments to physicians for 18 months, and delays the competitive bidding program for durable medical equipment for two years.

Medically necessary therapy services, in excess of the therapy caps, will continue to be paid by Medicare in accordance with the exceptions process.  Claims submitted with the therapy cap exception modifier will be processed as soon as the payment rates have been activated.  Claims submitted without the modifier, and rejected or denied, can be resubmitted with the modifier for reimbursement.  To the extent possible, claims under the therapy cap limit, which were paid at the lower rate, will be reprocessed automatically.  More information on therapy caps is available here.

The Durable Medical Equipment (DME) Competitive Bidding Program, which affects only Medicare beneficiaries in traditional fee-for-service in 10 competitive bidding areas, has been delayed.  Medicare beneficiaries may use any Medicare-approved supplier for DME.  If a beneficiary changed suppliers when this new program started (July 1, 2008), they can either continue to use the new supplier or choose another supplier.  The original DME payment rates in effect prior to July 1 are reinstated retroactively.  All Medicare households in the 10 competitive bidding areas will be notified of this change directly in a letter from CMS within two weeks. 

The DME Competitive Bidding areas are: (1) Charlotte-Gastonia-Concord, NC-SC, (2) Cincinnati-Middletown, OH-KY-IN, (3) Cleveland-Elyria-Mentor, OH, (4) Dallas-Fort Worth-Arlington, TX, (5) Kansas City, MO-KS, (6) Miami-Fort Lauderdale-Miami Beach, FL, (7) Orlando-Kissimmee, FL, (8) Pittsburgh, PA, (9) Riverside-San Bernardino-Ontario, CA, and (10) San Juan, PR.  Information on payment rates and claims processing will be communicated to DME suppliers in the coming days. More information on DME is available by clicking here.

The Act also includes provisions of the Long Term Care & Quality Modernization Act allowing expansion of telehealth services to skilled nursing facilities (SNFs). This provision makes skilled nursing facilities eligible to be originating sites for telehealth services under Medicare by adding SNFs to the existing list. In many instances, telemedicine can provide a safer, less costly and clinically appropriate alternative.

As a result of the new law, the mid-year 2008 Medicare Physician Fee Schedule (MPFS) rate reduction of -10.6 percent is retroactively replaced with the fee schedule rates in effect from January – June, 2008, which reflected a 0.5 percent update from 2007 rates.  In addition, MPFS payment rates are being revised to increase the fee schedule amounts for certain mental health services.  More information on physician pay issues is available on the CMS website.