Ding Dong, the Witch is Dead! The Therapy Caps Have Been Permanently Eliminated – Or Have They?

Legislation establishes the 2018 therapy cap level of $2,010 as a threshold level.

The therapy caps have been eliminated! It has been a long and exhaustive 20 years of the “stop the therapy cap” campaign by members of the Therapy Cap Coalition. Finally, success!

Well, sort of. In the Bipartisan Budget Act of 2018, the therapy cap was permanently eliminated. For 2018, the $2,010 therapy cap for physical and speech language pathology, and a separate $2,010 therapy cap for occupational therapy, were erased, and the $3,700 manual medical review therapy threshold was reduced to $3,000. In a bit of serendipity, the $2,010 amount remains in the universe.

The -KX Modifier is Still Required

In exchange for permanent elimination of the therapy cap, the legislation identified the 2018 therapy cap level of $2,010 as a threshold level (rather than a cap), beyond which an attestation of medical necessity is required. Does the -KX modifier sound familiar? All therapy claims over $2,010 (in 2018) will continue to require that the -KX modifier be appended to the claim line, signaling an attestation of medical necessity that is supported in the medical record.

The “Pay Fors”

In a surprise move (translation: we were blindsided), the legislation requires a payment differential of 15 percent of the fee schedule amount for therapy services provided by physical therapist assistants (PTAs) and certified occupational therapy assistants (COTAs), as compared to the payment for services provided by a physical therapist (PT) or occupational therapist (OT).

The reduction in payment, slated to begin in 2022, will help offset expected overages due to the permanent elimination of the therapy cap. By 2019, a modifier will be identified to be used on claims submitted for therapy services completed in whole or in part by PTAs or COTAs.

Therapy Assistant Modifier

PTAs and OTAs are licensed professionals, and eligible under Medicare to treat Medicare beneficiaries under direct supervision in private practice and under general supervision in all other sites of services. The use of the therapy assistant modifier will be phased in over several years. By Jan. 1, 2019, the therapy assistant modifier will be established; by Jan. 1, 2020, the therapy assistant modifier will be reported on claims for outpatient physical therapy service or outpatient occupational therapy service furnished in whole or in part by a therapy assistant.

And by Jan. 1, 2022, therapy services provided/reported by therapy assistants will be reimbursed at 85 percent of the fee schedule amount. With the therapy assistant modifier in use by 2020, CMS will be able collect and study claims submission data in preparation for the payment reduction in 2022.

As a point of comparison, nurse practitioners (NPs) and physician assistants (PAs) are reimbursed at 85 percent of the fee schedule when providing services and billing under their own provider numbers. This payment differential likely provided an easy comparison in order to include this language in the legislation, despite 12th-hour efforts by the Therapy Cap Coalition to remove it from the final language of the bill. Therapy groups have vowed to study this payment differential and respond to CMS in hopes of eliminating it, as this subsection of the legislation is subject to notice and comment rulemaking.

Medical Review Under the “No Therapy Cap” Era

Therapy claims over the $3,000 “threshold” will not be reviewed on a 100 percent basis, as has been in the past. This new review level will target a percentage of therapy providers who meet certain criteria, for example those with a high percentage of denials, aberrant billing patterns, or billing patterns that significantly differ from peer groups.

Under the previous manual medical review value of $3,700, CMS had tasked Strategic Health Solutions (SHS) as the Supplemental Medical Review Contractor (SMRC) to target and select claims for review. The $3,000 threshold will remain through 2027, and in 2028 it will be increased by the percentage increased in the Medical Economic Index (MEI).

Therapy providers have recently reported that claims at the $2,010 amount have been denied, rather than selected for review, thereby putting the provider in a position to file an appeal rather than submit records in response to an additional documentation request (ADR). It is anticipated that CMS will also use the targeted probe-and-educate process (TPE) to identify therapy claims over $2,010 for review.

In the “no therapy cap” era, the use of the Advanced Beneficiary Notice of Non-Coverage (ABN) will not change. Medicare beneficiaries are entitled to all medically necessary therapy and all medically necessary skilled maintenance therapy. An ABN should not be preemptively issued at the $2,010 level, but only issued when it is determined that skilled therapy is no longer medically necessary, or an item or service is excluded from coverage as a therapy benefit. In order for ABN to be effective, it must follow the rules for issuance, be signed and dated prior to providing the service or items, and be appropriately coded to the claim.

Tune in to Monitor Monday, where I will keep you updated on hot topics. Let me know if you have any questions.

Program Note: Register to listen to Monitor Monday and hear Nancy Beckley continue her reporting on this developing story.


Nancy J. Beckley, MB, MBA, CHC

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 practices. 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 Mondays, where she serves as a senior national correspondent.

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