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Medicare’s Therapy Cap for Outpatient Rehab

Written by: Shawn Hewitt on Wednesday, January 31, 2018 Posted in: Outpatient Rehab

The therapy cap exception process for use of the KX modifier and the manual medical review (MMR) process expired at the end of 2017.  That means that without a change or an extension of the therapy cap exceptions process, beneficiaries (patients) are now financially responsible for 100% of expenses/services that exceed the therapy cap. This is a huge price tag for patients to have the burden to pay for their therapy services.

There is still a therapy cap in place, but this means that the use of the KX modifier on these claims now has no impact as there is no further medical review required.  For 2018, the cap threshold is $2010 for Occupational Therapy and $2010 for both Physical Therapy and Speech Therapy combined.  Another important factor is that since the cap exception process expired, Hospital OP is now no longer required to track against the therapy cap.

“Hospital OPs were not originally included under the therapy cap when it was first enacted as part of the Balanced Budget Act (BBA) in 1997.  Hospital OPs were subsequently added to the cap exceptions process in 2012. Since the exceptions process expired on December 31, 2017, the requirement for hospital OP to participate in the therapy cap exceptions process also expired.” (APTA)

What does this mean at the moment?

  • Hospital OP Clinics are exempt from the therapy cap, they do NOT have to track against the limit of $2,010.
  • Non-hospital-based outpatient therapy settings are NOT exempt from the therapy cap.
  • All Medicare beneficiaries that exceed the $2,010 amount in these settings will be statutorily non-covered and responsible to pay the provider for any therapy services that exceed the therapy cap.
  • These settings include private practices, rehabilitation agencies, comprehensive outpatient rehabilitation facilities, skilled nursing units and home health agencies providing OP therapy in the home.

Latest Update from CMS

Many of you have expressed concern about the expiration of the cap exception process and hoped that there would be additional legislative follow-up to make the 2018 picture clearer.  APTA, AOTA, ASHA, and many others are still working the legislative process to change the Final Rule mandate.  We know that “repeal/replace/extend” are the hopes and initiatives being fought for. Here is an update from CMS about how they plan to release and implement a rolling hold on claims above the cap and use of the KX modifier:

Expired Medicare Legislative Provisions and Therapy Claims with the KX Modifier Rolling Hold

“CMS is committed to implementing the Medicare program in accordance with all applicable laws and regulations, including timely claims processing.  Several Medicare legislative provisions affecting health care providers and beneficiaries recently expired, including exceptions to the outpatient therapy caps, the Medicare physician work geographic adjustment floor, add-on payments for ambulance services and home health rural services, payments for low volume hospitals, and payments for Medicare dependent hospitals.  CMS is implementing these payment policies as required under current law.

For a short period of time beginning on January 1, 2018, CMS took steps to limit the impact on Medicare beneficiaries by holding claims affected by the therapy caps exceptions process expiration. Only therapy claims containing the KX modifier were held; claims submitted with the KX modifier indicate that the cap has been met but the service meets the exception criteria for payment consideration. During this short period of time, claims that were submitted without the KX modifier were paid if the beneficiary had not exceeded the cap but were denied if the beneficiary exceeded the cap.

Starting January 25, 2018, CMS will immediately release for processing held therapy claims with the KX modifier with dates of receipt beginning from January 1-10, 2018.  Then, starting January 31, 2018, CMS will release for processing the held claims one day at a time based on the date the claim was received, i.e., on a first-in, first-out basis. At the same time, CMS will hold all newly received therapy claims with the KX modifier and implement a “rolling hold” of 20 days of claims to help minimize the number of claims requiring reprocessing and minimize the impact on beneficiaries if legislation regarding therapy caps is enacted.  For example, on January 31, 2018, CMS will hold all therapy claims with the KX modifier received that day and release for processing the held claims received on January 11.  Similarly, on February 1, CMS will hold all therapy claims with the KX modifier received that day and release for processing the held claims received on January 12, and so on.

Under current law, CMS may not pay electronic claims sooner than 14 calendar days (29 days for paper claims) after the date of receipt, but generally pays clean claims within 30 days of receipt.”

What to do now?

Try to minimize the touches you need to do for your Medicare Authorizations during this uncertainty period.  Since CMS is processing claims that contain the KX modifier, it is recommended that you continue to include the KX in your billing file.  One approach is to just continue to conduct business as if the therapy cap with KX modifier is in place.  This will assure that if the therapy exception process is extended, the tracking of the therapy cap will not be interrupted.  If the therapy cap exception process is extended, then nothing changes, and you are all set.  If the therapy cap is repealed or eliminated, then we all can discuss what that will mean and how to manage that change.  Mediware is committed to working with you to minimize the intrusive disruption to whatever the change ends up being by providing educational resources and ensuring our support teams are up-to-date.

The rehab industry is great at working together to solve problems thrown our way.  This is just one task of many that we will work through to lobby for the right things to offer patients quality and affordable access to therapy services.


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