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Short Term Fixes for Physician Fee Schedule and Outpatient Therapy Caps

Written by: Mediware on Friday, December 27, 2013 Posted in: Outpatient Rehab

Each Thursday I hold onto my desk chair in anticipation of the next released Medicare Learning Network release flyer. Every week there is no doubt that at least one or two topics are relevant on a need-to-know information basis specific to guiding practice for rehabilitation leadership in the various venues of care.

This past week was no exception. Awaiting the sustainable growth rate reform decisions has been keeping an entire nation on edge. MedPac Report March 2013  stated, “Medicare pays for the services of physicians and health professionals under a fee schedule, and total payments are limited by the sustainable growth rate (SGR) formula. Because of years of volume growth exceeding the SGR limits and legislative and regulatory overrides of negative updates, fees for physicians and other health professionals will decline about 25 percent in January 2014, according to the Congressional Budget Office.” However, a newly signed  Pathway for SGR Reform Act of 2013 provides an ‘update fix through March of 2014’. This law prevents a scheduled payment reduction for physicians and other practitioners from taking effect on January 1 as the MedPac report stated it could.

The new law provides for a 0.5 percent update for such services through March 31, 2014. President Obama remains committed to a permanent solution to eliminating the Sustainable Growth Rate (SGR) reductions that result from the existing statutory methodology. The Administration will continue to work with Congress to achieve this goal.”

If you are somewhat perplexed by the SGR, I found the MedPAC March 2013 information extremely valuable in understanding the complexity of this rising issue. Refer to chapter 4, pages 75-100 of the linked report above to help educate yourself and your staff on the problems associated with SGR formula payments. One certainly must understand these complexities before advocating and stearing your congressional leaders on what must occur in the next steps of SGR reform. In addition, keeping abreast of discussions by clinical associations related to therapy and rehabilitation networking is also advantageous. is a good resource if you desire additional education on the topic and your ability to advocate in steering public policy is desired.

In order for the March 1 deadline to be enacted, several provisions of the Middle Class Tax Relief and Job Creation Act of 2012 and provisions of the Affordable Care Act Medicare fee-for-service policies had to be extended.

CMS promises that more information and education will be published and is currently revising the 2014 Medicare Physician Fee Schedule (MPFS) to reflect the new law’s requirements as well as technical corrections identified since publication of the final rule in November. MedLearn Matters published that the “2014 conversion factor is $35.8228.”

And if you think deadlines are hard enough to keep track of, this is certainly no exception when it comes to therapists that must keep watch over capped payments and advanced beneficary notices related to providing outpatient therapy care to Medicare beneficiaries.

MedLearn Matters states that, “Extension Related to Payments for Medicare Outpatient Therapy Services – Section 1103 extends the exceptions process for outpatient therapy caps through March 31, 2014. Providers of outpatient therapy services are required to submit the KX modifier on their therapy claims, when an exception to the cap is requested for medically necessary services furnished through March 31, 2014. In addition, the new law extends the application of the cap and threshold to therapy services furnished in a hospital outpatient department (OPD).”

Information related to the process of therapy caps and services are found in the online manuals at The Claims Processing Manual 100-04, Chapter 5, Section 10.3 holds the details related to appropriate workflows in therapy Cap administration.

Recall that therapy caps are determined based on the beneficiary calendar year. Outpatient services calendar years begins calculating fresh each January 1. Recall that CAPs incurred for physical and speech pathology services are combined and the limit for 2014 on incurred expenses is $1,920 and the same amount is then capped separately for occupational therapy services post Jan. 1, 2014.

Also recall that deductible and coinsurance amounts applied to therapy services count toward the amount accrued before the caps are reached and also apply for services above the cap where the KX modifier is then required. The manual medical review of therapy services has also been extended through March 1, 2014, when a beneficiary has reached a dollar aggregate amount of $3,700 for outpatient therapy services for the 2014 fiscal year. Again, these are separate annual thresholds which combine PT and SLP and leave OT services to account independent of their own $3,700 expenditure.

As this is just temporary updates; stay tuned for changes that may still impact 2014.

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