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Written by: Darlene D'Altorio-Jones (1959-2015) on Tuesday, September 11, 2012 Posted in: Inpatient Rehab

If you’re a rehab hospital that also provides outpatient therapy, I’m certain you’ve been very busy over the last several months preparing yourself to participate and keep track of Therapy Caps on outpatient therapybecause for at least the last three months of the year, it now concerns you too! The numbers game of tracking charges and the use of KX modifiers for OT and PT and SLP combined, along with the advanced exception request for the $3,700 threshold has consumed at least some of your time and your finance department’s time to make sure the uniform bill will reflect expected information as you bill therapy.

Did you ever think it meant anything for you as an inpatient provider of rehabilitation care? Transmittal 2537just released Aug. 31, 2012 describes in detail the necessary billing procedures for Therapy Caps. Tucked away in the detail is an alarming fact that it can also impact inpatient care on rare occasion. How? Suppose you have an inpatient that has exhausted their Part A benefits, or has only Medicare Part B benefits, and you are utilizing that benefit to pay for their inpatient therapy care. A type of bill (TOB) for a patient with Medicare Part A days left is 11X; paid under HIPPS. If they only have Medicare Part B coverage, the type of bill (TOB) is 12X – or Hospital Inpatient Part B. The transmittal states all 12X bill types must follow the Caps process as though they are an “outpatient provider” of care.

The Transmittal 2537:

7881.4.1
“Medicare contractors shall add a ‘legislation effective’ indictor of A to line items that meet the following conditions: Type of bill 12X(excluding Critical Access Hospital CCNs in the range 1300-1399) or 13X Revenue code 042X, 043X or 044X Modifier GN, GO or GP and Dates of service that fall within the effective dates set on the user-controlled ‘legislation effective’ screen.”

7881.4.1 exempts Critical Access Hospitals but says nothing about specialty exempt Rehabilitation hospital providers. A person without part A benefits will not have a locator field 42 code of 0024 showing they are paid by a HIPPS.


Initial inquiry to CMS confirms that IRFs are not exempt and that if they are billing a Medicare part B patient benefit, the Caps regulation must be followed. Rehab hospitals provide a minimum of three hours of therapy no less than five times per week for each beneficiary in a rehab bed by standard. The KX modifier is not difficult, but as soon as they exceed $3,700 they cannot wait 10 days to decide if the 20 days will be approved. The advanced exception request may be mail driven or an electronic process dependent on your fiscal intermediary. There are more than 1,100 rehab hospitals that may be affected by this transmittal in more than just the traditional outpatient services area. You need to at least consider if your facility falls into this predicament and how often it might happen?

Are you ready to oblige with the uniform billing instructions when the sole purpose of admission to a rehab facility is to receive concentrated therapies? We recognize this may impact a very small percent of the population that access rehabilitation level of care with only a Medicare Part B benefit. We recommend your facility runs a report to see just how much therapy care has been billed as 12X bill type for inpatients in your hospital. When you have that answer, you should work accordingly to abide by the same process as you would for your hospital-based outpatient services when completing your universal bill.

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