Therapy Caps Exceptions Process Extended Through CY 2017
The therapy caps exceptions process for PT, OT, and SLP services was extended through the remainder of CY 2015, and for all of CY 2016 and CY 2017, when the Medicare Access and CHIP Reauthorization Act was signed into law on April 16, 2015.
Jimmo v. Sebelius Settlement Agreement – Program Manual Clarifications (Fact Sheet)
As explained in the previously-issued Jimmo v. Sebelius Settlement Agreement Fact Sheet (see Downloads section on the SNF PPS web page), the Centers for Medicare & Medicaid Services (CMS) is issuing revised portions of the relevant program manuals used by Medicare contractors. For additional information, please see the Jimmo v. Sebelius Settlement Agreement – Program Manual Clarifications (Fact Sheet) [PDF, 416KB]
Latest Applicable Legislation/Law: This section was last updated to include revisions to Medicare law for therapy caps, and related provisions, through Section 202 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA extended the therapy caps exceptions process through December 31, 2017 and modified the requirement for manual medical review for services over the $3,700 therapy thresholds. MACRA also extended the application of the therapy caps, and related provisions, to outpatient hospitals until January 1, 2018.
Under Medicare Part B, the annual limitations on per beneficiary incurred expenses for outpatient therapy services are commonly referred to as “therapy caps.” The therapy caps amounts are determined on a calendar year (CY) basis which means that all beneficiaries begin a new cap each year. For CY 2016, the limit on incurred expenses is $1,960 for physical therapy (PT) and speech-language pathology services (SLP) combined. There’s another limit of $1,960 for occupational therapy (OT) services. Deductible and coinsurance amounts paid by the beneficiary for therapy services count toward the amount applied to the limit.
With the passage of MACRA, an “exceptions process” to the therapy caps is currently in effect for all of CY 2016 and CY 2017. For services furnished during a calendar year that exceed the therapy caps, with an exceptions process in place, providers and practitioners may request an exception on a beneficiary’s behalf when those services are reasonable and necessary. To indicate this medical necessity, the therapy provider or practitioner is required to add a KX modifier to the claim for each applicable service. By using the KX modifier, the provider attests that the services are both (a) reasonable and necessary and (b) that there is documentation of medical necessity in the beneficiary’s medical record. Manual policies relevant to the exceptions process apply only when exceptions to the therapy caps are in effect.
The therapy caps exceptions process applies an annual manual medical review (MMR) requirement when a beneficiary’s incurred expenses reaches a threshold of $3,700. Each beneficiary’s incurred expenses apply towards the MMR thresholds in the same manner as it applies to the therapy caps. There’s one threshold for PT and SLP services combined and another threshold for OT services. Now, through MACRA, not all claims exceeding the thresholds are subject to MMR as they were before. The MMR is currently in effect through December 31, 2017 for some claims over the $3,700 thresholds. For a general overview of the medical review process, go to the Medical Review and Education website. For more information on the MMR of therapy claims above the $3,700 thresholds, visit the Medical Review and Education website’s Therapy Cap section.
Prior to October 1, 2012, the therapy caps applied to all outpatient therapy services except those furnished by outpatient hospitals and critical access hospitals (CAHs). The therapy caps, and related provisions, were first applied to outpatient hospitals on October 1, 2012; and, this application was extended through MACRA until January 1, 2018. Beginning January 1, 2014, the outpatient therapy caps, and related provisions, apply to therapy services furnished by a CAH. Therapy services furnished by a CAH are counted toward the therapy caps as if the services were paid under the Medicare Physician Fee Schedule. The amount counted toward the caps for services furnished by a CAH also reflect any applicable therapy multiple procedure payment reductions (MPPR). This provision does not change the actual method of payment for therapy services furnished by a CAH.
Due to an oversight, the therapy caps and related provisions were inadvertently not applied to Maryland hospitals at the time they were applied by law to other outpatient hospitals – first effective on October 1, 2012 and later extended by MACRA through CY 2017, as noted above. However, beginning January 1, 2016 CMS will apply these therapy cap provisions to Maryland hospitals. The majority of Maryland hospitals are paid under the Maryland All-Payer Model; and the therapy services they furnish are paid based on the charges they submit rather than on the MPFS. As such, covered therapy services provided by a Maryland hospital paid under the All-Payer Model will be counted toward the therapy caps based on submitted charges. Consequently, these accrued amounts do not reflect the MPFS rates or any applicable therapy MPPR amounts. For the specialty hospitals in Maryland that are not paid under the Maryland All-Payer Model, therapy services are paid based on the MPFS and the therapy caps are accrued as they are for all other hospitals and CAHs using MPFS amounts after the MPPR is applied. For more information about Maryland hospitals see Transmittals 3367 and 3454 and Chapter 5 of the Medicare Claims Processing Manual. For beneficiary information about 2016 Medicare Limits on Therapy Services, please view the Beneficiary Fact Sheet on Medicare Limits on Therapy Services. If you have questions about the Medicare Program, you should first get in touch with your Medicare Contractor. To find contact information, please use the Provider Compliance Interactive Map.
For more information about the therapy caps and other therapy payment policies, please see:
- The Medicare Claims Processing Manual, Chapter 5.
For applicable coverage policies for therapy services, please refer to the Medicare Benefits Policy Manuals:
- Sections 220 and 230 of Chapter 15, and Chapter 12 for PT, OT, and SLP services in Comprehensive Outpatient Rehabilitation Facilities
Advance Beneficiary Notice of Noncoverage Frequently Asked Questions Document Now Available
On May 1, CMS released a new Frequently Asked Questions (FAQ) document on Advance Beneficiary Notice of Noncoverage. Please view the new FAQ document, or find it in the Downloads section below.
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