Therapy Cap

Manual Medical Review of Therapy Claims Above the $3,700 Threshold 

Update February 09, 2016

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), signed into law on April 16, 2015, extended the therapy cap exception process through December 31, 2017 and modified the requirement for manual medical review for services over the $3,700 therapy thresholds. MACRA eliminated the requirement for manual medical review of all claims exceeding the thresholds and instead allows a targeted review process. MACRA also prohibits the use of Recovery Auditors to conduct the reviews.

CMS has tasked Strategic Health Solutions as the Supplemental Medical Review Contractor (SMRC) with performing this medical review on a post-payment basis. The SMRC will be selecting claims for review based on:

  • Providers with a high percentage of patients receiving therapy beyond the threshold as compared to their peers during the first year of MACRA.
  • Therapy provided in skilled nursing facilities (SNFs), therapists in private practice, and outpatient  physical therapy or speech-language pathology providers (OPTs) or other rehabilitation providers

Of particular interest in this medical review process will be the evaluation of the number of units/hours of therapy provided in a day.

For CY 2015, the limit on incurred expenses (therapy cap) is $1,940 for physical therapy (PT) and speech-language pathology services (SLP) combined and $1,940 for occupational therapy (OT) services.

Manual Medical Review of Therapy Claims Above the $3,700 Threshold - Updated April 4, 2014

On April 1, 2014, President Obama signed into law the Protecting Access to Medicare Act of 2014.  This new law extends the exceptions process for outpatient therapy caps through March 31, 2015.  Section 103 of this Act contains a number of Medicare provisions affecting the outpatient therapy caps and manual medical review (MR) threshold.

The statutory Medicare Part B outpatient therapy cap for Occupational Therapy (OT) is $1,920 for 2014, and the combined cap for Physical Therapy (PT) and Speech-Language Pathology Services (SLP) is $1,920 for 2014. This is an annual per beneficiary therapy cap amount determined for each calendar year. Exceptions to the therapy cap are allowed for reasonable and necessary therapy services. Per beneficiary, services above $3,700 for PT and SLP services combined and/or $3,700 for OT services are subject to manual medical review. CMS is not precluded from reviewing therapy services below these thresholds.

The therapy cap applies to all Part B outpatient therapy settings and providers including:

  • Therapists’ private practices             
  • Offices of physicians and certain nonphysician practitioners
  • Part B skilled nursing facilities
  • Home health agencies (Type of Bill (TOB) 34X)
  • Rehabilitation agencies (also known as Outpatient Rehabilitation Facilities-ORFs)
  • Comprehensive Outpatient Rehabilitation Facilities (CORFs)
  • Hospital outpatient departments (HOPDs)
  • Critical Access Hospitals (CAHs) (TOB 85X) - (2014)

In addition, the therapy cap will apply to outpatient hospitals as detected by:

  • Type of Bill 12X, 13X or 085X
  • Revenue code 042X, 043X, or 044X
  • Modifier GN, GO, or GP; and
  • Dates of service on or after January 1, 2014

CMS will continue to update this page as necessary.

Page Last Modified:
02/10/2016 09:18 AM