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Therapy Cap REPEALED!

GREAT NEWS! The cap on therapy services for Medicare beneficiaries has been repealed. We thank everyone who petitioned their respective legislators to help achieve this important legislative victory.

Since the Balanced Budget Act of 1997 (BBA ’97), Medicare beneficiaries have faced a cap for all Medicare-covered outpatient therapy services provided by non-hospital providers. The caps are service limits applied separately for: (1) physical therapy (PT) services and speech-language pathology services (SLP); and (2) occupational therapy (OT) services.

Historically, Congress has approved an exception process to the caps, recognizing the potential harm in limiting beneficiary access to these services. The exceptions process is administered through the Centers for Medicare and Medicaid Services (CMS) and allows providers to deliver services above the caps if extra services are “reasonable and necessary.”

The MACRA legislation extended this exceptions process through Dec. 31, 2017, and it also required the HHS Secretary to implement a targeted manual medical review process for outpatient therapy services.


Based upon the current spending bill that has successfully passed both the Senate and the House, Congress has acted to permanently repeal the outpatient therapy caps beginning on January 1, 2018. The president signed the bill on February 9, 2018.

The elimination of the therapy cap effectively removes any perceived financial limitations associated with caring for these Medicare beneficiaries. This allows skilled professionals to continue to provide medically necessary services to address residents’ functional needs based on clinical decisions. Billing requirements for an appropriate claims modifier remain in place for claims over the current exception threshold indicating that the services are medically necessary. Additionally, the threshold for the targeted manual medical review process is effectively lowered from $3,700 to $3,000.

We are anticipating an update from the Medicare Administrative Contractors regarding next steps for resuming held Part B therapy claims.

In addition, beginning in 2022, outpatient therapy services provided to a Medicare beneficiary by a physical therapist assistant (PTA) or occupational therapy assistant (OTA) will be paid at 85% of the allowed amount for each CPT code under the Medicare Physician Fee Schedule. By January 1, 2019, the Secretary must establish a modifier that would be appended to the CPT codes on the claim (specific location yet to be determined) to indicate the services were provided in whole or in part by a PTA or an OTA.

Beginning January 2020, Home Health Agencies (HHAs) will see a 30-day unit of service instead of a 60-day unit of service.

As your partner, HealthPRO® /Heritage will continue to provide quality rehabilitation services based on clinical judgement of resident need and in accordance with all Medicare requirements and guidelines for medical necessity and skill.

What Now? – Frequently Asked Questions

Q: What should we do when someone reaches the Cap ($2010.00 for PT & ST combined and $2010.00 for OT services) and is currently on caseload?
A: As long at the services continue to be medically necessary, continue under your current treatment plan. Be sure to apply the appropriate KX modifier for those line items at and above the cap.

Q: What is the difference between the $2010.00 cap/threshold and the $3000.00 threshold?
A: For reporting purposes, a KX modifier will still be required for claims that exceed $2010.00. However there are no limitations to medically necessary services implied by this. Services provided in excess of the $3000.00 threshold will continue to be subject to random medical review via ADR’s.

Q: What if someone had been on caseload prior and when they hit the cap, we issued an ABN and discharged therapy because the family didn’t want to pay for continued services due to the statutory limitation at the time?
A: If the patient is still showing deficits and an evaluation and treatment are warranted, obtain physician orders and complete a new POT for the patient. Be sure the documentation supports the referral and explain the previous therapy and reason for discharge due to the previous statutory limitations before Congress passed the bill.

What does this mean for us?

  • Services covered under Medicare Part B should continue to be provided as medically necessary for all patients that need it and can benefit from the skills of a therapist.
  • ABN’s will no longer be necessary for services that meet Medicare criteria for medical necessity and skill.
  • KX modifiers must be applied to all medically necessary services that exceed $2010.00.
  • While the cap has been eliminated, the need to provide and document services that meet all Medicare criteria remain in place and will be adhered to. Random Complex Medical Review of these claims will continue.

Tags: CMS, Therapy Cap, CMS Update 2018