Therapy Cap RecapIf you’re a rehab therapist who treats Medicare patients, you’ve got a bevy of rules and regulations to follow and knowing all of them inside and out is a tall order, to say the least. If decoding government legalese isn’t really your thing, don’t worry—we’ve dedicated this entire month to serving up a smorgasbord of digestible, easy-to-understand guides on the important Medicare policies that apply to you. On today’s menu: the therapy cap.

As part of the Balanced Budget Act (BBA) of 1997, the therapy cap places an annual limit on the total amount of reimbursement Medicare will provide for each patient’s rehabilitation services. In 2013, that amount was $1,900 (up $20 from $1,880 in 2012) for physical therapy and speech therapy combined, along with an additional $1,900 for occupational therapy. Although the government has yet to finalize the 2014 Physician Fee Schedule Rule—which will lay out the details of next year’s cap amount and the regulations surrounding it—we’re not expecting any major changes from last year’s therapy cap rules.

Here are some more fast facts about the therapy cap:

  • It currently applies to services furnished in:
    • private practices
    • physician offices
    • skilled nursing facilities (Part B)
    • rehabilitation agencies (or ORFs)
    • comprehensive outpatient rehabilitation facilities (CORFs)
    • outpatient hospital departments—although it will no longer apply to outpatient hospital settings in 2014 unless Congress passes legislation
  • It does not reset for each diagnosis.
  • Examinations or re-examinations that establish the medical necessity of continuing treatment beyond the cap do not count toward the cap, even if the patient has already exceeded it. (But, if the patient receives treatment, the entire visit counts toward the cap).

Each time you get a new Medicare patient, it is crucial that you find out if the patient has received any prior therapy services during the current benefit period, as those services will apply to the cap. To calculate the patient’s “running total,” you can safely assign $80 to $100 per visit. If the patient is unable to provide you with his or her therapy services history, you can get it via CMS by:

  • Visiting the ELGA or ELGB screens within the Common Working File (CWF) on the HIQA screen (for providers who bill through fiscal intermediaries).
  • Contacting your Medicare contractor and requesting the necessary information (keep in mind that the amount that goes toward the limit reflects the date of claim receipt, not the date of service).

Now remember, the therapy cap isn’t necessarily the end-all, be-all of reimbursement for a particular patient—at least not according to 2013 rules. If you believe that continuing therapy is medically necessary and that the patient qualifies for an exception to the cap, simply attach the KX modifier and clearly document your reasons for continuing treatment. If you believe treatment beyond the manual medical review threshold ($3,700 in 2013) is medically necessary, either your Medicare Administrative Contractor (MAC) will notify you that you must submit the appropriate documentation to an assigned Recovery Audit Contractor (RAC) (if you are in a pre-payment review state) or you will continue to receive reimbursement until you submit the appropriate documentation to your RAC, who will determine whether the services are covered (if you are in a post-payment review state). In the latter scenario, you’ll have to reimburse Medicare if they deem the services in question as not medically necessary.

Finally, if you would like to continue treating a patient who has exceeded the cap but does not qualify for an exception, you can do so as long as the services are no longer medically necessary and the patient agrees to pay out-of-pocket—or through a secondary insurance—by signing an Advanced Beneficiary Notice (ABN). Whatever you do, absolutely do not attempt to “game the system” by working around the therapy cap in order to avoid having your exceptions rejected.


As soon as we get the final word on next year’s therapy cap policy, we’ll post all the details right here on the WebPT blog. In the meantime, if you still have questions about the cap, leave them in the comments section below.

Regulatory Roundup: 6 Challenges Confronting Rehab Therapists in 2018 - Regular BannerRegulatory Roundup: 6 Challenges Confronting Rehab Therapists in 2018 - Small Banner
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