The Medicare therapy cap was initiated with the Balanced Budget Act of 1997 (BBA). What? Yes, this year marks the 20th year of therapy cap legislation as well as the 20th year of the therapy industry’s efforts to “stop the therapy cap”. The therapy cap has been a permanent fixture since 2006, 11 years ago. From 1997 – 2006 there were a few implementation stops and starts, however the therapy industry was successful in keeping a moratorium in place on implementation of the caps until 2006.
Exceeding the Therapy Cap – What is the Therapy Cap?
The BBA established two therapy caps, which at the time were $1500 each:
- Physical therapy and speech-language pathology combined
- Occupational therapy
The initial therapy cap applied to Medicare suppliers (private practices and physicians), and was consistently applied to hospitals in 2012 and subsequent years. Beginning in 2013 the cap was applied to Critical Access Hospitals (CAH).* By law Medicare beneficiaries are limited to the amount of therapy up to the therapy cap amount, unless an exceptions process is in place. The current exceptions process is in place through the end of 2017.
When the therapy cap was fully implemented in 2006 the exceptions process included both a manual exceptions process and an automatic exceptions process. The manual exceptions process required a submission to the Medicare Administrative Contractor (MAC) in order to request advance approval of additional visits, but payment was not guaranteed (as the claim was still subject to post-payment review). The automatic exceptions process was based upon a list of ICD-9 diagnosis codes: if an “approved” diagnosis code was on the claim, then therapy over the cap was “automatically excepted”. The codes were published in the Medicare Claims Processing Manual, via Transmittal 855 in February, 2006. CMS eliminated the manual exceptions process in 2007, so providers were no longer required to submit a request to the MAC for additional visits if the diagnosis code(s) were not on the automatic exceptions list. The list of codes allowing for an automatic exception were eliminated in 2009.
Exceeding the Therapy Cap – What is the Process in 2017?
According to the Medicare Claims Processing Manual Medicare beneficiaries “may qualify for use of the cap exceptions process at any time during the episode when documented medically necessary services exceed caps. All covered and medically necessary services qualify for exceptions to caps.” The exceptions process is initiated by appending a KX modifier to the claim lines of therapy over the cap ($1980 in 2017). CMS guidance also indicates that documentation must support the medical necessity of therapy over the cap, per the Medicare Benefits Policy Manual, Chapter 15. Caution: the KX modifier indicates that “the clinician attests that services at and above the therapy caps are medically necessary and justification is documented in the medical record.”
Exceeding the Therapy Cap – What About the ABN?
An ABN can be issued at anytime in the therapy episode when therapy is not medically necessary or not covered. An ABN should not be issued for medically necessary therapy over the cap, and should not be issued for medically necessary therapy over the $3700 threshold. Examples when an ABN should be issued:
- The therapist has determined that therapy is no longer medically necessary, but the beneficiary requests additional therapy.
- The therapist has determined that therapy should be tapered to 2x per week per the plan of care, and the beneficiary requests therapy 3x per week. The ABN would be for the 3rd visit per week.
- The MAC’s LCD does not cover a modality or service (Ionto for example) and the patient chooses to have the modality.
- Therapy is no longer medically necessary, per Medicare benefits, and the patient’s benefits from their secondary (not supplemental) insurance will pay. An ABN is necessary to get a denial so the secondary insurance will pick up coverage per the secondary’s benefit schedule.
We detailed the ABN in our article on ABN over the therapy cap. The ABN should be properly filled out according to the ABN instructions, and it must be signed prior to services being provided in order to pass the liability to the beneficiary. The beneficiary must indicate their choices on the ABN. Of note, CMS has updated the ABN form to inform beneficiaries of their rights under Section 504 of the Rehabilitation Act of 1973 (Section 504) and how to request the ABN in an alternative format if needed. The updated ABN form must be used beginning June 21, 2017.
Exceeding the Therapy Cap – Best Practice
Medicare beneficiaries are entitled to medically necessary skilled therapy. Despite urban legend to the contrary, therapy over the therapy cap that is medically necessary must be provided and documented by the clinician. An ABN should only be issued when therapy is no longer medically necessary or not covered. We have provided a brief summary of exceeding the therapy cap and hope that you review the relevant CMS references.
Do you provide medically necessary therapy over the cap? Do you use the ABN in your therapy practice? Are you properly coding the ABN to the claim?
*Therapy provided at critical access hospitals (CAH) is subject to the cap in terms of calculating a beneficiaries benefits, however a CAH is still paid on a cost-basis.