A Welcome Goodbye: Congress Repeals $2,010 Therapy Cap

On February 9, 2018, Congress permanently repealed the $2,010 Medicare-funded therapy cap, ending a 20-year course of short-term fixes for providers of physical, occupational, and speech therapy services. 

The $2,010 cap on therapy services for Medicare recipients has long been opposed by the skilled nursing and physical therapy industries. Congress routinely granted exemptions to the cap. However, the exemption process was inefficient and Medicare beneficiaries requiring a substantial course of therapy would often hit the cap before Congress could provide a solution. In the past, when the cap took effect before the exceptions were issued, the Centers for Medicare & Medicaid Services (“CMS”) had instructed providers to forgo filing claims for a period of time, causing uncertainty among providers.

While the bill repeals the hard cap on therapy services, and the uncertainty that came with it, there are several items that providers should keep in mind as they submit claims going forward:

1. Claims above $2,010 (adjusted annually) will still require use of the KX Modifier. This means that providers will still have to track total claim amounts and attest that the services are both (1) reasonable and necessary and (2) that there is documentation of medical necessity in the patient’s medical record.

1. Congress also retained the targeted medical review process, but it reduced the threshold from $3,700 to $3,000 through 2027. Thus, once a Medicare beneficiary reaches $3,000 in combined physical therapy and speech language pathology services, or $3,000 in occupational claims alone, CMS may perform an audit of those claims.

1. Not all cases in which a beneficiary reaches the $3,000 threshold will be reviewed. The supplemental medical review contractor (“SMRC”) charged with reviewing claims will only target providers who meet certain criteria. These criteria are identical to those that have been applied to therapy services since 2015 and target the following types of providers:

• Providers with a high percentage of patients receiving therapy beyond the threshold as compared to their peers.
• Providers that bill a high number of units/hours of therapy in a day.
• Skilled nursing facility (“SNF”) providers, private/group practices, and outpatient facility providers.

The permanent repeal of the therapy cap along with the other changes mentioned above are effective January 1, 2018.

• Nicholas H. Meza: (602) 229-5439 / nicholas.meza@quarles.com
• Amy Cotton Peterson: (602) 229-5530 / amy.cotton@quarles.com