Archives for February 2013


Medicare Therapy Cap:  

What patients and clinical service providers need to know.


Background: The “Balanced Budget Act of 1997” imposed a $1,500 cap on outpatient therapy services. Section 4541 (c) and (d) of the act increased the financial limitation to no more than $1500 of the incurred expenses in a calendar year, and applied it to outpatient therapy services furnished in skilled nursing facilities, physician’s offices, home health agencies (Part B), skilled nursing facilities (Part B), in addition to private practice offices. This cap did not apply to hospital-based outpatient programs. The effective date of this $1,500 cap was January 1, 1999. A myriad of legal actions were successful in delaying implementation of the cap, until it cleared all barriers and went into effect on January 1st, 2006.  Later that year, congress generated legislation that created an exception process, thereby allowing continued care for specified patients that have exceeded the cap.

In early 2012, President Obama signed into law The Middle Class Tax Relief and Job Creation Act (H.R. 3630).  This legislation mandated that Hospital-based outpatient would be subject to the therapy cap process beginning in October, 2012.

Unless legislation is passed, Beginning on January 1st, 2013, the exceptions process will no longer be in effect and all outpatient therapy settings, excluding hospital based outpatient programs, will be forced to strictly adhere to the therapy cap provisions.

Understanding the current process:

The current therapy cap amount is $1800 for Speech Therapy and Physical Therapy combined. It is unclear as to why two disciplines share the cap amount. Through the exceptions process, patients may receive additional services in excess of the cap, if clinicians identify continued need for skilled therapy. In 2012, there are two exception processes: an automatic exception and a manual medical review process. The automatic exception to the therapy cap can be utilized to extend patients’ services from $1880 to $3700. No prior authorization is required, however, by continuing treatment, clinicians are attesting that the services billed are: 1. Qualified for the cap exception, 2. Are reasonable and necessary services that require the skills of a therapist and 3. Are justified by appropriate documentation in the medical record. The manual medical review process is required for all patients who reach $3700 in reimbursed services. The process will require that clinicians obtain advanced approval from Medicare. Criteria for medical review will be based on current medical review standards. Clinicians must comply with coverage, documentation and coding requirements set forth in the Medicare Benefit Manual (Publication 100-02, chapter 15, section 220) and the Medicare Administrative Contractor (MAC) local coverage determination (LCD) for their jurisdiction.

Patient Corner

What are the outpatient therapy limits for 2012?

  •  $1,880 for physical therapy (PT) and speech-language pathology (SLP) services combined
  • $1,880 for occupational therapy (OT) services 
After you pay your yearly deductible for Medicare Part B (Medical Insurance), Medicare pays its share (80%), and you pay your share (20%) of the cost for the therapy services. The Part B deductible is $140 for 2012. Medicare will pay its share for therapy services until the total amount paid by both you and Medicare reaches either one of the therapy cap limits. Amounts paid by you may include costs like the deductible and coinsurance.

What can I do if I need services that will go above the outpatient therapy cap amounts? 

  • You may qualify to get an exception to the therapy cap limits so that Medicare will continue to pay its share for your therapy services. Your therapist must document your need for medically-necessary services in your medical record, and your therapist’s billing office must indicate on your claim for services above the therapy cap that your outpatient therapy services are medically necessary. 
Even if your therapist provides documentation that your services were medically necessary, you might still have to pay for costs above the $1,880 therapy cap limits. If Medicare finds, at any time (even after your therapy services have been paid for), that the services above the therapy cap limits weren’t medically necessary, you might have to pay for the total cost of the services above the $1,880 therapy cap limits. 
Starting October 1, 2012, a Medicare contractor may review your medical records to check for medical necessity if you got outpatient therapy services in 2012 higher than these amounts:  $3,700 for PT and SLP combined.  $3,700 for OT 
Note: The Medicare contractor may conduct this review of your medical records before  you get any additional outpatient therapy services.

How can I find out if my therapy services will go above the therapy cap limits?

  • Ask your therapist’s billing office. If you get all your therapy in the same place, your therapist’s billing office will have the most up-to-date information and will know if your services will go above these limits.
  • Visit to track your claims for therapy services. This website is Medicare’s secure online service for accessing your personal Medicare information.
  • Check your “Medicare Summary Notice” (MSN). This is the notice you get in the mail (usually every 3 months) that lists the services you had and the amount you may be billed.

What is an ABN?

  • An ABN is an Advanced Beneficiary Notification You may be asked by your clinical provider to sign this form prior to receipt of therapy services. The form states that in the event your services are not covered under medicare, you (The patient) will become responsible for payment. It is important to ensure that the provider includes a specific monetary amount that you would be billed. You should maintain a copy of this report for your personal records