Therapy Cap Exceptions Process Extended; Full Repeal of Caps Narrowly Misses

On April 14^th, 2015, the Senate passed legislation that repeals and replaces the sustainable growth rate (SGR) formula used to determine payments to providers for outpatient services, including outpatient therapy.  The reform package will provide for a 0.5% increase in reimbursement for services under the Medicare Physician Fee Schedule and avoids a 21.2% reduction that was scheduled to go into effect on 4/1/15.  Furthermore, this bill extends the therapy cap exceptions process through December 31^st, 2017.  An amendment to permanently repeal the outpatient therapy caps for Medicare beneficiaries failed by a mere two votes (58-42).

What does this mean for therapy services going forward?  First, clinicians will be able to continue to utilize the KX modifier for services above the therapy cap which meet the criteria for the exceptions process.  Secondly, the language in the bill extends the original deadline for the expiration of the therapy cap exceptions process from March 31st, 2015 to December 31st, 2017.  In an email sent on 4/15/15, CMS stated that “provisions allowing for exceptions to the therapy cap … that expired on April 1 have been extended.  CMS will immediately begin work to implement these provisions.”  Therefore, it is expected that CMS will consider those medically necessary services rendered to beneficiaries that exceeded the therapy cap during this recent two-week interval to be eligible for reimbursement with the appending of the KX modifier to the procedures on those claims.

As a reminder, the final 2015 Medicare Physician Fee Schedule Rule released by CMS set the 2015 therapy cap at $1,940 for PT and speech therapy combined and a separate $1,940 cap for OT.   The exceptions process that has been in place and that was just extended through the end of 2017 allows Medicare beneficiaries to receive additional care above and beyond their yearly maximum benefit when the therapist can justify in the documentation the need for continued skilled intervention in order to achieve their prior functional status or maximum expected functional improvement within a reasonable time period.  When a Medicare beneficiary qualifies for an exception to the therapy cap, the clinician adds a KX modifier to those procedure codes subject to the cap limits.  By attaching the KX modifier, the therapist attests that the services billed qualify for the cap exception, are reasonable and necessary services that require the skills of a therapist, and are justified by appropriate documentation in the medical record.