2014 Therapy Cap and SGR Reform

The Pathway for SGR Reform Act of 2013 signed into law by President Obama on December 26th not only served as a three month “patch” to prevent a 20.1% reduction to the conversion factor in the physician fee schedule associated with the SGR formula, but it also extended the current therapy cap exception process through March 31st, 2014.  As a result of this law, providers will continue to be able to utilize the KX modifier through March 31st for patients who have exceeded their therapy cap and for whom additional care is medically necessary.  (To review, the 2014 therapy caps are $1,920 cap for physical and speech therapy combined and $1,920 for occupational therapy.)  Furthermore, the law extends the manual medical review process for services provided above the $3,700 threshold.  Additional legislation will be needed to extend the therapy cap exceptions process and the manual medical review process beyond March 31st.

The Senate Finance Committee’s proposal for long-term SGR reform includes the repeal of the Medicare therapy cap which would eliminate the requirement for a KX modifier.  However, the proposal includes the continuation of the manual medical review process at $3,700 of expenditures through 2014 and then a transition to a new medical review program in 2015.  In this proposal, the new program would use prior authorization to allow therapists to request blocks of visits.  The proposal also calls for a new data collection system to replace the current functional limitation reporting procedures and for claims submitted in 2015 to indicate whether outpatient therapy services were provided by a PTA or COTA.   Time will tell if any of these provisions are included in the final reform package.  Stay tuned.