Medicare Part B Outpatient Therapy Cap Exceptions
Extension through December 31, 2012
On February 22, 2012, the Middle Class Tax Relief and Job Creation Act of 2012 was signed into law. This legislation extends the Outpatient Therapy Cap Exceptions Process past the original cutoff date of October 1, 2012.
The therapy cap was originally passed with the Balanced Budget Act of 1999. Its purpose and effective result was to reduce Medicare spending by limiting outpatient therapy payments.
The original cap was $1,500.00. The effective date of the original cap was January 1, 1999; however, there were several legal challenges to the therapy cap that led to a moratorium that was further extended by the passage of the Medicare, Medicaid and SCHIP Balanced Budget Act of 1999 and the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000.
In December 2006, Congress passed the Tax Relief and Healthcare Act of 2006, which provided exemptions for the therapy cap and allowed patients with medically necessary rehabilitation needs with Parkinson’s and musculoskeletal disorders to continue treatments until the end of 2007. Beneficiaries are provided with the most current amount accrued toward their caps on each quarterly Medicare Summary Notice (MSN)
Patients are able to receive a waiver (exception) to cover services above the capped amount if their treatment is medically necessary.
Medicare Outpatient Therapy Benefit
Medicare Part B covers rehabilitation therapy for ambulatory outpatients or inpatients who have exhausted or are ineligible for Part A benefits. Outpatient therapy includes services furnished by:
- Physical Therapists
- Occupational Therapists
- Speech-Language Pathologists
Medicare Outpatient Therapy Benefit Coverage Requirements
- Medical necessity of furnished service
- Care plan containing at a minimum:
- long-term treatment goals
- type, amount, duration and frequency of therapy services that were provided by a clinician and periodically reviewed by a physician or NPP
- Furnished while under the care of a physician or NPP
- Furnished on an outpatient basis
- Certified by the physician or NPP for the applicable payment period
Related claim processing requirements
- Submission of CMS 1450 (IB-04) claims for hospital claims and CMS-1500 claims for professional offices
- Therapy services identified on claim line by 5 digit CPT and HCPCS codes for each procedure furnished at each encounter
- The outpatient therapy discipline furnishing the service(s) is identified at the claim line by the appropriate modifier:
- GP for Physical Therapy
- GO for Occupational Therapy
- GN for Speech-Language Pathology
Outpatient Therapy Caps: Annual per-beneficiary limitation on allowed therapy services
- Extended to all outpatient therapy settings/professionals (except hospitals) effective 1999.
- Two caps:
- Physical Therapy/Speech Pathology combined cap
- Separate cap for Occupational Therapy services
- Allows beneficiaries to receive services beyond the cap limits in non-hospital settings
- If the clinician attests that the services are medically necessary, and places a KX modifier on claims lines for services furnished beyond the annual cap limits.
The Deficit Reduction Act of 2006 established an exceptions process for beneficiaries needing coverage above the therapy caps effective 2007
- Indicates that the clams processing for the exception is automatic, not that the exception is automatic
- Clinician is responsible for justifying medical necessity
- No special documentation is submitted to the contractor with the claim; documentation is only submitted in response to an Additional Documentation Request (ADR) for claims selected for medical review.
- Medicare Contractor makes the final determination concerning whether the claim is payable.
- All services that require exceptions to caps are processed using “automatic process exceptions”.
- The KX modifier is added to claim lines to attest that:
- the services billed qualified for the cap exception
- were reasonable and necessary services that required the skills of a therapist
- were justified by appropriate documentation in the medical record
Automatic exceptions are available for diagnoses and procedures that are directly related to the condition being treated, for complexities that may negatively effect recovery from that condition and/or certain evaluation services
A list of diagnostic (ICD-9-CM) codes that are included in the “automatically excepted” category may be found at www.cms.hhs.gov/transmittals/downloads/R855CP.pdf. Although diagnoses and procedures that qualify as automatic exceptions do not require documentation for submission to the Medicare Contractor, it is important to be able to produce documentation of medical necessity if required.
From the Medicare Claims Processing Manual:
“In making a decision about whether to utilize the automatic process exception, clinicians shall consider, for example, whether services are appropriate to:
- The patients's condition, including the diagnosis, complexities, and severity
- The services provided, including their type, frequency, and duration
- The interaction of current active conditions and complexities that directly and significantly influence the treatment such that it causes services to exceed caps."
Evaluation Services Excepted from the Therapy Cap (once it is reached)
- 92506: Evaluation of speech
- 92597: Oral speech device evaluation
- 92607: Evaluation for prescription for speech-generating Augmentation and Alternative Communication (AAC) device
- 92608: Each additional 30 minutes required for evaluation
- 92610/ 92611/ 92612/ 92614/ 92616: Swallow evaluations
- 96105: Assessment of aphasia
- 97001: Physical therapy evaluation
- 97002: Physical therapy re-evaluation
- 97003: Occupational therapy evaluation
- 97004: Occupational therapy re-evaluation
Requests for Exceptions to the Therapy Threshold
The Manual Medical Review Process
- Medical review threshold ($3,700.00): The total allowed charges under Part B for services furnished by independent practitioners
- Providers within a Medicare Administrative Contractor (MAC) jurisdiction will be divided into three phases:
- Phase I October 1, 2012 to December 31, 2012
- Phase II November 1, 2012 to December 31, 2012
- Phase III December 1, 2012 to December 31, 2012
- The Phase for a provider is based on CMS analysis of the billing practices of the provider and the workload of the MAC.
- No automatic exceptions granted for requests for exceptions above the threshold based solely on a specific diagnosis.
- Claims for therapy services above the threshold that have not been approved for a provider assigned within a specific phase will be subject to prepayment review upon receipt for payment.
- Requests for exceptions can be made in increments of 20 DAYS. Additional treatment beyond 20 days require an additional manual review.
- Contractors will have 10 business days to review the request for exception to the threshold using the manual review process. If a contractor fails to make a decision within 10 business days of receiving a request containing all the required documentation the request will be automatically approved.
- Providers should have been notified via US Mail before September 1, 2012 about the process to request an exception to the threshold and manual medical review process on the CMS website and which Phase the provider is assigned.
Please find the link to the request for exceptions to the threshold at:
Documentation required with request, included with request form and detailed below for your convenience:
- Justification for the extended treatment days
- Evaluation/Reevaluation form to include:
- Physician order
- Signed and dated certification by physician
- Date of evaluation
- Start date of care
- Medical diagnosis and treatment diagnosis
- Onset date
- Current level of function
- Prior level of function
- Plan of care with long and short term goals – Previous therapy administered to include:
- Diagnosis for treatment
- Modalities administered
- Discharge summary if applicable
Provided for each date of service billed
- Grid reflecting services/HCPCS provided (if applicable)
- Actual minutes provided to support each timed service/HCPCS provided
- Signature and professional identification of personnel providing services
- Advance Beneficiary Notice (if applicable)
Per CMS: “Because the caps are statutorily based, a decision is difficult to appeal but not precluded. Therefore, you should approach an unsatisfactory Exceptions decision as you would any other Part B denial and consider an appeal.”
Please find contact information for your MAC by clicking on the link below:
For answers to questions about the therapy cap exception process, send an email to firstname.lastname@example.org
Centers for Medicare and Medicaid Services
The American Physical Therapy Association (APTA)
American Speech-Language-Hearing Association
American Occupational Therapy Association