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In the wee hours of Friday, Feb 9, 2018, the House and Senate passed a bill that repeals therapy caps. What does that repeal mean for your community and residents?

In the wee hours of Friday, Feb 9, 2018, the House and Senate passed a bill that repeals therapy caps. What does that repeal mean for your community and residents?

First, some background about the therapy caps – The Balanced Budget Act of 1997 put into place beginning Jan 1, 1999, therapy caps to reduce excess Medicare spending for therapy services provided in outpatient, private practice, and skilled nursing settings.  However, independent studies demonstrated that the cap could be detrimental to outcomes for older adults, specifically with individuals who’d had a stroke or other neurological disorders.  For example, the American Heart Association found that costs skyrocketed (lost productivity, disability expenses, etc.) for stroke patients who did not receive enough therapy to fully rehabilitate because therapy was stopped at the cap. Over the years, legislation was passed to soften the “hard” cap by allowing for use of “KX” modifiers to support why therapy beyond the cap was required. On January 1, 2018, the therapy caps came into play without exception ($2,010 for OT + $2,010 shared for PT/ST). Had these caps remained in place, this would have placed severe restrictions on access to care for individuals using Medicare Part B for outpatient therapy services, including all Part B therapy provided to those who live skilled nursing and/or assisted living communities.

What does the therapy cap repeal mean for SNFs and ALFs?

The use of the cap exception is good news for your residents as they will be able to access the appropriate amount of care needed, without being cut short due to some arbitrary dollar amount. This is great for person-centered care! But what else should you consider or expect?

Expect audits of claims that exceed the threshold.

The repeal allows use of a KX modifier for those patients who require therapy services that exceed the $2,010 allotted per year.  This requires that providers continue track charges for outpatient (Part B) OT, PT and ST services.  In addition to the KX modifier, the new legislation states that any therapy services that exceeds a “threshold” of $3,000 (previously was $3,700) may be subject to additional scrutiny by Medicare through an audit process.  Based on historical practice, we are likely to see every claim audited that exceeds the threshold.

You may need to more vigilantly monitor your therapy provider.

After the cap repeal, there may be signs that your therapy provider is not a “good steward of Medicare dollars.”). Here are some questions to ask:

  • Did my therapy provider suddenly change the frequency/duration of treatment?  For example, in Jan the treated residents 3 times a week, but now those same residents are seen 5 days a week.
  • Who makes the decision for frequency and duration of therapy?  The clinician or someone in a corporate office?
  • Did the caseload for long term residents suddenly grow significantly in February and March?
  • Why is the amount invoiced for therapy in February much greater than what it was in January?
  • Did the therapy provider institute a goal for the number of residents that must be on Part B?  What is the evidenced base rationale?
  • Can my therapy provider tell me why is each resident on caseload and what is the anticipated outcome?

It might be time to review the fine print of your contract.

Therapy for your long term care residents keeps them free from falls, participating in ADLs, and enjoying a good quality of life.  Is your therapy provider making a difference in the lives of your residents, or are you becoming their bank? It never hurts to review your contract and understand the fine print.

  • What amount does our facility actually retain per unit for part B therapy services based on our contract?
  • How is the MMPR factored in? And what exactly is that?
  • Is the percentage of the fee screen calculated before or after the 2% sequestration and MMPR?
  • Does my therapy provider have a dedicated support team to manage the ADRs and appeal process?
  • How long does our therapy provider hold our money when there is an ADR received for Med B and found unfavorable? Until the final appeal decision?
  • How does the cost of billing and tracking Part B therapy claims factor into our revenue?
  • How much does it cost us to process a Med B claim?
  • Does my facility have a resident population who has a secondary insurance (to cover the remaining 20% of the fee screen after Medicare pays 80%) other than Medicaid? When Medicaid is secondary the 80% of the fee screen in Michigan is considered reasonable payment, therefore there is no additional payment by Medicaid for remaining 20%.

At TMI our Part B programming is driven by evidence-based practice and person-centered care.  We continue to proactively position ourselves to assist our customers in the best possible manner to meet the challenges of future reimbursement and regulatory changes.

If you have questions about the therapy cap repeal and what it might mean for your community, our team is happy to provide insights.


Call us at 877-TMI-8171 or email me directly.