Therapy caps: Unraveling the spider’s web for long-term care

Outpatient therapy caps, originally instituted by the Balanced Budget Act of 1997, limit the coverage payments for physical and occupational therapy services under Medicare Part B to specific amounts allowable per year. The types of therapy involved in the current caps include physical therapy, occupational therapy and speech-language pathology services, among others.

Many senior care and therapist organizations argue that the annual therapy cap prices—currently set for 2013 at $1,900 for physical therapy and $1,900 for occupational therapy—are arbitrary figures, born from the federal budgetary issues faced by the original Balanced Budget Act rather than being based on clinical data relating to the need and usage of therapy services across patient populations. Both the American Physical Therapy Association (APTA) and the American Occupational Therapy Association (AOTA) have spoken out strongly on the vague definitions of therapies within specific situations, including long-term and post-acute care.

Many organizations—especially senior care groups—also have long argued that therapy caps shouldn’t exist at all, especially as written in the current law. To many, the idea of a law-based limit on therapy services is not clinically driven—and is seemingly in opposition to the myriad recent federal initiatives that emphasize patient-centered, longitudinal care.

“Long-term and post-acute care patients should be assured of receiving the full spectrum of necessary therapies prescribed by their doctors to complete their recovery,” said Mark Parkinson, President and CEO of the American Health Care Association/National Center for Assisted Living (AHCA/NCAL), in a recent association position statement. “Doctors and caregivers should be monitoring patient progress, not a cap, when administering these important therapies to their patients and our residents.”


On February 14, legislators introduced the Medicare Access to Rehabilitation Services Act in both houses of Congress, a bill whose concepts have been offered to Congress in previous legislative sessions. The current S. 367 and H.R. 713 both propose to repeal the outpatient rehabilitation therapy caps permanently. If passed, the bipartisan bill would, by default, eliminate the need for skilled nursing facilities and other long-term care/post-acute care facilities to apply for “exceptions” to the therapy caps for individual residents who need to continue their therapies beyond the set limits.

Therapy organizations such as the APTA and the AOTA have shown strong support for the bill, emphasizing the need to recognize the legitimacy of ongoing therapies to maintain residents’ activities of daily living. Said AOTA’s Executive Director Fred Somers, in a statement about the congressional action: “[We] know therapy is essential for full recovery from stroke or heart disease or for preventing a bad fall. This bill takes a stand against a bad policy and for good health.”


Another volatile point of contention involves the therapy cap “exceptions process,” which is not intrinsically part of the overarching law. The ability to file for exceptions/extensions under the therapy cap rule is something that must be renewed each year, at the discretion of Congress.

Therapy caps have faced significant criticism from groups involved with Parkinson’s disease, spinal cord injuries, brain injuries and quadriplegia, since residents with these conditions often require consistent, daily therapies to maintain activities of daily living and quality of life. In some cases, the exceptions to the therapy caps become arduous billing-submission issues for care facilities, especially for residents whose therapy needs are ongoing and long-term.

In December, the Therapy Cap Coalition, whose weighty member portfolio includes the National Stroke Association, LeadingAge, the Arthritis Foundation, the Parkinson’s Action Network and the American Heart Association, petitioned Congress to extend the therapy cap exceptions through 2013, a motion which successfully contributed to assuring the exceptions processes for another year.

For 2013, Congress approved two exceptions processes: an automatic exception process and a manual medical review exception process. The automatic exception process pertains to residents who have a documented need for ongoing therapy in order to maintain or exceed their current functional status, up to but not beyond $3,700 for physical therapy and/or $3,700 for occupational therapy.

Residents who meet or exceed the $3,700 automatic exception limits will be subject to a manual medical review in order to receive further physical or occupational therapy payments.

On the subject of manual medical reviews, the current Centers for Medicare & Medicaid Services (CMS) website states (as of Feb. 22, 2013): “CMS is developing a long term strategy to deal with manual medical review. However, in the interim, Medicare Administrative Contractors (MACs) will conduct prepayment review on the claims reaching the $3700 threshold. CMS requested MACs conduct these manual medical reviews within 10 days. At this time, there is no advance request for an exception process.”


2013 therapy caps

Current outpatient therapies under the therapy cap break down into several categories:

  • Therapists’ private practices
  • Offices of physicians and certain nonphysician practitioners
  • Part B skilled nursing facilities (Type of Bill: 42X, 43X,44X)
  • Home health agencies (Type of bill: 34X)
  • Outpatient Rehabilitation Facilities (ORFs)
  • Comprehensive Outpatient Rehabilitation Facilities (CORFs)
  • Hospital outpatient departments (Type of bill: 12X or 13X)

[Source: CMS, therapy cap FAQ.]

Therapy caps have always had a vastly disproportionate impact on skilled nursing facilities (SNFs), whose high-acuity residents often need extensive or long-term therapy services. Acute-care hospitals have never shared the same impact issues as long-term care, and starting in 2014, therapy caps will no longer apply to critical-care hospitals that perform therapy services within their own outpatient settings, notes APTA.

SNFs often carry the largest therapy-based burden in the LTC community, as they regularly provide therapy services for residents recovering from stroke, joint replacements and heart attacks. But it’s the longer-term and permanent-care conditions—residents with brain injuries, ongoing paralysis or degenerative illnesses such as Multiple Sclerosis or Parkinson’s disease—that further complicate the long-term care billing process (the KX billing modifier) and the financial bottom line, an especially frustrating situation when Congress currently has an annual chance to revoke the “exceptions clause,” if it wishes.


Or, maybe not. Plenty of questions have arisen lately on how the Medicare Advantage plans will handle the idea of therapy caps for their own beneficiaries in the future. To date, most Medicare Advantage plans have not implemented therapy caps, but that could change down the road, warns APTA.

As long-term care negotiates the ongoing therapy billing road, SNFs, assisted living facilities and other care communities that have eagerly opened their doors to embrace greater occupational and physical therapy services opportunities surely need to stay tuned to congressional movements on the therapy cap issue for 2014 and beyond.

For more information, read the Centers for Medicare & Medicaid Services publication on 2013 therapy caps.

Topics: Accountable Care Organizations (ACOs) , Advocacy , Articles , Executive Leadership , Medicare/Medicaid , Regulatory Compliance