South Florida Hospital News
Monday May 25, 2020
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June 2006 - Volume 2 - Issue 12

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Medicare and Medicaid Financial Limitations (Caps) on Outpatient Therapy Assuring Outpatient Therapy Services in an Environment of Scarce Government Support

The Balanced Budget Act of 1997 requires the Centers for Medicare and Medicaid Services (CMS) to impose financial limitations (caps) on outpatient physical, speech-language and occupational therapy services by all providers except hospital outpatient departments. It mandates a combined cap for physical therapy and speech-language pathology, and a separate cap for occupational therapy. The caps were set - on January 1, 2006 via a CMS memorandum - at $1,740 for physical therapy and speech-language pathology combined and at $1,740 for occupational therapy. The Deficit Reduction Act of 2005 (DRA) - signed into law on February 8, 2006 with an effective date of January 1, 2006 - directs CMS to allow for exceptions to therapy caps when therapy services are medically necessary. It instructs CMS to make a decision about an exception request within 10 days or, otherwise, the services will be automatically considered medically necessary. Subsequently, CMS has outlined, in a February 2006 memo, an exception process that allows for automatic and manual exceptions.

Automatic exceptions are allowed without a written request and are for specifically identified conditions, diagnoses or circumstances. To qualify for an automatic cap exception, the beneficiary’s additional treatment must be related to one of the diagnoses listed in the attachment to CMS’ memo. It also must have a direct and significant impact on the currently-provided course of therapy and be deemed medically necessary.

Among the circumstances that justify an automatic exception the therapy cap are complex conditions that medically necessitate uninterrupted services of skilled therapy. These may include, among others, a discharge from a hospital or skilled nursing facility (SNF) within 30 treatment days from starting the currently-provided course of outpatient therapy; a musculoskeletal condition that is not qualified for an automatic exception that, nonetheless, has a direct and significant impact on the overall rate of recovery; or when physical therapy (PT) and speech-language pathology (SLP) services are required concurrently. Manual exceptions require submission of a written request by the beneficiary or the provider and a medical review by a CMS contractor/representative. The manual exception request, faxed or mailed in, may ask for up to 15 treatment days beyond the cap where a treatment day is a day in which one or more therapy services are provided. It is submitted for a condition that does not qualify for automatic exception, but are believed to require medically necessary services that may exceed the cap. It is also to be submitted prior to the date when the cap may be exceeded and in a manner that prevents or minimizes, in case of a denial, the risk of service interruption or unnecessary expenditure. The request needs to include supporting documents justifying the request. CMS contractor/representative will determine whether to approve or deny the request, based on medical necessity, within 10 business days. In case of an approval, a determination will also be made regarding the number of approved days.

When services are qualified for a cap exception, either automatic or manual, a special modifier (KX) is added to each lines of the claim that claims a service that exceeds the caps. Should the KX modifier be used inappropriately the matter may be handled like other matters of providing inaccurate information on a claim.

Ofer Amit is a partner and Chief Executive Officer of RehabXperience, LLC, an outpatient physical therapy center in Sunrise, Florida. He can be reached at (954) 741-2221.
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