The Physical Therapist’s Guide to Therapy Cap

The therapy cap was introduced as part of the Balanced Budget Act (BBA) of 1997. The hard cap is now replaced by the soft cap (or the annual threshold). The threshold for the year 2021 is $2110 for PT(Physiotherapy) and SLP (Speech-Language Pathology) services combined, and $2110 for OT (Occupational Therapy) services. This threshold value is set annually by the Medicare Economic Index (MEI). All the diagnoses that the patient undergoes within the benefit period correspond to the same threshold.

The annual threshold does not intend to prevent Medicare patients from obtaining medically necessary care. It applies to all Medicare Part B outpatient therapy services provided at different facility types. They include private practices, physician offices, skilled nursing facilities, outpatient rehabilitation facilities (ORF), comprehensive outpatient rehabilitation facilities (CORF), home health agencies, critical access hospitals, hospital outpatient departments (HOPD), and outpatient hospitals.

The Physical Therapist Guide to Therapy Cap

The recent changes in the therapy cap help the physical therapists to continue providing medical services to their patients (if necessary) even if the cost exceeds the annual threshold. This is possible due to the automatic exceptions process.

Automatic exception process: KX modifiers are the therapist’s attestation and confirmation justifying continued treatment as per medical records. No additional documentation is required. In cases where the therapy history is not available with the patient, providers can request it from CMS. Automatic exceptions are applicable for all claims beyond the threshold amount up to a maximum of $3,000. The KX modifier should be affixed considering the following factors:

• The patient’s past and current condition, diagnosis, complexities, and severity in treatment.
• Type of services provided, its frequency, and duration.

Without the KX modifier, CMS will deny payments on claims exceeding the threshold. Claims beyond this amount are subject to a targeted medical review.

Targeted medical review: The targeted medical review threshold for PT and SLP services is $3,000 above the standard threshold, and the same applies to OT services. This value is constant for the years 2018-2028 and will be annually indexed by MEI afterward.

The review process is conducted by CMS-appointed supplemental medical review contractors (SMRC). Their goal is to lower improper payment rates and increase the CMS program efficiency. Not all claims that exceed the threshold amount are subject to this review. A medical billing services firm can help you understand the intricate details, in case you need any help.

The selection of claims for targeted medical review is based on the following factors:

• High claims denial percentage.
• Non-compliance to requirements.
• Aberrant billing, billing unconvincing units on the same day.
• Treatment targeted to specific medical conditions.
• Newly appointed providers without prior record of therapy services, and those belonging to groups that contain other providers who meet the criteria specified above.

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