What's Going On with the 2018 Therapy Cap?

Update: The therapy cap has been repealed as of February 9, 2018. Scroll to the last section of this post for details.

Nowadays, you might be tempted to tune out, turn off, and log out at the mere mention of anything political. And considering the current climate within our legislative system, I certainly wouldn’t fault you for wanting to avoid the chaos. However, putting on the blinders could prevent you from learning crucial information. After all, the healthcare industry is deeply tied to American politics.

This past month, rehab therapists found themselves caught in the middle of the melodrama playing out in Washington, DC: at the end of 2017, Congress failed to pass legislation that would ensure the continuation of the therapy cap exceptions process—meaning PTs, OTs, and SLPs entered the new year unable to use of the KX modifier. Thus, for the first time since the therapy cap was introduced, a hard cap went into effect for 2018, putting immense pressure on therapists who treat Medicare patients. Fortunately, the year is still young enough that most patients haven’t met the $2,010 cap. However, if Congress doesn’t act fast, there’s going to be a lot of uncertainty among rehab therapists—and a lot of patients left without coverage for therapy services.

So, what’s going on with the 2018 therapy cap anyway? And what are providers supposed to do when patients exceed the cap? You might be asking yourself these questions—and several others—if you haven’t been following the therapy cap saga closely. Fortunately, CMS and APTA haven’t left providers out in the cold. Here’s everything you need to know about the therapy cap in 2018:

What happened in December?

As we mentioned in our post covering the 2018 final rule, the terms of the exceptions process were set to expire on December 31, 2017, as were the terms of the manual medical review process. This wasn’t exactly breaking news at the time; after all, Congress has always voted to extend the exceptions process, thus barring the enforcement of a true cap. But, as you may remember, Congress was a bit tied up in the final weeks of 2017, and the vote to extend the exceptions process was postponed until January 2018.

Wasn’t the therapy cap going away?

Yes—well, almost yes. As APTA notes in this article, lawmakers reached a bipartisan, bicameral deal last fall that would’ve completely eliminated the cap on therapy services in favor of a targeted claims review process (much like the manual medical review process implemented in 2015 for claims exceeding the $3,700 threshold). Originally, this deal was going to be included in a much larger Medicare omnibus ruling. Unfortunately, congressional conflict over the December 2017 tax bill—among other things—took focus away from less pressing issues, thus delaying further action.

What should therapists do with 2018 claims that go over the $2,010 cap?

This one is a little tricky, and the answer depends on what providers and practice billers feel is the best course of action for their own revenue cycle management processes.

Option 1: Use an Advance Beneficiary Notice of Noncoverage

In its responses to comments on this FAQ, APTA advised providers to:

• issue an Advance Beneficiary Notice of Noncoverage (ABN) before furnishing any services that exceed a patient’s therapy cap,
• affix the GA modifier to claims expected to exceed the cap,
• anticipate that Medicare will deny the service for lack of medical necessity, and finally,
• bill the patient directly—or bill the patient’s secondary insurance if the adjustment amount is identified with a PR group code. (Make sure that the patient has completed the secondary insurer’s coordination of benefits form.)

Option 2: Apply the KX Modifier

Technically, obtaining an ABN and applying the GA modifier is the correct way to submit claims exceeding $2,010 based on the current law. However, if the KX modifier is reinstated retroactively—as CMS anticipates—GA modifier use could cause issues for providers who choose to resubmit those claims. That’s why CMS recommends that therapists apply the KX modifier to claims exceeding the cap and submit them as usual. If your practice chooses this course of action, do not issue an ABN to patients who go over the cap, as this could be considered unethical.

Option 3: Hold Claims Until Legislation is Passed

Your other option would be to hold any claims for dates of service in 2018 that would exceed the therapy cap and submit them after Congress takes action to remove the hard cap. However, there’s no guarantee that Congress will (1) take action and (2) apply any retroactive fix to claims dated prior to the passage of therapy cap exceptions legislation.

What is CMS doing with unprocessed claims that exceed the therapy cap?

On January 1, 2018, with no legislation to ensure the continuation of the exceptions process, CMS began holding any claims with a “date of receipt” occurring between January 1 and January 10 that contained the KX modifier. (CMS paid any claims that did not have the KX modifier as long as they did not exceed the cap, but denied claims that went above the $2,010 limit and did not have the KX modifier.) The language from CMS is a little vague, but it seems to imply that any claims received by CMS between January 1 and January 10—including claims for dates of service in 2017—that contained the KX modifier were held. Then, as of January 25, CMS began processing the held claims it received between January 1 and January 10.

As for any claims received after January 10, CMS began processing these as of January 31. Going forward, Medicare is processing any claims received after January 10 on a 20-day rolling hold. (For example, if Medicare received a claim on January 20, it’ll process the claim on February 9, and if Medicare received a claim on February 9, it’ll process the claim on March 1—barring any sort of legislative changes that occur before that time.)

What happens if Congress fails to pass legislation?

Right now, that isn’t totally clear. However, APTA and its partners in the Repeal the Therapy Cap Coalition continue to pressure Congress to include a proposal for permanently repealing the therapy cap in the next congressional budget deal—which Congress must pass by February 8 in order to avoid another government shutdown. However, with many pressing—and controversial—issues still at stake, it’s hard to know if Congress will prioritize a therapy cap solution. Still, APTA remains optimistic.

So, the epic saga continues. And while CMS and APTA have been doing their best to keep therapists in the loop, we’ll have to continue keeping our ears to the ground. But, that doesn’t mean providers have to sit idly by. Now more than ever, rehab therapists must make their voices heard. Contact your representatives via email, phone, and social media to let them know that PTs, OTs, and SLPs need a permanent therapy cap solution ASAP. With so many legislative items on the docket, it’s easy for some things to get brushed aside. But, as a rehab therapist, you simply can’t afford to be brushed aside any longer, and neither can your patients.

Update: The therapy cap has been repealed!

As of February 9, 2018, the Medicare therapy cap is no more. In the early hours of the morning, the Senate voted in favor of a stopgap spending bill that includes language that permanently repeals Medicare’s $2,010 hard cap on therapy services. This change is effective for all claims occurring on or after January 1, 2018.

However, providers may not notice any significant changes on the billing end compared to previous years. Therapists must still track total claim amounts for Medicare beneficiaries and apply the KX modifier to claims exceeding the $2,010 threshold. Additionally, the targeted review process will now apply to therapy claims exceeding $3,000 for each individual patient—instead of $3,700, as was the case in previous years.

The new law also changes reimbursement for services provided by physical therapist assistants and occupational therapy assistants. Starting January 1, 2022, services furnished by PTAs and OTAs will be reimbursed at 85% of the usual rate. This measure theoretically offsets the extra expenditures associated with the cap repeal. The law also includes changes affecting home health services, including the establishment of a 30-day episode for payment.

To read a breakdown of the entire bill, check out this resource from the House Committee on Rules.