The Medicare therapy caps have been the subject of many changes over the past couple of years, and several of those changes were set to expire on December 31, 2012. However, due to the passage of the American Taxpayer Relief Act of 2012 (the “Act”), some of the changes will be extended until the end of 2013. The Act also provides that the therapy caps now apply to outpatient therapy services furnished at a critical access hospital (“CAH”) and further reduces payments for multiple therapy services provided during the same day. This article summarizes the changes to the therapy caps made by the Act. For additional information regarding the Medicare therapy caps and the exceptions processes, please see our prior article, which is available here.
Summary of Changes
Summary of Therapy Caps. Medicare has two separate therapy caps, one for outpatient physical therapy and speech-language pathology services (i.e., a combined therapy cap for these services), and a second for outpatient occupational therapy services. The therapy caps are applied on a per beneficiary, per calendar year basis and increased to $1,900 for 2013 from $1,880 in 2012.
Exception Processes. Therapy services above $1,900 are subject to the automatic exception process. Once therapy services exceed $3,700 for a beneficiary during a calendar year, services are subject to the manual review exception process. Both the automatic exception process and the manual review exception process were set to expire on December 31, 2012 but were extended until December 31, 2013 by the Act.
Application of Therapy Caps to Hospitals – Including CAHs. The Act also extends the requirement that the therapy caps apply to services furnished to a hospital outpatient until December 31, 2013. Prior to the Act, outpatient hospital therapy services would not have counted toward the therapy caps beginning on January 1, 2013.
In a somewhat unexpected development, the Act subjects outpatient therapy services furnished at CAHs to the therapy caps. CAHs are typically reimbursed 101% of their reasonable costs. However, for purposes of applying the therapy caps, the Centers for Medicare and Medicaid Services (“CMS”) will apply the amount that would be paid under the Medicare Physician Fee Schedule toward the therapy caps. The requirement that outpatient services furnished at a CAH be subject to the therapy caps is set to expire on December 31, 2013. In other words, unless changed, beginning January 1, 2014, therapy services provided to an outpatient in a hospital or CAH will not count toward the therapy caps.
Reduction in Payment for Multiple Procedures. Prior to the Act, CMS applied a reduction to the Practice Expense component of payment for the second and subsequent therapy services provided on the same day of 20% if furnished in an office or other non-institutional setting and 25% if furnished in an institutional setting. The payment reduction is applied to all therapy services furnished on the same date of service by the same practitioner or facility, regardless of whether those therapy services were furnished in separate sessions.
Beginning on April 1, 2013, CMS will apply a 50% payment reduction (instead of 20% for professional claims or 25% for institutional claims) to the Practice Expense payment component for the second and subsequent therapy services during the same date of service. This reduction applies equally to therapy services furnished in the institutional and non-institutional settings.
Practical Takeaways
- Congress extended the automatic exception and manual review exception processes through the end of 2013;
- The therapy caps will continue to apply to services provided by hospital outpatient departments during 2013;
- Beginning January 1, 2013, therapy services provided at a CAH will count towards the therapy caps; and
- Beginning April 1, 2013, CMS will apply a 50% reduction in the payment for the second and subsequent therapy services furnished to a patient during the same day.
Conclusion
Hospitals and CAHs should be aware of these changes to the therapy caps because therapy services provided to outpatients at a hospital or CAH will apply toward the therapy caps during 2013. In addition, all providers of therapy services must ensure that they meet the requirements of the applicable exceptions process if they provide services to a beneficiary that has exceeded his or her therapy cap during a calendar year.
If you have questions regarding this article, please contact Lori A. Wink at lwink@hallrender.com or 414-721-0456, Joseph R. Krause at jkrause@hallrender.com or 414-721-0906 or your regular Hall Render attorney.
