Early last month, Congress enacted the American Taxpayer Relief Act of 2012 (the “Act”). The Act made certain changes to the Medicare therapy caps that included services provided in critical access hospitals (“CAHs”) being subject to the caps. CMS’s position on how it is going to apply this provision has recently been revised, with CAHs benefiting from the revision. This article updates and revises our previous article on changes made by the Act to the Medicare therapy caps, which is available here.
Summary of Revised Policy
When asked, the Centers for Medicare and Medicaid Services (“CMS”) originally stated that the therapy caps would apply to CAHs in two ways. First, services provided in CAHs would be applied toward the therapy cap using the Medicare Physician Fee Schedule amount as a proxy. Second, and more importantly for CAHs, payment for therapy services provided in a CAH would be subject to the therapy cap.
We understand that CMS received a barrage of comments regarding its stated position on the therapy caps applying to CAH services. Many, if not most, of these comments were concerning whether the therapy caps should apply to therapy services provided at CAHs. The Act did not clearly state that the therapy caps would apply in the CAH setting, and CMS’s position was challenged. Additionally, CMS has stated that it had given out conflicting comments regarding the application of therapy caps services provided in a CAH.
CMS has considered the comments from the provider community and has, we believe, finalized its implementation strategy with regards to outpatient therapy services provided at a CAH. Specifically, CMS has now stated that for outpatient therapy services provided at a CAH:
- Services provided in a CAH will be applied toward the beneficiary’s therapy cap using the Medicare Physician Fee Schedule amount as a proxy.
- Payment for therapy services provided in a CAH outpatient department will not be subject to therapy caps.
In other words, if a beneficiary receives therapy services in a CAH, those services will be applied to the therapy cap for services provided in locations subject to the cap, which include hospital outpatient departments paid under OPPS, physician offices and private practices, skilled nursing facilities paid under Medicare Part B, home health agencies, outpatient rehabilitation facilities and comprehensive outpatient rehabilitation facilities. The CAH services will be applied to the cap based on the amount that would have been paid under the Medicare Physician Fee Schedule. However, therapy services provided in a CAH will not be subject to any payment limitation based on the therapy cap. We understand that CMS will work with Medicare Administrative Contractors to put systems in place to avoid denials and mandatory medical review for outpatient therapy services provided at CAHs that exceed the therapy caps (for example, by automatically appending the KX modifier so the therapy services are not subject to the payment limitations).
Conclusion and Practical Takeaways
Given CMS’s revised position and/or conflicting comments, we recommend that providers carefully review proposed regulations, if issued. However, CMS has been addressing the therapy caps through Program Memorandum or other sub-regulatory guidance. So, there may not be an opportunity for comment, but at a minimum, providers should understand how the therapy cap is being calculated and which providers are subject to the cap.
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.
