Capping Problems: More Than Just a Dollar Amount

Home Blog Capping Problems: More Than Just a Dollar Amount

As almost everyone in the rehabilitation industry is well aware, there was legislation enacted back in 1997, under the Balanced Budget Act, that placed an annual cap on rehabilitation services under Medicare.  While this legislation was intended to prevent organizations from taking advantage of the system, the harmful effect of denying patients the care they desperately need has more than overshadowed the “good” of that original intent. Therapy Cap Background The Balanced Budget Act was passed in 1997 and had a SGR (Sustainable Growth Rate) formula.  This was designed as a cost saving measure, but essentially created a hard cap on the amount of outpatient therapy services patients can obtain.  While Congress has attempted to address the flawed system, no long-term solutions have been implemented.  The therapy cap for 2015 for outpatient physical therapy and speech-language pathology services combined is $1,940 with a separate $1,940 cap for outpatient occupational therapy. Therapy Cap Grouping You may be asking yourself the following questions: Why are there separate caps? Why are they grouped that way?  As frustrating as it may be, the answer to those questions is more of matter of grammatical omission than an intended effect.  When the original legislation was written it read similarly to the following, “We propose a cap on outpatient occupational therapy, physical therapy and speech therapy.”  Had they placed a comma after physical therapy we would still have a therapy cap, but it would be three separate caps rather than two with physical therapy and speech therapy grouped together. Therapy Cap Exceptions While small in nature, there is a silver lining to this $1,940 cap.  In the 2014 congressional session, after recognizing the harmful ramifications of this legislation, they instituted two short-term exceptions processes.

  1. After a patient hits the $1,940 cap, the therapist can apply a KX modifier to the claim form to designate that continued care is medically necessary. However, it is difficult to find out when a patient is approaching that $1,940 threshold.
  2. Upon meeting or exceeding a cap of $3,700, a manual review process must be initiated.
Therapy Cap Providers The other caveat to this legislation is that it only applies to the following outpatient therapy settings: physical therapists in private practice, physician offices, skilled nursing facilities (Part B), rehabilitation agencies (or ORFs), comprehensive outpatient rehabilitation facilities (CORFs), outpatient hospital departments and critical access hospitals.  (There are many articles that explain the difference between Medicare Part A, B, C, and D, if you want to learn more.) Be sure to check back for our second post of the month that will go into more details on how this impacts you and your patients, and what you can do about it.  For any other questions feel free to email [email protected] or visit us online at