Estimating Therapy Amounts for the Caps Process

on Wednesday, 05 September 2012. All News Items | Outpatient Services | Billing

A couple of weeks ago, we presented an article that reviewed the new requirements for therapy caps and therapy thresholds. In summary, the new requirements are that effective October 1, 2012, outpatient therapy caps ($1880 for occupational therapy and $1880 for physical therapy/speech language pathology therapy combined) will apply to therapy services provided in an outpatient hospital setting. The therapy amounts will include all therapy services provided from January 1, 2012 forward including services provided in hospital outpatient departments. Providers may request an exception to the caps by using modifier KX to indicate that services beyond the cap are reasonable and necessary and there is documentation of medical necessity in the patient’s medical record. Also, services exceeding a threshold amount of $3,700 will require manual medical review for approval. If you missed that article, you can find it on our website at
This week, we would like to address a practical aspect of the new requirements – estimating therapy amounts.
First, let’s consider that providers will not be able to determine where their patients are in their paid therapy amounts until October 1, 2012. Amounts for therapy provided in an outpatient hospital will not be added to the patient’s totals in the Medicare systems (ELGA and HETS) until that date. Also consider that therapy services are repetitive Part B services, meaning they are billed monthly or at the conclusion of treatment. Therefore, therapy amounts will update for a month’s worth of therapy services at a time.
So, how can you estimate a patient’s therapy spending in advance? Therapy services provided in an outpatient hospital setting are paid under the Medicare Physician Fee Schedule (MPFS). Medicare generally pays 80% and the patient’s co-pay is 20% of the amount listed in the fee schedule. There is also a Multiple Procedure Payment Reduction (MPPR) for the second and subsequent therapy services when more than one of certain therapy services is furnished in a single session. For example, here are the Alabama 2012 MPFS amounts for some common therapy services:
HCPCSShort DescriptionFacility AmtFacility Therapy Reduction Amt
97110 Therapeutic exercise $28.63 $25.34
97112 Neuro re-ed $29.82 $26.24
97113 Aquatic therapy $37.55 $31.95
97116 Gait training $25.43 $22.52
97140 Manual therapy $26.75 $23.76
97530 Therapeutic activity $31.28 $27.24
97597 Debridement, first 20 sq cm $22.35 N/A
97598 Debridement, addtl 20 sq cm $10.45 N/A
92507 Speech treatment $70.18 $63.98
97532 Cognitive training $24.10 N/A

Using this table, let’s estimate an amount for a particular scenario. Patient receives physical therapy 2 times a week for four weeks. The first two weeks each session includes 30 minutes of therapeutic exercise and 15 minutes of neuromuscular re-education. The last two weeks, sessions include 15 minutes therapeutic ex and 15 minutes therapeutic activity.

Session (First 2 weeks)

  • Ther ex, first 15 minutes $28.63
  • Ther ex, addtl 15 min $25.34
  • NMR, addtl 15 min $26.24
  • Total $80.21
  • 2 sessions/wk for 2 wks $320.84

Session (Final 2 weeks)

  • Ther ex, first 15 minutes $28.63
  • Ther act, addtl 15 min $27.24
  • Total $55.87
  • 2 sessions/wk for 2 wks $223.48

Total for 4 weeks of therapy $544.32

An easier way to estimate is to use an approximate average of $27.00 per 15 minutes for most physical therapy services. Using this method, we are providing 20 units of therapy for the four weeks (3 units per 2 sessions/2 weeks and 2 units per 2 sessions/2 weeks). This gives an estimate of $540 for the four weeks. At this rate, this patient would reach the therapy cap in about 3 ½ months if no other therapy services were provided.

But if this patient had already received $1400 of therapy in 2012 prior to the month for which you are providing these services, your therapy amount of approximately $540 will push the patient over their $1880 therapy cap. You would need to add the KX modifier to all the therapy services on the claim to which the limitation was about to be exceeded if those services meet the requirements for use of the KX modifier (medically necessary and reasonable services with supporting documentation).

Hospital outpatient therapy providers need to be cognizant of where their patients are in their therapy amounts before billing for therapy services provided after October 1, 2012. You will also need to establish processes within your organization for checking the therapy cap amounts, determining where the patient stands with the addition of the services you are providing, and adding the appropriate modifiers when applicable. Currently, these requirements are only in effect for outpatient hospital services from October 1, 2012 through December 31, 2012. There will have to be further actions by Congress to extend the application of the therapy caps to outpatient hospital services, to extend the therapy exceptions process, and to extend the manual review process for services exceeding the threshold amount. MMP, Inc. will do our best to keep you updated on new and changing regulations, but we also encourage all therapy providers to watch for upcoming regulations from Washington.

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