You’re Late; You’re Late, For a Very Important Date: Therapy Caps and Manual Medical Review of Therapy Claims

on Tuesday, 25 September 2012. All News Items | Outpatient Services | Billing

If your hospital has not already addressed processes to deal with the application of the therapy caps to hospital outpatient therapy services and the manual medical review of therapy services exceeding the threshold, then you are running a little late. Both of these new requirements go into effect October 1, 2012 (a week from tomorrow). So if you still have work to do, here are some key points to remember about the changes and some valuable resources for more detailed information.
Therapy Caps
  • The therapy cap amount for 2012 is $1880 for occupational therapy (OT) and $1880 for physical therapy (PT) and speech language pathology (SLP) therapy combined.
  • A patient’s therapy amount for 2012 includes all therapy services (including services provided in an outpatient hospital setting) from January 1, 2012 forward.
  • The therapy cap applies to outpatient hospital therapy services from October 1, 2012 through December 31, 2012 (could be extended by Congressional action).
  • Providers may bill for medically necessary services beyond the cap amount by appending the KX modifier to the service on the claim.
  • A patient’s therapy amount year-to-date can be viewed on the Medicare ELGA or HETS systems (will include hospital outpatient amounts beginning October 1, 2012).
  • All rehabilitation therapy services should be reasonable and necessary for the patient’s condition, should require the skills of a therapist, and there should be a reasonable expectation that the patient will show improvement in a reasonable amount of time.
  • It is very important to recognize that most conditions would not ordinarily result in services exceeding the cap. Use the KX modifier only in cases where the condition of the individual patient is such that services are APPROPRIATELY provided in an episode that exceeds the cap. Routine use of the KX modifier for all patients with these conditions will likely show up on data analysis as aberrant and invite inquiry. Be sure that documentation is sufficiently detailed to support the use of the modifier.
  • If a claim for services beyond the therapy cap amount is submitted without the KX modifier, those services will be denied and are the financial responsibility of the patient.
Manual Medical Review of Therapy Services
  • When therapy services exceed $3,700 (OT or PT/SLP combined), they are subject to manual medical review by your Medicare contractor.
  • Medicare is phasing in this process over the remainder of the year with Phase One providers starting October 1, 2012; Phase Two providers starting November 1, 2012; and Phase Three providers starting December 1, 2012. (Providers can determine what phase they are in at this website.)
  • Medicare is allowing an exception process for providers to obtain pre-approval of therapy services beyond the threshold in 20 day increments.
  • Requests for exceptions will be manually medically reviewed. Providers will have to submit documentation to support their requests, such as orders, plan of care, and any other supporting documentation.
  • If a claim for services beyond the therapy threshold amount and after your Phase implementation date is submitted without a pre-approved exception, the claim will be subject to pre-payment review.
  • Each Medicare Administrative Contractor (MAC) has provided instructions on their websites about the review process, including forms to request an exception.
Resources for More Information
  • First, we would like to encourage our clients to use our website at to access articles on the therapy caps/manual review. This is our third article on this subject and all of these articles are on our website – just use the subject search function with subject “therapy”.
  • Second, we would like to point out CMS’s Special Open Door Forum that included a presentation on therapy requirements and documentation required to support the services provided. Unfortunately, the audio and transcript of the ODF is not yet available on the website, but should be soon. The slides from the presentation can be viewed here and they are an excellent resource for understanding the documentation and requirements for rehabilitative therapy services.
  • Other CMS resources include the Therapy Services webpage, which includes links to the Medicare Manual sections that address rehabilitation therapy services and the Medical Review - Therapy Caps webpage which has downloads for a fact sheet and Q&A document. Also there is a recent transmittal on the Medical Review process (MLN Matters Article MM 8036).
Finally, as mentioned above, the MACs have published instructions on their websites for the manual medical review process and some are holding educational webinars. Be sure to check the website of your regional MAC for more information: Cahaba website, Palmetto website, and Novitas website.

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