Shelly Mesure, MS, OTR/L

Are the therapy caps back? Well, sort of. Here’s a quick summary of the current regulations that were recently passed and how they affect you:

* The Middle Class Tax Relief and Job Creation Act of 2012 (H.R. 3630) extended the exceptions process through December 31, 2012; reiterated mandatory use of the KX modifier for claims that go above the cap;

* expanded the therapy cap to cover hospital outpatient departments (HOPDs) as of Oct. 1, 2012;

* called for a manual medical review of claims over $3,700;

* set in place rules for collection of functional data beginning in 2013.

So what does all of this mean? Well, let’s start with the first item. The exceptions process that requires use of the KX modifier was extended from expiring Feb. 29, 2012, to expiring on Dec. 31, 2012.  The cap rate for this year is $1,880. This is nothing new, but we were worried we wouldn’t get the exceptions process extended for the full year.

The second item, expanding the cap to include HOPDs, is pretty significant. It has multiple implications for the hospitals, local outpatient clinics and the patients. The positives (or negatives, depending on where you work), is that HOPDs no longer have a marketing advantage by being exempt from the caps.

If you have a “free-standing” outpatient clinic, you may have lost business to the HOPDs because of the cap exemptions. Now, that is no longer the case and everyone is on an even playing field. The negative, however, is to the patient. My grandmother lives independently in her own home. On occasion, throughout the years, she’s required outpatient physical therapy. If she didn’t meet the exceptions process criteria, she would be subject to the cap limits. If she chose the HOPDs as her outpatient clinic of choice, she wouldn’t have to worry about the caps.

My grandmother was given this advice because I am her granddaughter, but to the typical Medicare recipient, this process was very confusing. Well, avoiding the caps is no longer an option, and HOPDs must now compete with all outpatient facilities.

The next item calls for an automatic manual review of the medical records for any patients billing above a limit of $3,700. Is this our new cap? It strengthens the argument that we must always be providing excellent documentation.

These manual reviews of the medical records will be conducted through our fiscal intermediaries and they will be looking for “lack of medical necessity” in all of our notes. If you’ve been postponing that documentation in-service or training, you should sign up for it — yesterday.

Lastly, the final item talks about a process of collecting functional data in 2013. Performance-based and patient outcomes have been in our conversations for years. Requiring this information as part of the regulations implies that reimbursement of claims may be linked to this data. It could be a very positive direction to move toward, but I would worry that CMS would deny payment if patients don’t meet a certain level of functional outcomes. This one we’ll have to wait and see.

In the meantime, always make sure you’re providing strong documentation and good clinical care and have your business office notified of the coding and modifier updates. These are crazy times we live in, and the craziness just continues to come more frequently.


Shelly Mesure (“Measure”), MS, OTR/L, is the president and owner of A Mesured Solution Inc., a rehabilitation management consultancy with clients nationwide. A former corporate and program director for major long-term care providers, she is a much sought after speaker and writer on therapy and reimbursement issues.