Shelly Mesure, MS, OTR/L

Here it comes again! The Oct 1, 2012, federal regulatory changes will not only impact reimbursement but new reporting requirements also will multiply denials for skilled nursing providers across the country.

Understanding current policy from federal, state, and local regulators is a critical aspect of healthcare operations. Policies are constantly changing from every angle, and facilities often use cross-subsidization as an essential business strategy.

Cross-subsidization is an industry term that involves seeking revenue sources from non-Medicaid sources. As Medicaid funding continues to face a mountain of challenges, it’s clear that decreasing costs while also increasing reimbursements from Medicare Parts A and B, as well as insurance companies, becomes a key element in every facility.

Policy changes

The Centers for Medicare & Medicaid Services is constantly changing the game. Facilities without the proper tools and resources are already falling below the line in standards of care, as well as, reimbursement. A strong rehabilitation department not only can, but WILL make the biggest difference for any facility.

On Monday, Phase 1 of enacting the Financial Limitation for Outpatient Therapy Services – Section 3005 of the Middle Class Tax Relief and Job Creation Act of 2012 began. Through this new policy, any providers billing therapy services through Medicare Part B will be considered outpatient therapy services. This includes long-term care facilities, outpatient clinics, and HOPDs (hospital-based outpatient clinics) previously exempt from the therapy caps.

As the therapy caps remain in place, physical therapy and speech therapy will continue to share the cap allowance, while occupational therapy remains separate. The same will apply for implementing the new CMS policies. Under the new policy, a provider must request approval through a manual medical review by the fiscal intermediary for any PT/ST or OT services exceeding $3,700 for the calendar year. CMS has issued letters notifying providers of their “phase.”

Phase 1 providers began following the new regulations on Monday; Phase 2 begins Nov. 1; Phase 3 begins Dec. 1. The caps will reset on Jan. 1, 2013, and all providers will begin the process over again.

This new policy is an add-on to the current policies requiring patients to meet automatic exceptions, utilizing KX modifiers and adhering to the annual therapy caps.

Another key factor of the Middle Class Tax Relief and Job Creation Act of 2012 was the law mandating the collection of functional data on outpatient therapy claims beginning Jan. 1, 2013. Consequently, CMS’s calendar year 2013 Medicare Physician Fee Schedule Proposed Rule is a plan to collect additional data on therapy claims related to patient function during the course of therapy.

While this policy is currently under debate, final ruling is expected on or around Nov. 1. The preliminary reports suggest new “G-codes” to indicate the functional status; combined with new “X” modifiers to indicate the level of progress. In addition, CMS has recommended the reports to be submitted once every 10 visits or 30 days, whichever time period is shorter.

CMS officials have directly stated their plans are to use this information to ultimately reform the payment system for outpatient therapy. Preparing for these changes is critical to ensure strong clinical practice for the long-term resident.

Shelly Mesure <>  (“Measure”), MS, OTR/L, is the senior vice president of Orchestrall Rehab Solutions 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.