MLN Matters Number: SE0815
Related Change Request (CR) #: 5871
Related CR Release Date: N/A
Effective Date: N/A
Related CR Transmittal #: N/A
Implementation Date: N/A

Reminder that Exceptions to Therapy Caps are Restricted as of July 1, 2008

Provider Types Affected
Therapists and other suppliers or providers, who bill Medicare contractors (carriers, fiscal intermediaries (FI), or Medicare Administrative Contractors (A/B MAC) for outpatient therapy services for Medicare beneficiaries

Provider Action Needed
As stated in MLN Matters article, MM5871, exceptions to the $1810 outpatient therapy caps were allowed from January 1, 2008 to June 30, 2008 for medically necessary services that were appropriately billed with KX modifiers. On or after July 1, 2008, the exceptions to therapy caps are restricted to those medically necessary services billed by the outpatient departments of hospitals. Use of the KX modifier will not be effective on or after July 1, 2008.

If, on July 1, 2008, a cap has already been reached, a beneficiary who is not a resident in the Medicare certified part of a skilled nursing facility will be able to obtain medically necessary services that exceed the cap only when the services are billed by the outpatient department of a hospital. A beneficiary in the Medicare certified part of a skilled nursing facility is restricted by consolidated billing rules from coverage of services that are billed by a hospital.

You should make sure that your billing staff is aware that outpatient therapy caps apply to all services in calendar year 2008, with exceptions for medically necessary services in all settings on or prior to June 30, 2008 and with exceptions limited to the outpatient hospital setting after June 30, 2008. You might also want to refer to the updated Medicare Claims Processing Manual, Chapter 5 (Part B Outpatient Rehabilitation and CORF/OPT Services), Section 10.2 (The Financial Limitation), for the complete documentation of the outpatient therapy services exceptions clarifications. That chapter is available at http://www.cms.hhs.gov/manuals/downloads/clm104c05.pdf on the Centers for Medicare & Medicaid Services (CMS) Web site.
Background
The Balanced Budget Act of 1997 enacted financial limitations on outpatient physical therapy, occupational therapy, and speech-language pathology services in all settings except outpatient hospital services. The 2006 Deficit Reduction Act enacted further exceptions to the limits, and the Medicare, Medicaid, and SCHIP Extension Act of 2007 extended the cap exceptions process through June 30, 2008.

CR 5871 announced the dollar amount of outpatient therapy caps for 2008. Effective January 1, 2008, the financial limits on outpatient therapy services were $1,810 for combined physical therapy and speech-language pathology services; and $1,810 for occupational therapy services. Exceptions are allowed for medically necessary outpatient therapy services in all settings for services furnished on or before June 30, 2008. This article announces, and reminds providers, that exceptions are restricted for services furnished on or after July 1, 2008.

Additional Information
MM5871 is available at http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM5871.pdf on the CMS Web site.

If you have questions, contact your carrier, FI, or MAC at their toll-free number, which is available at http://www.cms.hhs.gov/MLNProducts/downloads/CallCenterTollNumDirectory.zip on the CMS Web site.

Disclaimer This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents.