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Hot Topics: Understanding the Medicare Therapy Threshold & Therapy Cap Repeal

What is the Medicare therapy cap?

Medicare Part B helps pay for medically necessary outpatient physical therapy, occupational therapy and speech language pathology services. Until 2018 there were annual limits on Medicare allowed payment for therapy services known as the "Therapy Cap".

What are the Medicare therapy threshold limits for 2019?

In 2018, the Therapy Cap was rescinded, but CMS left regulations in place requiring therapists to apply a special "KX modifier" on all claims when the Medicare allowed charges reach certain arbitrary limits known as therapy thresholds. In 2019 those limits are:

  • $2,040 for physical therapy (PT) and speech-language pathology (SLP) services combined
  • $2,040 for occupational therapy (OT) services
In addition, services exceeding $3,000 annually for PT and SLP services combined, or OT services may be subject to additional review.

Read our recent blog for information about the CMS proposed rule for 2020.

Medicare webinar playing on smart phone
Learn more about 2018 Medicare updates. Watch our Medicare update webinar with compliance expert, Nancy Beckley.

Is there an exception process for 2019?

No. As of January 1, 2018 there is no exception process and you can no longer use a KX modifier for medically necessary services that exceed the cap.

Without a therapy cap exception process, what does this mean?

This means that CMS will deny payment of any claims that exceed the $2040 therapy threshold and Medicare beneficiaries will be responsible for payment of any claims that exceed the therapy threshold.

Is there a manual medical review process in 2019?

No. The manual medical review process for claims that exceed $3700 expired on December 31, 2017. There is now a targeted review process instead.

What should you do if your patient reaches the 2019 Medicare therapy threshold?

You should issue an ABN for patients reaching the cap following the ABN instructions.

Does the therapy threshold apply to all outpatient settings?

When there is not an exceptions process in place the therapy threshold applies to all outpatient setting with the exception of hospitals.

How does Clinicient help therapists manage Medicare compliance and the therapy cap?

Clinicient's therapy-specific EMR and billing system can help ease compliance to Medicare regulations and track the therapy threshold. Among the many features that support Medicare compliance are:

  • Single system for EMR and billing
  • Therapy-specific chart templates
  • Workflow prompts, alerts and notifications
  • Goal tracking and process reporting
  • Pre-audit at visit sign off