Glossary of Legislative Terms & Issues
A - Z
Accountable Care Organization (ACO)
Administrative Procedure Act (APA)
Affordable Care Act (ACA)
Bundled Payments
Capitation
Centers for Medicare and Medicaid Services (CMS)
Disability and Rehabilitation Research Coalition (DRRC)
Disproportionate Share Hospital Payments (DSH)
Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)
Government Accountability Office (GAO)
Health Care Financing Administration (HCFA)
Health Information Technology (HIT)
Health Information Technology for Economic and Clinical Health Act ( HITECH Act)
Healthcare Common Procedure Coding System (HCPCS)
KX Modifier
L-codes
Medicare Access to Rehabilitation Services Act (HR 1546/S 829)
Medicare Administrative Contractors (MACs)
Medicare Fee Schedule
Medicare Orthotics and Prosthetics Improvement Act of 2012
Medicare Payment Advisory Committee (MedPAC)
Multiple Chronic Conditions (MCC)
National Provider Identifier (NPI)
Multiple Procedure Payment Reduction (MPPR)
The National Quality Forum (NQF)
Obamacare
Office of Inspector General Work Plan
Patient Protection and Affordable Care Act (PPACA)
Physician Quality Reporting Initiative (PQRI)
Physician Quality Reporting System (PQRS)
Public Health Services Act
Sustainable Growth Rate (SGR)
Therapy Cap
Accountable Care Organization (ACO)
According to the Centers for Medicare and Medicaid Services (CMS) an ACO is "an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it."
In March 2011, the Department of Health and Human Services (HHS) released proposed new rules to help doctors, hospitals, and other providers better coordinate care for Medicare patients through ACOs. ACOs create incentives for health care providers to work together to treat an individual patient across care settings – including doctor’s offices, hospitals, and long-term care facilities. The ACO agrees to cover all the health needs of a minimum of 5,000 people for at least three years for Medicare beneficiaries. The Medicare Shared Savings Program will reward ACOs that lower growth in health care costs while meeting performance standards on quality of care. Patient and provider participation in an ACO is purely voluntary.
Administrative Procedure Act (APA)
The Administrative Procedure Act is the law under which federal agencies create rules and regulations necessary to implement and enforce major legislative acts. It requires agencies to post public notices and final rulings in the Federal Register. It requires agencies to provide opportunities for public comment. There are approximately 55 US government agencies operating under the APA including the FDA, EPA and healthcare and social assistance agencies.
Affordable Care Act (ACA)
The Affordable Care Act, also known as the Patient Protection and Affordable Care Act (PPACA), and informally as Obamacare, was signed into law by President Barack Obama on 23rd March, 2010. The aim of the Act is improving the health care system of the United States by widening health coverage to more Americans, as well as protecting existing health insurance policy holders.
Following is a summary of the main provisions of the law:
Individual mandate: Requirement that most Americans obtain health insurance or pay a fine, starting in 2014.
Young adult coverage: Dependent children can stay on parents' plan up to age 26.
Expanding coverage to retirees: Financial help for employment-based plans to continue to provide valuable coverage to people who retire between the ages of 55 and 65, as well as their spouses and dependents
First phase of consumer protections: Lifetime limits for insurance coverage are prohibited. Children cannot be denied coverage based on pre-existing conditions. It adds restrictions on annual coverage limits.
Providing Small Business Health Insurance Tax Credits: Up to 4 million small businesses are eligible for tax credits to help them provide insurance benefits to their workers
Rebuilding the Primary Care Workforce: New incentives in the law to expand the number of primary care doctors, nurses and physician assistants.
Medicare plan tax: An increase in the Medicare Part A tax rate by .9 percent, for those making over $200,000 ($250,000 for households), set to go into effect in 2013.
Offering Relief for 4 Million Seniors Who Hit the Medicare Prescription Drug “Donut Hole.” Each eligible senior will receive a one-time, tax free $250 rebate check.
Increasing Payments for Rural Health Care Providers: The law helps underserved communities by providing increased payment to rural health care providers to help them continue to serve their communities
Health insurance exchanges: The creation of state exchanges across the country where consumers can shop around for insurance plans, set to take effect in 2014.
Second phase of consumer protections: Guaranteed coverage regardless of health, and a prohibition on annual coverage limits.
Employer coverage mandate: Requirement that businesses with more than 50 workers offer coverage or pay a fine, set to take effect in 2014.
Tax credits: Tax credits and subsidies available to individuals making up to 400 percent of federal poverty line, for insurance coverage - set to take effect in 2014.
Medicaid expansion: Massive expansion of Medicaid set to go into effect in 2014. Roughly 16 million Americans were expected to be covered under this expansion. The court, however, reined in this provision by prohibiting the federal government from penalizing states that don't comply by withholding existing Medicaid funds -- it's unclear how this affects the expansion.
More information: http://www.healthcare.gov/law/timeline/full.html
Bundled Payments
The Bundled Payment initiative is a model for bundling payments from the Centers for Medicare & Medicaid Services (CMS) working in partnership with providers in its development. The Bundled Payments initiative is seeking applications for four broadly defined models of care, three of which would involve a retrospective bundled payment arrangement, with a target payment amount for an episode of care paid prospectively.
Under the Bundled Payments initiative, CMS combine payments for all services a patient received during an episode of care. For example, reimbursement for a wrist fracture requiring surgical intervention would include the radiology, surgical and therapy costs in one lump sum paid to the ‘team” of providers. The intent is to provide an incentive to deliver health care services more efficiently while improving quality of care. Providers will have flexibility to determine which episodes of care and which services would be bundled together.
In these models, CMS and providers would set a target payment amount for a defined episode. Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data. Participants in these models would be paid for their services under the Original Medicare fee-for-service (FFS) system, but at a negotiated discount.
At the end of the episode, the total payments would be compared with the target price. Participating providers may share the gains resulting from the more efficient redesigned care model.
More information: http://innovations.cms.gov/initiatives/bundled-payments/index.html
Capitation
Capitation is a health care reimbursement model in which the provider is paid a fixed amount per person regardless of the number or type of services the person requires. The physician, hospital or other health care provider is paid a contracted rate for each member assigned, regardless of services provided. These contracted rates are usually adjusted for factors such as age, illness, gender, etc.Under capitation, physicians are given incentives to consider the cost of treatment. Pure capitation pays a set fee per patient, regardless of their degree of infirmity, and gives physicians an incentive to avoid the most costly patients. Providers who work under these plans are expected to focus on preventive health care, as there is greater financial reward in prevention of illness than in treatment of the ill.
Centers for Medicare and Medicaid Services (CMS)
The Centers for Medicare & Medicaid Services (CMS) previously known as the Health Care Financing Administration (HCFA), is a federal agency that administers the Medicare program and works in partnership with state governments to administer Medicaid, the State Children's Health Insurance Program (SCHIP), and health insurance portability standards. In addition to these programs, CMS has other responsibilities, including the administrative simplification standards from the Health Insurance Portability and Accountability Act of 1996 (HIPAA), quality standards in long-term care facilities. Through its survey and certification process, and clinical laboratory quality standards CMS is responsible for making certain that its beneficiaries are aware of the services for which they are eligible, that services are accessible, and that they are provided in an effective and efficient manner.
Disability and Rehabilitation Research Coalition (DRRC)
Disability and Rehabilitation Research Coalition is a coalition of national non-profit organizations committed to improving the state of rehabilitation and disability. It aims to achieve its goal of improving the ability of Americans with disabilities to live and function as independently as possible by maximizing the return on the federal investment in research . The Coalition plays a leadership role in increasing and leveraging federal resources devoted to disability and rehabilitation research. It’s recommendations include increasing federal funding for research in various agencies and creating an Office of Disability and Health within the CDC, among other recommendations. The coalition submits recommendations to congress on actions to improve the lives of people with disabilities by enhancing the federal commitment to research in disability and rehabilitation.
More information: www.aapmr.org
Disproportionate Share Hospital Payments (DSH)
Disproportionate Share Hospital Payments are payments made to provide financial assistance to hospitals that serve a large number of low-income patients, such as people with Medicaid and the uninsured. Medicaid DSH payments are the largest source of federal funding for uncompensated hospital care. The payments aim to make up for the short fall for hospitals that treat patients with little or no funds to cover the costs of care. The majority of funds go to large hospitals in urban areas and to teaching hospitals.
See also: www.nhpf.org/library/the-basics/Basics_DSH_06-15-09.pdf
Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)
This is an act that was instituted by the Secretary of State as part of the Medicare Modernization Act and applies to the Suppliers of Durable Medical Equipment, Prosthetics, Orthotics and Supplies, hence the name DMEPOS. Suppliers of these items now must compete with competitive bidding and comply with quality standards to retain their supplier number and receive Medicare Part B payments. The contracts will be awarded based on demands of beneficiaries as well competition for lower payments versus the past fee payment schedule.
Government Accountability Office (GAO)
The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is part of the legislative branch of the United States government. The head of the GAO is responsible to "investigate, at the seat of government or elsewhere, all matters relating to the receipt, disbursement, and application of public funds, and shall make to the President ... and to Congress ... reports [and] recommendations looking to greater economy or efficiency in public expenditures"* According to GAO's current mission statement, the agency exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. Each year the GAO issues an audit report on the financial statements of the United States Government.
The Government Accountability Office has concluded through an independent study that the therapy caps are not meeting the needs of patients. The Study and Report on Outpatient Therapy Utilization by the Centers for Medicare and Medicaid Services (CMS) concluded that older patients require more therapy than what the cap allowed: “patients who are female, older, minorities, live in certain geographic regions, require the services of institutional providers and suffer from complex medical conditions are more likely to require more costly outpatient therapy services than the general outpatient therapy population.” http://www.gao.gov/new.items/d0659.pdf
*Budget and Accounting Act of 1921, Sec. 312(a), 42 Stat. 25
Health Information Technology (HIT)
Health information technology involves the exchange of health information in an electronic environment. Health Information Technology provides the framework to describe the comprehensive management of health information across computerized systems and its secure exchange between consumers, providers, government and quality entities, and insurers. Utilization of HIT is expected to:
- Improve health care quality;
- Prevent medical errors;
- Reduce health care costs;
- Increase administrative efficiencies
- Decrease paperwork; and
- Expand access to affordable care.
HIT is postulated to improve patient care, and bring public health benefits including:
- Early detection of infectious disease outbreaks around the country;
- Improved tracking of chronic disease management;
- Evaluation of health care based on value enabled by the collection of de-identified price and quality information that can be compared
More information: http://healthit.hhs.gov/
Health Information Technology for Economic and Clinical Health Act ( HITECH Act)
Health Information Technology for Economic and Clinical Health Act implements the provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 111-5) which provides incentive payments to eligible professionals (EPs), eligible hospitals and critical access hospitals (CAHs) participating in Medicare and Medicaid programs that adopt and successfully demonstrate meaningful use of certified electronic health record (EHR) technology. This final rule specifies the initial criteria EPs, eligible hospitals, and CAHs must meet in order to qualify for an incentive payment. It also specifies calculation of the incentive payment amounts, payment adjustments under Medicare for covered professional services and inpatient hospital services provided by EPs, eligible hospitals and CAHs failing to demonstrate meaningful use of certified EHR technology; and other program participation requirements. Also, the Office of the National Coordinator for Health Information Technology (ONC) will be issuing a closely related final rule that specifies the Secretary's adoption of an initial set of standards, implementation, specifications, and certification criteria for electronic health records. ONC has also issued a separate final rule on the establishment of certification programs for health information technology.
https://www.federalregister.gov/articles/2010/07/28/2010-17207/medicare-and-medicaid-programs-electronic-health-record-incentive-pro
The law does not include occupational or physical therapists in its definition of eligible professionals, limiting it to physicians. AOTA submitted comments on this point, as well as others, to each agency earlier this year. OTs and PTs are not yet required or incentivized to adopt EHR systems for such initiatives as Medicare's Meaningful Use Program, which in 2015 will penalize eligible providers that do not meet the requirements for "meaningful use," but physicians and facilities that are included in the program will expect the OTs and PTs with whom they share patients use compatible EHR systems. The following are resources for education and assistance in assessing and implementing electronic health records.
http://www.aota.org/News/AdvocacyNews/Final-Rules-on-Meaningful-Use-and-EHR-Certification.aspx
http://www.apta.org/EHR/
Healthcare Common Procedure Coding System HCPCS
HCPCS is the abbreviation for Healthcare Common Procedure Coding System numbers. These codes (CPT codes = Current Procedural Technology codes) were developed by the AMA and are used by Medicare and Medicaid and are monitored by the CMS. These are uniform codes used by medical, diagnostic and surgical services and are assigned to every task and service a medical practitioner performs. They are designed to provide uniformity between practitioners. There are 2 sets of HCPCS codes. The first set are the same as the CPT codes and the second set, Level II HCPCS codes, are used by medical suppliers other than physicians.
KX Modifier
The KX modifier is a code that may need to be added to some claims in order to be reimbursed. This code may need to be added to claims that currently need a written order or certificate of medical necessity prior to delivery. It is used in billing for a Medicare patient when the patient qualities for an exception to the therapy cap.
http://www.cms.hhs.gov/MLNMattersArticles/downloads/SE0637.pdf
L-codes
L codes are used to bill orthotics such as splints, immobilizers and prosthetics. L codes are not listed in the current CPT book but are in a level II book and are specific to custom fabricated and prefabricated orthotics. The L code charge amount includes not only the cost of the materials for the orthotic or prosthesis but also the fabrication and fitting time.
Medicare Access to Rehabilitation Services Act (HR 1546/S 829)
The Medicare Access to Rehabilitation Services Act of 2011 amends title XVIII (Medicare) of the Social Security Act to repeal the financial cap on outpatient physical therapy, speech-language pathology, and occupational therapy services of the type furnished by a physician or as an incident to physicians' services.
Under the Balanced Budget Act (BBA) of 1997, Congress placed an annual financial cap on rehabilitation services under Medicare.
As part of the Deficit Reduction Act (DRA) in 2006, Congress passed legislation implementing the therapy caps but authorizing the Centers for Medicare and Medicaid Services (CMS) to create an exceptions process for medically necessary physical therapy, occupational therapy, and speech language pathology services above cap. Since 1997, Congress has acted 9 times to prevent the implementation of the therapy caps most recently through an exceptions process. The exceptions process, implemented in 2006, allows for use of a billing modifier to show that the patient’s condition requires medically necessary therapy above the financial limitation of $1,880. The current exceptions process expires at the end of this year. (2012)
The Medicare Access to Rehabilitation Services Act of 2011 would eliminate the financial cap and the need for the exceptions process.
Medicare Administrative Contractors (MACs)
Medicare Administrative Contractors are the companies hired by Medicare to process Medicare claims. As a result of a provision in the Medicare Modernization Act of 2003 (MMA), the Centers for Medicare and Medicaid Services (CMS) has been charged with significantly altering the way they award contracts. CMS is completing the process of awarding Medicare claims processing contracts through competitive procedures resulting in replacing its current claims payment contractors - fiscal intermediaries and carriers - with new contract entities called Medicare Administrative Contractors (MACs). The reform efforts are aimed at making Medicare contract awards more competitive and contracts more efficient. CMS will put the contracts up for bidding at least once every five years.
Currently, there are 15 Medicare A/Medicare B MAC jurisdictions that have served as the foundation for CMS's initial series of A/B MAC procurements. This is a significant departure from the old system, under which there were eighteen Part B Carriers and twenty-five Part A Fiscal Intermediaries.
More information: http://www.cms.gov/Medicare/Medicare-Contracting/MedicareContractingReform/PartAandPartBMedicareAdministrativeContractor.html
The Medicare fee schedule is a list that stipulates the maximum amount Medicare has agreed to pay its contracted Medicare providers and suppliers for their services and products. This includes doctors, institutions, medical equipment suppliers, etc. The United States Congress is responsible for setting the Medicare fee schedule. This is done through federal legislation, and it can change from year to year.
From: http://www.medicare.com/advantage-plans/what-is-a-medicare-fee-schedule.html
Medicare Orthotics and Prosthetics Improvement Act of 2012
The Medicare Orthotics and Prosthetics Improvement Act of 20102 states “To amend title XVIII of the Social Security Act to modify the designation of accreditation organizations for orthotics and prosthetics, to apply accreditation and licensure requirements to suppliers of such devices and items for purposes of payment under the Medicare program, and to modify the payment rules for such devices and items under such program to account for practitioner qualifications and complexity of care”
From: http://www.opencongress.org/bill/112-h1958
This legislation is designed to reduce fraud and abuse in the Medicare O&P benefit while improving the quality of care and saving the government money. Specifically, the bill would raise the standards for O&P accreditation organizations recognized by the Medicare program. It would also compel CMS to fully implement billing edits that would deny payment for unlicensed O&P suppliers submitting Medicare claims in those states that have O&P licensure and link the right to bill Medicare for custom O&P care with satisfaction of appropriate education, training, and experience requirements.
Occupational and Physical Therapy are listed as exempt from the standard.
Medicare Payment Advisory Committee (MedPAC)
The Medicare Payment Advisory Commission is an independent Congressional agency established by the Balanced Budget Act of 1997 to advise the U.S. Congress on issues affecting Medicare. The Commission's mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare's traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare.
MedPAC meets publicly to discuss policy issues and formulate its recommendations to the Congress. Committee members and staff also seek input on Medicare issues through frequent meetings with individuals interested in the program, including staff from congressional committees and the Centers for Medicare & Medicaid Services (CMS), health care researchers, health care providers, and beneficiary advocates.
In its March 2012 report, MedPAC made several payment recommendations that could affect physical and occupational therapists in private practices and those working in skilled nursing facilities (SNF) and for home health agencies (HHA). The report calls on Congress to repeal the sustainable growth rate and replace it with a 10-year path of statutory fee-schedule updates. In the SNF setting, MedPAC suggests that Congress eliminate the market basket update for 2013 and revise the prospective payment system (PPS). Recommendations for HHA payment include a 2-year rebasing of home health rates and revision to use patient characteristics to set payment for therapy and nontherapy services instead of using the number of therapy visits as a payment factor. More information: http://www.medpac.gov/about.cfm and http://www.apta.org/PTinMotion/NewsNow/2012/3/30/IronMajors/?blogid=10737418615&id=10737426555
Multiple Chronic Conditions (MCC)
Multiple Chronic Conditions are defined as having 2 or more chronic conditions. They are a significant and increasing burden on the health of Americans and the healthcare system. They affect one in four Americans and in the over 65 aged groups 3 of 4 have MCC. Chronic conditions are conditions that last more than one year, require ongoing medical care and limit ADLs. They include physical, mental and cognitive disorders.
National Provider Identifier (NPI)
A National Provider Identifier is a unique ten-digit identification number required for all health care providers in the United States. The NPI has replaced the unique provider identification number (UPIN) as the required identifier for Medicare services, and is used by other payers, including commercial healthcare insurers. The transition to the NPI was mandated as part of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Both individual (doctors, nurses, dentists, OTs, PTs) and organizational (hospitals, clinics, nursing homes) health care providers are required to obtain an NPI. This number’s purpose is to facilitate organization and create national standards within HIPAA transactions. The NPI itself is an “intelligence-free” number in that it carries none of the holder’s personal identification other than a name and business address. A health care provider’s NPI does not change when the provider changes their place of employment. The NPI must be used in connection with the electronic transactions identified in HIPAA.
More information: https://nppes.cms.hhs.gov/NPPES/
Multiple Procedure Payment Reduction (MPPR)
Multiple Procedure Payment Reduction is the application of a reduction to the practice expense portion of the payment for a therapy procedure when more than one unit or procedure is provided to the same patient on the same date of service. Full payment is made for the unit or procedure with the highest PE (practice expense) payment. All subsequent units and/or procedures are paid at a reduced amount for the PE portion of the services.
Many therapy services are time-based codes, i.e., multiple units may be billed for a single procedure. The Centers for Medicare & Medicaid Services (CMS) is applying a MPPR to the practice expense payment when more than one unit or procedure is provided to the same patient on the same day, i.e., the MPPR applies to multiple units as well as multiple procedures. Full payment is made for the unit or procedure with the highest PE payment. However, with subsequent units and procedures, full payment is made for work and malpractice while an 80 percent payment is made for the PE for services furnished in office settings and other non-institutional settings and at 75 percent payment for the PE services furnished in institutional settings.
For therapy services furnished by a group practice or “incident to” a physician’s service, the MPPR applies to all services furnished to a patient on the same day, regardless of whether the services are provided in one therapy discipline or multiple disciplines.
More information: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/MM7050.pdf
The National Quality Forum (NQF)
The National Quality Forum is a nonprofit organization. Its stated mission is to improve the quality of healthcare in the US by:
- Building consensus on national priorities and goals for performance improvement and working in partnership to achieve them;
- Endorsing national consensus standards for measuring and publicly reporting on performance; and
- Promoting the attainment of national goals through education and outreach programs.
NQF's membership includes a wide variety of healthcare stakeholders including the AOTA and APTA. NQFs vision is to work with leaders from both private and public sectors to set national priorities, goals and standards regarding the quality and efficiency of healthcare along with influencing continuous quality improvement in American healthcare.
More information: www.qualityforum.org
Office of Inspector General Work Plan
The Office of Inspector General Work Plan provides a review of activities that the OIG plans to pursue regarding Health and Human Services (HHS) programs. It sets forth various projects to be addressed during the fiscal year. The OIG was created to protect the integrity of HHS services and protect beneficiaries by detecting fraud, waste and abuse. OIG covers more than 300 programs administered by HHS such as Medicare, Medicaid, NIH, FDA, and CDC.
Physician Quality Reporting Initiative (PQRI) / Physician Quality Reporting System (PQRS)
The Physician Quality Reporting System is mandated by federal legislation. CMS implements Physician Quality Reporting through regulations published in the Federal Register.
The Physician Quality Reporting System (Physician Quality Reporting) is a reporting program that uses a combination of incentive payments and payment adjustments to promote reporting of quality information by eligible professionals. The program provides this payment to practices with eligible professionals (identified on claims by their individual National Provider Identifier [NPI] and Tax Identification Number [TIN]) who satisfactorily report data on quality measures for covered Physician Fee Schedule (PFS) services furnished to Medicare Part B Fee-for-Service (FFS) beneficiaries. Beginning in 2015, professionals who fail to report the required data will have their payments reduced.
To participate in the 2012 Physician Quality Reporting System, individual eligible providers may choose to report information on individual Physician Quality Reporting quality measures or measures groups: (1) to CMS on their Medicare Part B claims, (2) to a qualified Physician Quality Reporting registry, or (3) to CMS via a qualified electronic health record (EHR) product, or 4) to a qualified Physician Quality Reporting data submission vendor. Providers who meet the criteria for satisfactory submission of Physician Quality Reporting quality measures data via one of the reporting mechanisms above for services furnished during a 2012 reporting period will qualify to earn a Physician Quality Reporting incentive payment equal to 0.5% of their total estimated Medicare Part B Physician Fee Schedule (PFS) allowed charges for covered services furnished during that same reporting period.
Measures typically used by Hand Therapists:
#128 – BMI
#130 – Current Meds
#131 – Pain Assessment
#154 – Falls Risk Assessment
#155 – Falls Plan of Care
#173 – Alcohol Screening
#182 – Functional Outcomes (PT only)
#226 – Tobacco Screening
More information: www.cms.gov/pqrs
Public Health Services Act
The Public Health Services Act was enacted in 1944 and has been amended many times including amendments with HIPPA, National Cancer Act and the Patient Protection and Affordable Care Act. It organized public health services in the U.S. and created better funding for public health.
More information: http://www.fda.gov/RegulatoryInformation/Legislation/ucm148717.htm
Sustainable Growth Rate (SGR)
The Sustainable Growth Rate is a method to ensure that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in GDP. It used by the Centers for Medicare and Medicaid Services (CMS) in the United States to control spending by Medicare on physician services.
Therapy Cap
(updated April 30, 2014)
Background
The American Taxpayer Relief Act of 2012 (ATRA) was signed into law by President Obama on January 2, 2013. This law extends the Medicare Part B Outpatient Therapy Cap Exceptions Process through December 31, 2013. Section 603 of this Act contains a number of Medicare provisions affecting the outpatient therapy caps and manual medical review (MMR) threshold.
Medicare Part B Outpatient Therapy Cap and Exceptions Process
In 2013, the Medicare Part B outpatient therapy cap for Occupational Therapy (OT) is $1,900, and the combined cap for Physical Therapy (PT) and Speech-Language Pathology Services (SLP) is also $1,900 (an increase from the 2012 level of $ 1,880). This is an annual per beneficiary therapy cap amount determined for each calendar year by the Medicare Economic Index (MEI). The amount attributed to the Medicare cap is the amount paid by Medicare, not including the patient deductible and any secondary or out of pocket payments.
The therapy cap applies to all Part B outpatient therapy settings and providers including:
- Therapists’ private practices
- Offices of physicians and certain non-physician practitioners
- Part B skilled nursing facilities
- Home health agencies (Type of Bill (TOB) 34X)
- Rehabilitation agencies (also known as Outpatient Rehabilitation Facilities-ORFs)
- Comprehensive Outpatient Rehabilitation Facilities (CORFs)
- Hospital outpatient departments (HOPDs)
Critical Care Hospitals are not subject to the therapy cap, the KX modifier, or the manual medical review.
In addition, the therapy cap will apply to outpatient hospitals as detected by:
- Type of Bill 12X (excluding Critical Access Hospitals) or 13X;
- Revenue code 042X, 043X, or 044X;
- Modifier GN, GO, or GP; and
- Date of service on or after January 1, 2013
Automatic Exceptions
Exceptions to the therapy cap are allowed for reasonable and necessary therapy services. Per beneficiary, services above $3,700 for PT and SLP services combined and/or $3,700 for OT services are subject to manual medical review. CMS is not precluded from reviewing therapy services below these thresholds.
KX Modifier
When conditions are met for care exceeding the therapy cap in a calendar year, which is $1,900 for 2013, a provider may submit claims for a beneficiary with a KX modifier included on the claim form. The use of the KX modifier indicates that the clinician attests that services as medically necessary and justification is documented in the medical record. The KX modifier on the claim indicates that the requirements for an exception to the therapy cap have been met. Claims that exceed the cap and do not include the KX modifier will be denied.
Manual Medical Reviews
Medicare Administrative Contractors (MACs) will conduct prepayment review on claims reaching the $3,700 threshold with dates of service January 1, 2013 to March 31, 2013. CMS requested MACs conduct these manual medical reviews within 10 days. At this time, there is no advance request for an exception process. Effective April 1, 2013, the Recovery Auditors will conduct review for all claims processed on or after April 1, 2013. Recovery Auditors will complete two types of review.
Prepayment Review:
- Claims submitted in the Recovery Audit Prepayment Review - Demonstration states will be reviewed on a prepayment basis. These states are: Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.
- Prepayment review occurs when services have been rendered, claims are submitted, but the claim is stopped prior to adjudication for review.
- In these states, the MAC will send an ADR (Advanced Development Request) to the provider requesting the additional documentation be sent to the Recovery Auditor (unless another process is used by the MAC and the Recovery Auditor).
- The Recovery Auditor will conduct prepayment review within 10 business days of receiving the additional documentation and will notify the MAC of the payment decision.
- Prepayment review of claims always results in an "initial determination" and is assessed on the current claim. Once the status has been determined (i.e., services were or were not reasonable and necessary), the claim will be processed.
Postpayment Review:
- In the remaining states, the Recovery Auditors will conduct immediate postpayment review.
- Postpayment review occurs when the services have been rendered, claims are submitted, the claim is adjudicated for payment, and the claim is paid.
- In these states, the MAC will flag the claims that meet the criteria, request additional documentation and pay the claim. The MAC will send a ADR to the provider requesting the additional documentation be sent to the Recovery Auditor. The Recovery Auditor will conduct postpayment review and will notify the MAC of the payment decision.
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Postpayment may result in no change to the initial payment to the provider or may result in a "revised determination" that would require the provider to pay back monies for services determined to be "not reasonable or necessary." The provider will be notified of any payment determination, and if necessary, be given the options of
- Paying back funds by check,
- Recoupment from future payments,
- Applying for an extended payment plan, or
- Appealing the decision.
Therapy furnished by providers must always be reasonable and medically necessary, require the specialized skills of medical professional, and be justified by supporting documentation in the patient’s medical record. Email CMS directly at therapyservicesnpc@cms.hhs.gov with questions and concerns.
Questions? Contact legislation_reimbursement@asht.org or call ASHT Member Services at 856-380-6856.
