Congress Removes Limits on Medicare Outpatient Therapy - Mature Health Center

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Originally published March 23, 2018, last updated March 27, 2018

Congress Removes Limits on Medicare Outpatient Therapy

Congress Removes Limits on Medicare Outpatient Therapy

Medicare patients who qualify for outpatient care such as physical therapy will no longer lose the services because they’ve reached a limit on what Medicare pays.

The bipartisan budget deal approved in February to fund the U.S. government removes annual caps on how much Medicare Part B pays for physical, occupational or speech therapy. As long as your doctor or other health care provider confirms your need for therapy and you continue to meet other requirements, you will be eligible for these types of therapy indefinitely.

The repeal is considered a major win for America’s 59 million Medicare recipients — especially when combined with a 2013 class-action lawsuit settlement intended to end Medicare’s practice of refusing payment for therapy because of a patient’s failure to improve.

A Permanent Fix

Congress created the caps with the Balanced Budget Act of 1997 in an attempt to save money. But in 2006, Congress established an exceptions process as a way for beneficiaries to exceed the caps. That process allowed Medicare recipients to be granted an exception and receive as much rehabilitation therapy as considered medically necessary. Congress continued to extend the exceptions process, but it expired on Dec. 31, 2017.

The Bipartisan Budget Act of 2018, signed into law on Feb. 9, 2018, is considered a permanent fix to Congress’ 11th-hour, temporary fixes. It repeals application of the Medicare outpatient therapy caps but retains the medical review process for “medically necessary” services, but at a lower amount.

Previously, the limit was $3,700. The Bipartisan Budget Act of 2018 lowers that limit to $3,000. That means that once a patient’s treatment hits $3,000, Medicare may review the patient’s progress. 

Some industry organizations, however, expect the reviews to remain limited, because Congress did not provide additional resources for the Centers for Medicare and Medicaid Services (CMS) to conduct the reviews.

How It Will Work

The Medicare.gov website explains that while Medicare law no longer limits how much Medicare will pay for your medically necessary outpatient therapy services in one calendar year, your therapist will need to add information to your therapy claims and your medical record if your therapy services reach these amounts in 2018:

  • $2,010 for physical therapy (PT) and speech-language pathology (SLP) services combined
  • $2,010 for occupational therapy (OT) services

According to the Medicare.gov website, once your therapy services reach those amounts, your therapist will need to add a special code to your therapy claim validating that the therapy is reasonable and necessary. (CMS may review your medical records to be sure the therapy is medically necessary once it reaches the $3,000 amount — $3,000 for physical therapy and speech-language pathology services combined, and $3,000 for occupational therapy.)

What You Can Do

Ask your doctor and other health care providers questions so you fully understand how much your therapy costs and if Medicare will cover it. How much you will owe depends on many factors — other insurance you have (such as Medicare Supplement), where you get your therapy, and so on.

All people with Medicare Part B are eligible for physical therapy, occupational therapy and speech-language pathology services. (Medicare Part A covers hospital stays, skilled nursing care and hospice and home health services, while Part B covers outpatient care, preventative services, ambulance services and durable medical equipment.) You pay 20% of the Medicare-approved amount, and the Part B deductible applies. If you have Medicare Supplement or Medicare Advantage, those plans may pick up some of those costs.

Be Aware

Your doctor may even recommend therapy more frequently than what Medicare covers or therapy that is not covered by Medicare. Asking questions will show that you’re an informed consumer who wants to remain aware of what you’re being charged.

A therapy may be recommended that isn’t “medically necessary.” However, before providing services that aren’t medically necessary, your therapist or therapy provider must give you a written notice called an "Advance Beneficiary Notice of Noncoverage" (ABN). The ABN lets you choose whether or not you want the therapy services. If you choose to get the medically unnecessary services, you agree to pay for them.