Congress averted drastic cuts in Medicare reimbursement rates and strict caps on outpatient therapy services for one year as part of the American Taxpayer Relief Act, passed Jan. 1. However, the law also reduces reimbursement for multiple therapy services provided to a single patient on the same day, beginning April 1.
The law blocks the statutory formula used to set Medicare provider reimbursement rates—originally enacted in 1997 to control per-beneficiary expenses—and consequently averts a 26.5 percentrate decrease. The legislation suspends the formula for a year, but does not permanently repeal it. (For 2013 rates for audiology and speech-language pathology procedure codes, see our fee schedule page.)
Therapy caps and manual medical review
The Medicare therapy cap exceptions process—which allows beneficiaries to receive services beyond a set amount—and the manual medical review were also extended through Dec. 31, 2013. The exceptions process allows providers to indicate that services beyond the cap ($1,900 for combined speech-language treatment and physical therapy) are medically necessary for the beneficiary. Providers use a –KX modifier on the claim to attest to medical necessity and the availability of documentation.
Although in previous years the therapy cap applied to therapy services provided by private practitioners and outpatient rehabilitation facilities, the 2013 law adds two provider categories: outpatient departments in hospitals and critical access hospitals. Hospitals were included in the therapy caps for three months in 2012. The 2013 law includes them for the entire year and adds critical access hospitals.
The manual medical review process, enacted in 2012, was extended for all of 2013. Under this process, providers must obtain pre-approval for speech-language and physical therapy services that exceed $3,700 in order to receive payment. Any services not submitted for pre-approval will be denied; the denial can be appealed with a medical review.
To protect beneficiaries, the law also requires providers to tell Medicare beneficiaries if services exceed the threshold by giving the patient an Advanced Beneficiary Notice prior to delivering services. If the provider fails to give the patient the form, the beneficiary is not responsible for the cost of the services deemed not medically necessary in the review process.
Multiple procedure payment reduction
Despite aggressive advocacy efforts by ASHA and other therapy organizations, Congress included a 50 percent multiple procedure payment reduction on outpatient therapy services, effective April 1. Under MPPR, Medicare reduces payment for the second and subsequent therapy procedures furnished to the same patient on the same day. This per-day policy applies across disciplines and across settings, and is designed to save an estimated $1.8 billion in Medicare expenditures in 2013.
Under the policy, Medicare pays in full for the procedure with the highest practice expense. (Practice expense, one of three components used to value any given procedure code, includes support personnel time, supplies, equipment and indirect costs.) Reimbursement for other therapy procedures provided to the same patient on the same day will be cut by 50 percent of the codes' practice expense, resulting in an overall reimbursement reduction of approximately 20 percent.
The Centers for Medicare and Medicaid Services, responsible for implementing the law, must develop regulations related to these provisions. To receive e-mails about legislative and regulatory actions on these and other issues, subscribe to ASHA Headlines by sending a blank message to email@example.com with "subscribe to Headlines" in the subject line.