Medicare Access to Rehabilitation Services Act (S. 1394 and H.R. 3834)

(01/2002)

History and Background

  Prior to enactment of the Balanced Budget Act of 1997 (BBA), $900 annual caps were only applied to physical therapists and occupational therapists in independent practice settings. In addition, payment to these providers under the Medicare program was made on a reasonable cost basis.

 As a result of the BBA, many providers were shifted to a prospective payment system, and therapy service reimbursement was shifted to a fee schedule. In addition, the therapy cap amount was raised to $1,500 annually. However, the cap applied to all settings except hospital outpatient departments. In addition, speech-language pathology services were incorporated under the physical therapy cap. The cap was intended to be a beneficiary cap (i.e., regardless of the provider, a beneficiary would only be provided Medicare coverage up to $1,500). Once a beneficiary exceeded the cap, the beneficiary would have had to pay 100 percent of the out-of-pocket costs.

 Responding to the BBA, then-Representative Ensign and Senator Grassley introduced the Reinstatement of the Medicare Rehabilitation Benefit Act of 1998 (H.R. 3835 / S. 2222) to repeal the $1,500 therapy cap. The bills garnered 109 and 12 cosponsors, respectively.

 The following year, Representative Burr and Senator Grassley introduced the Medicare Rehabilitation Benefit Improvement Act of 1999 (H.R. 1837 / S. 472) to establish specific exemptions to the $1,500 therapy cap. The bills attracted 57 and 127 cosponsors, respectively.

 As a result of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA), Congress placed a two-year moratorium on the therapy cap until January 2002. In addition, the BBRA required focused medical reviews of claims for therapy reimbursement.

 Due to the difficulty of establishing an alternative payment methodology, provider and consumer groups pressed for a three-year moratorium extension. Ultimately, the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) extended the moratorium one more year until January 1, 2003.