Medicare Therapy Cap Rules Apply to Critical Access Hospitals

December 19, 2013

Speech-language pathologists performing therapy services in Medicare-designated Critical Access Hospitals (CAHs) must apply therapy cap rules and provisions to services in 2014.

Therapy cap regulations include the following:

  • a combined therapy cap of $1,920 for speech-language pathology and physical therapy (PT) services per beneficiary, calculated at the Medicare fee schedule rate;
  • an exceptions process for services over the combined cap, to include use of the -KX modifier for claims over the cap that are reasonable and medically necessary, require the specialized skills of a medical professional, and are justified by supporting documentation in the patient's medical record;
  • a manual medical review process for services over $3,700 (combined speech-language pathology/PT).

Functional outcomes reporting, using G-codes and severity modifiers to indicate the patient status on the claim, has been required for CAHs since full implementation in July 2013.


A CAH is a hospital certified under a set of Medicare Conditions of Participation (CoP), which requirements include having no more than 25 inpatient beds; maintaining an annual average length of stay for no more than 96 hours of acute inpatient care; offering 24-hour, 7-day-a-week emergency care; and located in a rural area, at least a 35-mile drive away from any other hospital or CAH. Once a hospital is recognized as a CAH, it receives payment based on cost, rather than the standard fixed hospital rate.

The Centers for Medicare & Medicaid Services (CMS) finalized its proposed rule that revised interpretation of the Social Security Act that would allow permanent expansion of the therapy caps to CAHs. Hospitals have historically been exempt from therapy cap laws and regulations, but recent legislation expanded therapy cap provisions to hospital services on a year-by-year basis. In the legislation, CAHs remained exempt from implementing the rules, though the dollar amounts of services provided were counted toward total therapy cap dollars used by the beneficiary. CMS, in an attempt to include all therapy services in therapy caps, determined that CAHs did not fall under the definition of "outpatient hospital" and could, therefore, be subject to therapy cap rules-independent of legislative expansion. As a result, CAHs will always be subject to the therapy cap provision, while outpatient hospitals are only subject when the legislation is renewed by Congress (usually annually).

ASHA Resources

Learn more about the Medicare Part B Therapy Cap Exceptions Process on ASHA's website.

For more information, please contact Lisa Satterfield, ASHA's director of health care regulatory advocacy, at, or a member of the health care economics and advocacy team at

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