Therapy benefit cap looms over patients and providers as healthcare bill stalled

Medicare beneficiaries face a steep cliff in their coverage for physical therapy and similar treatments due to Congress’s failure to enact a healthcare reform bill.

On Jan. 1, the clock started ticking for those patients who need physical, occupational or speech therapy, which is now subject to an annual limit on benefits. Healthcare reform legislation included language to block the so-called therapy caps, but with that bill sidelined, beneficiaries and therapy providers are seeking other means to keep the money flowing.

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Medicare beneficiaries now face annual limits of $1,860 for physical and speech therapy and $1,860 for occupational therapy. Those therapy caps apply to services provided at therapists’ offices, physicians’ offices, at home, or in nursing homes — but not therapy provided in hospitals on an outpatient basis.

The caps would hit hardest those patients who have the greatest need for rehabilitation therapy services, such as those who have suffered strokes or serious physical injuries and people with disabilities. Lawmakers have contacted the Obama administration saying some of their constituents have already exhausted their annual benefit just one month into the year.

“A beneficiary could go through that 1,860 [dollars] pretty quickly,” said Susan Feeney, a spokeswoman for the American Health Care Association (AHCA), which represents nursing homes. 

Above that level, beneficiaries are on the hook for 100 percent of the cost of their therapy unless they are also enrolled in Medicaid in a state that covers therapy services, she said. Patients undergoing therapy outside nursing homes can opt to seek treatment at a hospital, if one is available, but those in nursing homes cannot be discharged.

The Centers for Medicare and Medicaid Services (CMS) has begun administering the therapy caps, which were written into law in 1997, but Congress has repeatedly postponed implementation under pressure from industry and patient groups.

Senate Finance Committee Chairman Max Baucus (D-Mont.) indicated during a hearing Wednesday that he was drafting a bill to address the therapy cap exemption and other similar programs that expired on Jan. 1.

On Tuesday, three senators wrote Health and Human Services Secretary Kathleen Sebelius seeking the administration’s help to put off enforcing the caps while Congress works out a legislative remedy.

“These arbitrary financial caps are already resulting in restricted access to rehabilitation service,” wrote Finance Committee ranking member Chuck Grassley (R-Iowa), Sen. Blanche Lincoln (D-Ark.) and Sen. John Ensign (R-Nev.).

At the Finance Committee hearing, however, Sebelius said she could not comply. “We do not feel we have the administrative flexibility to merely push this down the line,” she told Lincoln. “We really would be in violation of the law.”

A coalition of healthcare industry associations and patient groups is also pressing Congress to resolve the situation. Business groups such as the AHCA and the American Physical Therapy Association have been joined by organizations like the American Heart Association and Easter Seals.

CMS issued a memorandum to Congress explaining that providers can continue submitting claims for the services knowing the caps are in place or can wait to see what actions Congress takes and file them if the caps are postponed.

In a similar notice issued to providers, CMS noted legislation to again push back the therapy caps has not been enacted.


“We believe some or all of these provisions may be extended as part of this legislation. We encourage you to monitor activity on the Hill and stay apprised of the status of potential legislation,” reads a notice distributed before the new year began.

CMS advises therapy providers they can wait to file claims “until it becomes clearer as to whether new legislation will be enacted to extend these provisions.” Absent legislation, however, the agency makes clear claims that exceed the annual caps will not be paid. 

In addition, providers are forbidden by anti-kickback rules to provide free services to Medicare patients and will have to bill them if the caps are not removed, said Gayle Lee, the director of federal payment policy and advocacy at the American Physical Therapy Association.

“If legislation is enacted, claims submission for affected services may resume. Otherwise, claims submitted with dates of service on or after Jan. 1, 2010, will not be paid in accordance with expiring provisions because there would no longer be any statutory basis for such payment,” CMS wrote.

The three senators, however, assert this guidance is untenable because it subjects providers and patients to uncertainty about whether Medicare will eventually pay the bills.

“While we appreciate this memorandum, many rehabilitation providers are unable to hold claims for substantial periods of time,” Grassley, Lincoln and Ensign wrote.