Repeal of the Therapy Cap

on Tuesday, 20 February 2018. All News Items | Outpatient Services | Billing

The Government Giveth and the Government Taketh Away

It is that time of year when the winter season tries its best to hang on while spring makes faltering attempts to assert itself.  The intermittent but increasing days of warmer weather are accompanied by spring rains, spring fever, spring breaks, and oh don’t forget taxes. If you have family or friends in the accounting business, you experience first hand that it is also the “busy season” for tax accountants.  Income taxes are one of the prime examples of the government taking away. In the recent Bipartisan Budget Act (BBA) of 2018, an example of our government giving and taking relates to rehabilitative therapy services and the infamous therapy cap.

Since the Balanced Budget Act of 1997, there has been an annual limitation on the amount Medicare will pay for rehabilitative therapy services for a beneficiary.  This is known as the therapy caps. There has been one therapy cap for outpatient occupational therapy (OT) services and another separate therapy cap for physical therapy (PT) and speech-language pathology (SLP) services combined.  Finally, however, the therapy cap is gone.  The BBA signed into law on February 9, 2018 repealed the therapy cap effective for claims on and after January 1, 2018.

There are a few catches to the repeal. Providers must continue to report the KX modifier for therapy services that exceed the dollar amount previously known as the therapy cap.  That amount remains $2,010 for 2018 – one $2,010 limit for physical therapy and speech-language services combined and another $2,010 limit for occupational therapy.  The KX modifier is attestation the services above this dollar amount are reasonable and necessary and that there is documentation of medical necessity for the services in the patient’s medical record. Since there is not technically a therapy cap, it is not yet known if therapy services exceeding the dollar amount reported without a KX modifier will be denied.  Such details should be forthcoming from CMS in sub-regulatory guidance.  All types of therapy providers, including those in a hospital outpatient setting, are affected by the new rules.

There will also continue to be targeted medical reviews of therapy services that exceed a threshold amount.  The BBA lowered that threshold amount for 2018 through 2028 from $3,700 to $3,000 – again, one threshold for PT/Speech combined and a separate threshold for OT.  Not all therapy services exceeding the new, lower threshold will be reviewed.  Targeted reviews for therapy exceeding the threshold will be selected based on such factors as therapy providers with a high claims denial rate for therapy services or with aberrant billing practices compared to their peers. The Supplemental Medical Review Contractor (SMRC) currently performs these types of reviews for CMS.

The bad news (i.e. the taking away) for therapy providers from the Bipartisan Budget Act relates to payment rates for services provided by therapy assistants. The BBA mandates that for PT and OT services furnished on and after January 1, 2022, the payment rate will be 85% of the usual payment when the services are provided in whole or in part by a therapy assistant.  A modifier will be created to be reported when therapy services are provided by a therapy assistant to trigger the reduced payment rate. 

This requirement for reduced payment for therapy assistant services offsets the excitement of the therapy cap repeal. At least there are a few years prior to any reduction in payment for assistant services.  A lot can happen between now and then – maybe even another incident of the “government giveth.” We can always hope.

Article by Debbie Rubio

Debbie Rubio, BS, MT (ASCP), is the Manager of Regulatory Affairs and Compliance at Medical Management Plus, Inc.  Debbie has over twenty-seven years of experience in healthcare including nine years as the Clinical Compliance Coordinator at a large multi-facility health system.  In her current position, Debbie monitors, interprets and communicates current and upcoming regulatory and compliance issues as they relate to specific entities concerning Medicare and other payers.  You may contact Debbie at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.

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