Annual Cap for Outpatient Therapy

Wednesday, February 15, 2006


Background: Section 4541 of the Balanced Budget Act of 1997 (BBA) required the Centers for Medicare & Medicaid Services (CMS) to impose financial limitations or caps on outpatient physical, speech-language and occupational therapy services by all providers, other than hospital outpatient departments.

The law required a combined cap for physical therapy and speech-language pathology, and a separate cap for occupational therapy. Due to a series of moratoria enacted subsequently to the BBA, the caps were only in effect in 1999 and for a few months in 2003. With the expiration of the most recent moratorium, the caps were reinstated on January 1, 2006 at $1,740 for each cap.

The President signed the Deficit Reduction Act of 2005 (DRA) into law on February 8, 2006. The DRA directs CMS to create a process to allow exceptions to therapy caps for certain medically necessary services provided on or after January 1, 2006. The law mandates that if CMS does not make a decision within 10 days, the services will be deemed to be medically necessary.

This fact sheet describes the exceptions process which will be implemented by our claims processing contractors. Until contractors are able to implement the exceptions process, they are required to accept requests for adjustment of claims for services in 2006 that were denied for exceeding the caps.

Exceptions Process:

CMS has established an exceptions process that is effective retroactively to January 1, 2006. Providers, whose claims have already been denied because of the caps, should contact their carrier to request that the claim be reopened and reviewed to determine if the beneficiary would have qualified for the exception. In addition, providers who have not yet submitted claims for services on or after January 1, 2006 that qualify for the exception, should submit these claims for payment, and refund to the beneficiary any private payments collected because of the cap.

The exceptions process allows for two types of exceptions to caps for medically necessary services:

Automatic Exceptions.

Automatic exceptions for certain conditions or complexities are allowed without a written request. A request to the contractor for an exception is not required when services related to these conditions and complexities, which are described below, are appropriately provided and documented. We anticipate that the majority of beneficiaries who require services in excess of the caps will qualify for automatic exceptions.

Manual Exceptions.

Manual exceptions require submission of a written request by the beneficiary or provider and medical review by the contractor responsible for processing the claims. If the patient does not have a condition or complexity that allows automatic exception, but is believed to require medically necessary services exceeding the caps–the provider/supplier or beneficiary may fax a letter requesting up to 15 treatment days of service beyond the cap. A treatment day is a day on which one or more services are provided.

The request must include certain documentation, including a justification for the request. Contractors will make a decision on the number of treatment days they determine are medically necessary within 10 business days. These requests for cap exceptions should be submitted prior to the date the cap is expected to be surpassed to avoid placing the beneficiary at risk of incurring the costs of treatment if the request is denied.

To read the rest of this article including the sections containing exceptions, and the section showing the Diagnosis codes, INCLUDING “337.20-337.29 – Reflex Sympathetic Dystrophy”, check out the link below.