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In the realm of physical therapy, $1,740 does not get a severely injured patient very far. A patient who has had a major stroke could blaze through that in a matter of weeks. But that is exactly the amount of money Medicare will pay for outpatient rehabilitation each year under a policy change that went into effect January 1, 2006. Federal officials are hoping to squeeze tens of millions of dollars out of the system each year by limiting payments for outpatient therapy services.
Seniors and disabled beneficiaries who receive more than $1,740 worth of combined physical and speech therapy in non-hospital outpatient settings will not receive any coverage for the services that exceed that amount. Occupational therapy is subject to a separate $1,740 cap. Medicare has implemented a temporary process doctors can go through to secure coverage above the limit for patients who need it. But some doctors worry that this will place an unnecessary administrative burden on their practices. The relatively unknown process could spawn confusion that makes the caps a true barrier to needed care. At some point during the year, beneficiaries with some of the most serious injuries and disorders will be at risk for losing access to essential therapy services that help treat their conditions. Some patients, especially those with low incomes, may avoid care for which they might have to fork over significant out-of-pocket payments.
The medical repercussions for some patients who receive their therapy in a physician’s office or a stand-alone rehab center could be severe. If concerns about losing Medicare coverage prompt a rheumatoid arthritis patient to forego necessary services, for example, the condition could easily turn into permanent numbness, deformity, and disuse if a patient decides to suspend therapy.
Congress first approved the annual caps in 1997 and several subsequent rounds of congressional and administrative postponements meant that they were in effect only in 1999 and for a few months toward the close of 2003. The latest legislative delay finally expired at the end of last year, opening the door for the current limits to take effect. Using a deficit-reduction bill signed into law in February 2006, Congress implemented an “escape hatch” designed to protect patients who need more therapy services. If a physician can demonstrate to his or her Medicare carrier that a beneficiary’s continued therapy regimen is medically necessary, the Centers for Medicare & Medicaid Services (CMS) will grant an exception that enables the government to pay for services above the $1,740 caps.
The exceptions process, which is in place only through the end of this year, follows two courses. Patients who qualify for one of more than 100 Medicare diagnosis codes will receive automatic exceptions if the codes are on the claims for therapy services and if the carrier agrees with the assessment. Included in this category are codes for lower limb amputation status, diabetes mellitus, neuropathies and walking difficulties. A physician whose patient does not fit into one of these categories can apply for a “manual” exception and submit additional information supporting the medical necessity of the services. CMS said that beneficiaries can also avoid the therapy ceiling altogether by getting their care in hospital outpatient departments, which are exempt from the restrictions. Some physicians caution that the hospital is not the most accessible source of care for many patients. During a recent conference call, CMS announced that it already had processed roughly 4,000 automatic exceptions in the first three months of the year and a few hundred manual exceptions.
CMS identified therapy services as an area of concern when it found surges in Medicare Part B spending in recent years. But neither the program officials paying the bills nor the Congressional Budget Office believe that the Medicare therapy caps will save the government all that much money. CMS estimates that only about 20% of Medicare therapy patients will hit the cap, and very few of that group will fail to qualify for an exception. The Budget Office projects that the limits would save the federal government $530 million in 2006 but that the exceptions process will put $500 million back into the system, allowing CMS to reduce spending by a relatively paltry $30 million this year.
No matter how the exceptions process is structured, it will have little impact if few physicians know about it or the therapy caps in general. Some foot and ankle surgeons said that they were not aware that the therapy limits went into effect in January. Several of those who did know were unclear about how physicians could seek exceptions for patients who need more care. The American Academy of Orthopaedic Surgeons and the American Medical Association have not weighed in on the issue. They are focused on broader Medicare payment inequities for physicians. The debate over this issue is unlikely to go away any time soon. Groups including the American Academy of Physical Medicine and Rehabilitation, as well as the American Physical Therapy Association, are urging Congress to repeal the caps before the exceptions process expires at year’s end. Several lawmakers are already on their side.
Under this system, physicians are expected to keep tabs on how much spending beneficiaries have already incurred on therapy services during the year—relying heavily on patients to provide them with accurate information about how much rehab they have received. This record keeping becomes much more difficult for physicians treating people who regularly see multiple doctors and other health professionals. If either doctors or their patients get it wrong, physicians may end up being stuck with the bill for services already rendered. There is also a strong possibility that Medicare carriers will end up rejecting claims for some therapy services, prompting some doctors to seek signed waivers from patients indemnifying the practice for expenses that the government decides not to pay after the fact. For physicians who have not planned ahead in such a way, the outcomes for their practices and their patients remain less predictable.
To get around the $1,740 caps for patients who have additional therapy needs, physicians can go through an exceptions process.
A physician can secure an automatic exception by accurately diagnosing a patient with a condition or complexity approved by Medicare for extended therapy. The list of codes that trigger such an exception can be found at www.cms.hhs.gov/apps/media/press/release.asp?Counter=1782 .
A physician whose patient is not eligible for an automatic exception can apply for a “manual” one. This requires a written request by the doctor at least 10 business days before the provision of therapy exceeding the cap. The request must include documentation justifying additional care. If the Medicare carrier does not respond to the request within 10 business days, the therapy is deemed medically necessary.
If the carrier rejects either the automatic or manual exception, physicians may prescribe the therapy and subsequently appeal the claims denial through the Medicare appeals process.
Physicians can avoid the caps by referring the patient to a hospital rehab facility.
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