FAQ on the Medicare Therapy Cap and Repealing the Policy Once and For All

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FAQ on the Medicare Therapy Cap and Repealing the Policy Once and For All

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Over the years of working on a repeal of the outpatient Medicare therapy cap I have received many questions about the therapy cap, and why its repeal was a priority for AOTA. With the passage of latest Budget bill and the permanent repeal of the cap, I wanted to provide some context for our activities and answer some of these questions.  Here are some of the most common questions and my answers.

1.     Question: What was the therapy cap?

Answer:  Since 1997, Medicare statute included a cap on how much outpatient therapy a Medicare beneficiary can receive each year, regardless of medical necessity. Since the policy’s enactment, Congress has kept this "hard cap" on services from taking effect, by implementing multiple, temporary moratorium and "exceptions processes”.  (An exceptions process is a process Congress puts into place to allow beneficiaries to exceed the cap). Because Congress typically acted to keep the cap from taking effect, beneficiaries were seldom denied therapy services as a result of the cap statute. Similarly, practitioners were rarely faced with telling beneficiaries they either had to pay out of pocket or forgo therapy services. 

For 2018, the therapy cap placed a financial limit of $2,010 on occupational therapy services and a financial limit of $2,010 on physical therapy and speech-language pathology services combined. This cap went back into place on January 1, 2018 after Congress allowed the most recent exceptions process to expire.

2.     Question: The last “exceptions process” seemed to be working, so why worry about repealing the cap?

Answer: While past exceptions processes worked, the most recent exceptions process expired on December 31, 2017 and no longer existed as of January 1st.  Unfortunately the law of the land was a hard cap on Medicare outpatient therapy services. Until passage of this permanent repeal, we were only “renting” an exceptions process in 1-2 year chunks of time. This year, we were given the opportunity to turn the most recent exceptions process, a process that we have heard works well, into permanent policy. This meant permanently repealing the hard cap and permanently putting into place an exceptions process.

Past exceptions processes have not always been as positive as the current one, either for beneficiaries or for providers. One past exceptions process applied an onerous manual medical review with prior authorization for services. This was both extremely burdensome for providers and caused delays in care for beneficiaries. By forever locking into place the most recent exceptions process (that did not include prior authorization), we now have a permanent policy that ensures a pathway to care for beneficiaries, and is not unduly burdensome for providers.

3.     Question: If Congress always acted to put in an exceptions process, why didn’t AOTA spend its time and effort on other issues?

Answer: Congress could never be relied upon to implement an exceptions process in a timely manner, and provide beneficiaries with a pathway to care. As we saw this year, Congress allowed the hard cap to be in place for almost 7 weeks.  During this time beneficiaries either had to ration care, or hit the cap.

Without our advocacy and that of our coalition partners (which included practitioners, providers, and patient advocates) it would have been easy for Congress to focus solely on other issues for which other stakeholders were advocating. In this budget bill there were hundreds of stakeholders clamoring for their provisions. When it comes to Congress the squeaky wheel does get the oil.

We saw the cap go into effect on January 1, 2018 after Congress failed to extend the most recent exceptions process. During the entire debate on the budget deal, we constantly heard rumors that Congress was going to extend funding for federally qualified community health centers (which we supported), but punt on Medicare policies such as the therapy cap. This would have meant a continued hard cap on therapy services. Grassroots advocacy, lobbying by AOTA and the therapy cap coalition, news stories and op-eds, and pressure by our Congressional champions helped ensure a permanent repeal of the therapy cap.

4.     Question: Wasn’t the cap more of a problem for physical therapy (PT) and speech language pathologists (SLP) since they were combined under one cap? 

Answer: Even though PTs and SLPs shared a cap, a report commissioned by AOTA showed that the therapy cap affected our clients more. In 2015, the last year for which there is data, 19% of Medicare beneficiaries exceeded the therapy cap for occupational therapy. This number was 16% for PT/SLP combined. Additionally, 59% of Medicare spending on outpatient occupational therapy occurred over the cap amount in 2015, as opposed to 48% of PT/SLP spending.  We believe that this is because occupational therapy practitioners tend to see more acutely or chronically ill clients, on average, than physical therapy practitioners.  While 65% of outpatient occupational therapy services were provided in skilled nursing facilities, only 27% of physical therapy services were. Of the beneficiaries who would have exceeded the cap in 2015 for occupational therapy services, 74% of them receive services in skilled nursing facilities.

I hope this is helpful! If you have further questions, please e-mail them to FAD@AOTA.ORG


  • Can you please provide a link to the study that AOTA commissioned (referenced in #4)?

    There seems to be a lot of information to unpack in this.  I am unsure how to interpret "We believe that this is because occupational therapy practitioners tend to see more acutely or chronically ill clients, on average, than physical therapy practitioners."  Other than acutely ill or chronically ill, what other patients are there?  I think that some definition of terms is needed.

    It also seems that this may have been a problem constricted to over-utilization in SNF contexts, based on what you are saying.  If that is true, a more nuanced approach to the problem might have been indicated.

    On its face, it seems counterintuitive that a profession with its own cap could be impacted more than a profession that has higher utilization rates in general and a shared cap.  If that is true, that is interesting - but it would be helpful to know the actual facts that support that determination.  Access to the full report would be helpful.

    Caroline Alterio, COTA, ROH

  • Hi Caroline - here is a link to the report from a previous blog post: otconnections.aota.org/.../congress-and-repeal-of-the-medicare-therapy-cap.aspx

    While there are certainly more PT/SLP services provided overall, OT has a larger percentage of clients and spending over the cap. Another key finding of the report was that the 2015 exceptions process (which included targeted review of claims over a $3,700 threshold), decreased utilization in that highest spending category.  These findings helped convince Congress that the 2015 targeted review process was doing its job - controlling utilization while allowing for a pathway to care - which is why we ultimately able to get that review process as part of the permanent repeal!

  • The numbers that you quote above in #4 were very confusing, and I had the opportunity to review this information (with some help, admittedly).  

    PT is responsible for 73% of all Medicare Part B spending, and OT is responsible for 19% of all Part B spending.  Speech is responsible for 8%.  Based on volume and money, the cap was a much larger issue for PTs.

    As I indicated on the phone call, 81% of all people remained below the cap for OT.  Another 14% were managed under the review threshold.  That means that 95% of all people were managed easily under the current system.

    Of those over the cap, 73% were in SNFs.

    That means that we took a problem that was relatively small for OT and functionally confined to the SNFs and we incurred a 15% OTA payment differential for the trouble of it all.  We would have been better off leaving it alone.

    Getting rid of the yearly grind of temporary fixes was not worth this cost.

    I really don't know why you cited the numbers you did above.  Those numbers do not answer the simple issues.  It does not have to be any more complicated than this information which is pulled directly from the report.

    Caroline Alterio, COTA, ROH