2018 Therapy Cap Questions & Answers

January 31, 2018
Rick Gawenda

With the 2018 therapy cap now beginning its 5th week, I am still receiving many questions concerning the therapy cap. In this article, I will answer the following questions:

  1. What is the 2018 therapy cap dollar threshold?
  2. How is the amount that is applied to the annual therapy cap dollar threshold calculated?
  3. How does the annual Part B deductible impact the annual therapy cap?
  4. What is the current status of the therapy cap exception process (ie. use of KX modifier)?
  5. What is the current status of the $3700 manual medical review threshold?
  6. What settings does the therapy cap apply to?
  7. What settings does the therapy cap not apply to?
  8. Does the therapy provided in an outpatient hospital count towards the annual therapy cap dollar threshold?
  9. Does the therapy cap apply to critical access hospitals?
  10. Are critical access hospitals exempt from the therapy cap?
  11. If a Medicare beneficiary exceeds the therapy cap and no exception process is in place, must I issue an ABN?
  12. Does the therapy cap apply to Medicare Advantage plans?

Lets begin!

1. What is the 2018 therapy cap dollar threshold?

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  1. Do you know if this is the final rule for 2018 or is there still a chance it might change? Thanks!

  2. Looking for clarification of your term “Outpatient hospital.” Also, if the therapy cap does not apply to outpatient therapy located on or off campus at a hospital, does that mean there is no cap at all?

  3. Would an ABN be necessary for a hospital based outpatient clinic once they hit $2010 even though the cap does not apply?

    1. No, since as of this date (January 9, 2018), the therapy cap does not apply to outpatient hospitals.

  4. On December 22 it was communicated that an ABN was not required for therapy beyond the cap – but a good idea to complete the process. This communication states that an ABN is required. Please re-verify if an ABN is now required. Thank you!

      1. It seems like the opposite would be true. It’s my understanding that if it’s statutorily not covered then an ABN is NOT required because it will never be covered. and that you would need to do one if there’s an exception process because the coverage isn’t clear cut, and may or may not be covered.

        1. The American Taxpayer Relief Act of 2012 changed the use of the ABN for therapy exceeding the cap and since January 1, 2013, an ABN has to be issued to a Medicare beneficiary for services above the annual theray cap dollar threshold when either not using the KX modifier or no exception process is in place.

  5. If the no exception process remains in place, will Medicare just stop paying on claims once the $2010 limit has been reached?

    1. Yes, but you will want to read the question and answer concerning the use of the ABN form in this situation.

  6. In your webinar, 2018 Outpatient Therapy Payment Updates; the teaching material indicates that if the therapy is cap is ended by the House and the Senate, then the annual threshold for targeted medical review would be $3K; now that the cap has ended for hosptial based OP PT, should the Kx modifier be added at $3K? Thank you, Liz

    1. As of January 17, 2018, there is no therapy cap exception process; hence, no KX modifier is available.

  7. I am confused about CAH and obs. if the pt is admitted to CAH under obs, seen by therapy, then later comes to outpt does the amount from the obs stay in the CAH inpt count toward total cap.

    Katesel Strimbeck PT, MS

    1. Depends on whether the therapy was billed out as therapy or bundled into the APC payment. If billed out as therapy using the CPT codes and therapy specific modifiers (GN, GO, GP), then those visits would count towards the annual therapy cap dollar threshold.

      1. I’m trying to find where you can verify if your local hospital is a CAH, but I’m not able to locate anything. Do you happen to have a reference for this? Thanks

        1. You would want to ask someone in your billing department or higher up in management. They would know if you are CAH or not. If your bill type is 85X, you are a CAH. If your bill type for outpatient therapy services is 13X, then you are an outpatient hospital and not a CAH.

      2. I have a question with respect to billing and Observation status patients…..
        Our facility has both inpatient and outpatient PT/OT and uses hospital based billing. If we see a patient for knee DJD (we bill the appropriate level evaluation). Then, the patient (within a few days of the initial evaluation as an outpatient) has a TKA. What should be billed for that patient’s first visit (Evaluation / Re-Evaluation / something different)? Then, that patient post-surgically starts / resumes outpatient PT a few days after hospital discharge. What should be billed for that patient’s first visit in outpatient post-operatively (Evaluation / Re-Evaluation / something different)?

  8. When calculating the $2010 cap, do we use the charged amount or Medicare allowable that is paid? For instance, we bill Medicare $88 per 97110. They pay $29.06. Which number would we use to determine amount of cap used?

    1. If therapy is still medically necessary, as of today, you would not issue an ABN in your situation.

  9. Would Home health care part B service administered in assisted living or individuals home be affected by the hard cap threshold of $ 2010?

  10. Hi I am a bit confused with therapy cap. is it 1980$ and then kx modifier until 3 K ? From the previous lecture I remember it was 3k and if above there is manual review. IS this correct?

    1. In calendar year 2018, the therapy cap is $2010. If a Medicare beneficiary requires therapy above $2010 in 2018, then you would need to append the KX modifier to those CPT codes on the claim form. If using the KX modifier, you would NOT issue an ABN.