Targeted Medical Review Changes for Outpatient Therapy Services

February 11, 2018
Rick Gawenda

On February 9, 2018, the United States Senate and House of Representatives passed H.R. 1892 – “Bipartisan Budget Act of 2018” and President Trump signed the bill into law at approximately 8:30am ET on February 9, 2018. The bill passed the Senate by a vote of 71-28 and passed the House of Representatives by a vote of 240-186.

This legislation contains several important implications that will have an impact on outpatient therapy services provided by physical therapists, physical therapist assistants, occupational therapists, occupational therapy assistants and speech-language pathologists. This legislation changes the following regarding outpatient therapy services:

  • Annual outpatient therapy cap, exception process, and use of the KX modifier
  • Dollar threshold for the targeted medical review process
  • Payment rates for services provided by a physical therapist assistant or occupational therapy assistant

In this article, I will explain changes to the dollar threshold for targeted medical reviews and factors that will have an impact on what claims are reviewed for exceeding the dollar threshold for the targeted medical review. To read about the changes to the annual therapy, exception process and use of the KX modifier, click HERE. To read about payment changes for services provided to Medicare beneficiaries provided by a physical therapist assistant and occupational therapy assistant, click HERE.

Beginning with dates of service on and after January 1, 2018, the annual dollar amount for the targeted medical review will be

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This article is not intended to and does not serve as legal advice or as consultative services, but is for general information purposes only.

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  1. Hi . I am assuming this cap applies to outpatient hospital as well as private practice PT. Is that correct?

    Thank you

  2. As a Critical Hospital in 2017, we calculated our charges using our own fee schedule as we are not reimbursed using the physician fee schedule. Then during one of the recent periods under short term continuing resolution we were instructed to calculate charges for the purpose of the hard cap based on the allowable charges in the physician fee schedule. Under this new legislation what resource should CRITICAL ACCESS HOSPITALS be using to calculate charges for the purpose of applying the KX modifier and tracking the medical review threshold.

  3. Could you please clarify what constitutes a “medical condition” as a factor that may trigger medical review? Osteoarthritis is a medical condition, for example, but one that physical therapists regularly treat.

  4. If we exceed the $3000, have a medical review and the services are found not to be medically necessary, who is responsible for the services (the therapy provider or the patient)/

    1. The provider would be if no ABN was issued. f you thought services were still medically necessary, an ABN would not have been issued. If denied above the $3,000, you would go through the appeals process.

  5. I have seen some conflicting information on what dollar amount the kx modifier should be applied. Is the kx modifier applied at the $2010 level (current practice) or $3000 threshold?


  6. If we apply the KX modifier for services over 2010, could we then issue an ABN when patient reaches the 3000 if we believe at that point services are no longer medically necessary but the patient wants to continue?

  7. When we have reached the $3000 and feel it is clinically appropriate to continue – your info indicates ” If a provider is appending the KX modifier to services that have exceeded $3,000 in calendar year 2018″. Does that mean we add an additional modifier?

    1. If a Medicare beneficiary exceeds $2010 PT and SLP combined or a separate $2010 for OT in calendar year 2018 and still requires skilled therapy services, the provider would need to append the KX modifier to those services that have exceeded that dollar amount threshold.

      1. Right and then when we need to go beyond second cap is there a different, or additional, modifier needed?