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Previous chapters have focused on the components present in each type of note form that you will encounter as a therapist. This chapter focuses on another component of documentation that is critical for reimbursement of the skilled therapy services that you provide. This chapter provides specific information you need to know as you document the skilled treatment you provide to Medicare beneficiaries.

Medicare Therapy Cap and KX Modifiers

In 1997, when it passed section 4541(c) and (d) of the Balanced Budget Act of 1997, Congress placed an annual limit on the amount of reimbursement paid out by Medicare on behalf of Medicare beneficiaries for therapy services rendered under Medicare Part B.1 Although there have been a total of 13 attempts to repeal the therapy cap legislation, the cap still remains in effect to this date.2

As a result of the language used in legislation in 2007, the therapy cap began to include physical therapy services and speech-language pathology services under the same amount of cap money annually, with occupational therapy having a separate but equal portion of money.1 For example, in 2015, the therapy cap amount was $1,940 for outpatient physical therapy and speech-language pathology services combined; occupational therapy had its own $1,940 cap for occupational therapy services.3

However, when Congress passed the Deficit Reduction Act on February 1, 2006, provisions were put into place to develop an exceptions process for beneficiaries needing coverage above the therapy caps. The provision was first implemented by the Centers for Medicare & Medicaid Services (CMS) in March 2006, allowing for either automatic or manual exceptions to the therapy cap. The exceptions process has been modified over the years, but remains in effect as of this writing. The most recent legislation to keep this provision in place was passed on April 15, 2015, when the U.S. Senate passed the Medicare Access and CHIP Reauthorization Act (MACRA) (H.R. 2), which included an extension of the exceptions process through December 31, 2017.1

There are currently two exceptions processes. The first is the automatic exceptions process that occurs when a Medicare beneficiary reaches the $1,940 therapy cap and the treating therapist must apply a KX modifier to the claim form to designate that continued care of the patient is medically necessary.4,5 By applying the KX modifier, the therapist proves to CMS that the patient's skilled therapy services are supported by documentation in the health record, that the patient qualifies for an exception under the automatic exception process, and that the skilled services are reasonable and necessary services that require the skills of a licensed therapist.6 The second exceptions process is the manual medical review process that must occur when the Medicare beneficiary reaches the second tier of the cap at $3,700.4-6

Besides extending the provisions to ...

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