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House keeps therapy cap, but with changes

Rehab Private Practice Alert, December 21, 2005

The U.S. House of Representatives narrowly passed the Deficit Reduction Act of 2005 (S. 1932) by a 212-206 vote. The bill included a proposal to fix the cap on outpatient occupational therapy. But a vote from the Senate is needed to enact it into law because there is significant opposition to other components of the bill.

In terms of the outpatient therapy cap, the bill makes the following changes for 2006, according to the American Occupational Therapy Association:

• Patients who reach the cap (around $1,760) will be able to apply for additional services
• Medicare must determine if the therapy is medically necessary and approve or deny the services
• An answer must be provided within 10 days or the therapy is considered approved
• Medicare must implement improvements in the use of codes to assure that only appropriate therapy is provided

The bill calls for additional edits in the Medicare payment system that any edits must be "clinically appropriate." The bill also includes a leveling of physician fee payment amounts for 2006 and 2007, which in turn increases Part B payments for therapy and extends the implementation of the inpatient rehabilitation facility "75%" rule to allow a one-year extension through 2007 for implementation at the 60% level.

But the bill also makes cuts to Medicaid, which may have a direct impact on occupational and physical therapy services. The bill proposes patient co-payment increases for certain Medicaid beneficiaries.

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