Why Working around the Therapy Cap Is a Bad Idea

Lea Chatham October 25th, 2013

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by Heidi Jannenga, PT

WebPT provdies tips and advice for therapy practices for Kareo

With Medicare’s seemingly endless stream of new regulations and reporting requirements—and the stiff penalties associated with noncompliance—it’s no wonder that finding a letter from the big M in your mailbox is enough to spike your heart rate. We get it; the thought of not getting paid is scary and that heightens the appeal of various “easy-way-out” options—in other words, gaming the system. And one way rehab therapists are doing this is working around the therapy cap to avoid rejections.

As compliance expert Nancy Beckley explains in this article on RAC Monitor, CMS has enlisted a review contractor to scrutinize outpatient therapy cases in which treatment stopped “at or near the cap” and then resumed on or after the start of a new benefit period. Why does this look suspicious to CMS? Because the way they see it, stopping treatment signals that therapy is no longer “medically necessary”—so why would it suddenly become necessary again once the cap resets? To an auditor, this chain of events looks pretty fishy.

Those who engage in this practice might argue that it’s a good idea to put a beneficiary who is approaching the cap “on hiatus” because it minimizes the patient’s out-of-pocket cost. Plus, it guards against claim denial, thus ensuring therapists get paid. But this strategy runs contrary to rehab therapists’ top priority of providing exemplary patient care.

The key here is clinical judgment paired with proper documentation. If your clinical judgment tells you a patient needs to continue treatment and that said treatment is “medically necessary,” then it’s your job to show that through documentation. Documentation is all Medicare has to go on—so you should make sure yours is up-to-snuff and that it properly and definitively articulates why it is appropriate to continue treatment beyond the therapy cap. Sub-par documentation leads to more severe scrutiny of your decisions. And in the face of such scrutiny, it might be tempting to resort to shortcuts rather than standing up for what you know to be correct as a medical professional and a musculoskeletal expert.

If you’re nervous about exceeding the cap, ask yourself why. If you’re reluctant to continue with a patient’s treatment, it might be a sign that the therapy is not totally necessary. Are your services crucial to the patient’s ability to function adequately in his or her daily life? Has the patient achieved his or her prior level of function? If so, it’s time to discharge the patient or possibly offer post-care services on a cash payment basis through the proper use of an ABN. If not, then you shouldn’t have anything to worry about. Continue to treat while documenting clearly, consistently, and correctly. Play by Medicare’s rules. Keep in mind that you don’t have to get approval to exceed the cap—you must simply apply the KX modifier and go about your treatment normally. In the event that you reach the $3,700 threshold, things become a little more complicated, but at the end of the day, it’s still all about providing good documentation that proves medical necessity.

Remember, documentation is a story that begins with a patient’s very first visit. You must paint a clear picture of who the patient was before he or she sought therapy and who he or she is at the outset of treatment (i.e., prior and current levels of function). As the patient’s story unfolds, document it using clear, concise, and objective language. Ultimately, this record will validate your actions, decisions, and services to everyone, including Medicare. In the event that you do exceed the cap, the story you’ve chronicled should clearly demonstrate that it is medically necessary to do so.

You might not like the therapy cap, but keep in mind that CMS will never raise it—let alone eliminate it—if therapists shy away from, or fail to properly justify their reasons for, exceeding it. CMS uses this data to develop their rules, so rehab therapists are only hurting themselves when they choose not to exceed the cap in situations that warrant doing so. Furthermore, gaming the system could very well lead to an audit—and nobody wants to deal with that.

According to Beckley, these audits are already happening, and more than 350 therapy providers have already gotten letters requesting specific claims for post-payment review. If you receive one, don’t panic—but understand the implications you might face. (Refer to Beckley’s article for more advice.) And in the future, commit yourself to documenting well, doing what’s right for your patients, following Medicare’s rules, and staying in the know regarding current issues and changes affecting the industry.

About the Author


Heidi Jannenga was a scholarship athlete at the University of California, Davis. Following a knee injury and subsequent successful rehabilitation, Heidi developed a passion for physical therapy. She started her 16-year physical therapy career after graduating with her Masters from the Institute of Physical Therapy in St. Augustine, Florida. In 2008, Heidi and her husband Brad launched WebPT, the leading web-based Electronic Medical Record (EMR) and comprehensive practice management service for physical, occupational, and speech therapists. As the company’s COO, Heidi is responsible for product development/management, billing services, and customer support. Through her role with WebPT, she has had the opportunity to speak as an industry expert at numerous industry trade shows and professional conferences. Additionally, she has participated as a panel speaker at local and regional technology, entrepreneurship, and women in leadership events.

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