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ASHA Update: 2018 Medicare Therapy Cap

01/30/2018 3:12 PM | Ann Ninness

Implementation Guidance for the 

2018 Medicare Therapy Cap Without an Exceptions Process

The Medicare therapy cap exceptions process expired on December 31, 2017, and is replaced with a hard cap, effective January 1, 2018. Although many Medicare beneficiaries will not likely exceed the cap in the first quarter of 2018, speech-language pathologists and their patients face uncertainty regarding how to proceed until Congress acts to repeal the therapy cap or extend the exceptions process. In the interim, consider the following tips on how to navigate the therapy cap without an exceptions process.

2018 Therapy Cap Amount

There is one cap of $2,010 for physical therapy and speech-language pathology services combined and a second cap of $2,010 for occupational therapy services. The cap follows a beneficiary throughout the year regardless of diagnosis or practice setting and “resets” annually on January 1.

Settings Where the Therapy Cap Applies

  • Private practices
  • Offices of physicians and certain nonphysician practitioners
  • Part B skilled nursing facilities
  • Home health agencies (visits provided on an outpatient basis)
  • Rehabilitation agencies (also known as outpatient rehabilitation facilities)
  • Comprehensive outpatient rehabilitation facilities
  • Critical access hospitals

Exemption for Outpatient Hospital Departments

Please note outpatient hospital departments are exempt from the therapy cap at this time, as they had been prior to the exceptions process. With an exceptions process in place for nearly 10 years, the previous exemption for outpatient hospitals was no longer considered necessary. As such, Congress applied the cap to this setting as long as an exceptions process was in place. Absent the exceptions process, the exemption from outpatient hospital departments was reinstated.

Additional details regarding the outpatient hospital department exemption is available on the Centers for Medicare and Medicaid Services (CMS) website.

Manual Medical Review of Therapy Services

Manual medical review (MMR) of therapy services was tied to the exceptions process. When Congress failed to extend the exceptions process, they also failed to extend MMR. It is possible that legislation for the cap could include some version of MMR in the future.

Options if a Patient Exceeds the Therapy Cap

If a patient exceeds the therapy cap, they may continue treatment at an outpatient hospital department (as this setting is currently exempt from the caps) or continue treatment and pay out of pocket. If a patient elects to pay out of pocket, ASHA strongly recommends that the clinician provide the patient with an advanced beneficiary notice (ABN) [PDF] to inform the beneficiary of potential financial liability if Congress fails to act. Following the provision of an ABN, the provider is allowed to charge the beneficiary if CMS does not pay the claim.

Unfortunately, clinicians may find that Medicare beneficiaries may not be able to afford to pay out of pocket and may prematurely end treatment despite a continued need.

CMS Announces it will Hold Claims

On January 18, 2018, CMS posted the following announcement regarding the expiration of the exceptions process to its website:

"...CMS is taking steps to limit the impact on Medicare beneficiaries by holding claims affected by the therapy caps exceptions process expiration for a short period of time beginning on January 1, 2018. Only therapy claims containing the KX modifier are being held; claims submitted with the KX modifier indicate that the cap has been met but the service meets the exception criteria for payment consideration. Currently if claims are submitted without the KX modifier and the beneficiary has exceeded the cap the claim will be denied.”

ASHA believes CMS intends to hold claims with the KX modifier and the KX modifier should only be used if the patient has exceeded the cap. It would not be appropriate for clinicians to use the KX modifier for all therapy claims. Holding claims for therapy services that have exceeded the cap and contain the KX modifiers will allow CMS to process those claims once Congress addresses the cap and prevents therapists from having to resubmit claims that would have otherwise been denied. It is not clear how long CMS will hold this group of claims. Additional details will be posted here as they become available.

Congressional Action Retroactive to January 1

Although it is hopeful that any legislative fix to the therapy cap will be retroactive to January 1, these details have not been confirmed at this time.

ASHA Resources

Take Action!

It is imperative that every ASHA member contact their members of Congress today and request that Congress pass a bipartisan and bicameral policy agreement to repeal the therapy caps once and for all.

Stay Informed

Please continue to monitor the ASHA website and sign up for ASHA Headlines to get the most recent news available.

For additional legislative questions contact Ingrida Lusis, ASHA's director of federal & political advocacy, at

For additional regulatory implementation questions contact Sarah Warren, ASHA's director of health care regulatory policy, at

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