Medicare Therapy Cap

Under the Balanced Budget Act (BBA) of 1997 Congress placed an annual cap on rehabilitation services under Medicare. Since enacting the BBA, Congress has recognized the cap's potential harmful effect on Medicare beneficiaries and has acted several times to prevent implementation of a hard cap.

On March 31, 2014, Congress passed legislation extending the Medicare therapy cap exceptions process until March 31, 2015. In 2014 there is a two-tiered exceptions process, an automatic exceptions process and a manual medical review exceptions process. The automatic exceptions process applies when patients reach the $1,920 threshold and the manual medical review exceptions process is required at the $3,700 threshold.

Representatives Jim Gerlach (R-PA) and Xavier Becerra (D-CA), and Senators Ben Cardin (D-MD) and Susan Collins (R-ME) introduced the Medicare Access to Rehabilitation Services Act (HR 713/S 367) in both chambers on February 14, 2013. HR 713 and S 367 would permanently repeal the $1,920 therapy "cap" imposed on physical therapy, occupational therapy, and speech-language pathology services. An arbitrary cap on outpatient therapy services without regard to clinical appropriateness of care discriminates against the most vulnerable Medicare beneficiaries. APTA believes that a full repeal of the therapy cap is necessary to ensure patients have access to timely and appropriate care.

Medicare Therapy Cap and SGR Reform

When the Balanced Budget Act was passed in 1997, it also created the sustainable growth rate (SGR) formula. The Medicare therapy cap and the SGR formula were enacted as cost saving measures. Since that time, Congress has continually acted to address the flawed SGR formula and to prevent a hard cap on outpatient therapy services with short-term fixes.

Congress is looking to permanently reform the sustainable growth rate formula so these annual fixes are no longer necessary. APTA has been meeting with legislators throughout the year, emphasizing the need to include a full repeal of the Medicare therapy cap in any SGR reform package.

Earlier this year, the House Ways and Means, House Energy and Commerce and Senate Finance Committees came to an agreement on reform policy for the SGR. The Senate Finance introduced legislation includes repeal of the Medicare therapy cap, while the companion legislation in the House of Representatives does not. APTA supports these efforts to reform SGR, but continues to advocate for repeal of the Medicare therapy cap in the final bill.

See the 2014 Medicare Changes webpage for the latest updates.

Short-Term Solution

Despite positive steps toward policy agreement on the repeal and reform of the SGR, an agreement on how to offset the cost of the legislation was not found before the previous March 31, 2014 deadline. Congress passed a short term patch to extend the current SGR and Medicare extenders, including the therapy cap, until March 31, 2015. This extension will give Congress time to reach an agreement on the final SGR reform package and offsets.

How to Take Action

Negotiations on SGR reform and repeal of the Medicare therapy cap will continue throughout 2014. APTA members and nonmembers can help repeal the therapy cap by:

  • E-mail your legislators. APTA has provided prewritten letters for APTA members on the Legislative Action Center and for nonmembers/patients on the Patient Action Center.
  • Meet with your legislators. Schedule a district meeting, attend a town hall event, or invite your legislators to visit your practice over recess. This is a great opportunity to meet with your members of Congress locally and discuss the importance of repealing the therapy cap.
  • Join PTeam. APTA will be ramping up its advocacy efforts when Congress returns in January. Join the PTeam to receive e-mail updates on the latest SGR and therapy cap news and receive alerts when it is time to take action and contact your members of Congress on these reform policies.

Policy Resources

Current Cosponsors

Inform Your Patients

Background

Payment Information & Resources

  • Medicare Coding & Billing

    The Medicare Coding & Billing page includes information on the 2013 changes, frequently asked questions, a medical manual review complaint form, and more.

Additional Resources

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