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.

Representatives Charles Boustany (R-LA), Xavier Becerra (D-CA), Marsha Blackburn (R-TN), and Lois Capps (D-CA), and Senators Ben Cardin (D-MD) and Susan Collins (R-ME) introduced the Medicare Access to Rehabilitation Services Act (H.R. 775/S. 539) in the 114th Congress. H.R. 775 and S. 539 would permanently repeal the $1,940 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.

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 $1,940 threshold and the manual medical review exceptions process is required at the $3,700 threshold.

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.

In 2014, the House Ways and Means, House Energy and Commerce and Senate Finance Committees came to a bipartisan 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. Congressional committees have begun to negotiate a permanent solution based on last year’s bipartisan SGR legislation. These committees have agreed on the policy, but continue to disagree on how the legislation should be offset.

See the Medicare Physician Fee Schedule 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.

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:

  • Email your legislators. APTA has provided prewritten letters for APTA members on the Legislative Action Center and for nonmembers/patients on the Patient Action Center. You can also send letters through the APTA Action App.
  • 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. 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


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