2014 Medicare Changes

Scroll down this page for info on topics including the Medicare fee schedule and therapy cap, SGR, PQRS, functional limitation reporting, and more.

New Year, New Changes

January 2, 2014: Before adjourning for the holidays at the end of 2013, Congress passed the Pathway for SGR Reform Act of 2013, which took effect January 1, 2014, temporarily preventing a scheduled payment cut for physicians, physical therapists, and other health care professionals from taking effect on January 1, 2014, and extending the therapy cap exceptions process. Subsequently, on April 1, 2014, President Obama signed into law the Protecting Access to Medicare Act of 2014, preventing the payment cut and extending the therapy cap exceptions process until March 31, 2015. The temporary patch is intended to allow the House and Senate time to finalize legislation that would permanently repeal the flawed SGR formula. In addition, there were a number of changes included in the 2014 Medicare Physician Fee Schedule final rule that affect physical therapist practice and payment for 2014.

Changes that are in effect from January 1 –March 31, 2015, include the following:

  • A 0.5% update in the conversion factor for providers, as compared to 2013 (The 2014 conversion factor for these three months is $35.8228.);
  • an extension of the existing 1.0 geographic practice cost index (GPCI) work floor;
  • an extension of the therapy cap exceptions process at $1920 for all settings; and
  • an extension of the manual medical review (MMR) process at $3700 for all settings.

Changes that are in effect from January 1 –December 31, 2014, include the following:

  • Application of the therapy cap in critical access hospitals (CAHs) for 2014, in the same manner as all other providers of outpatient therapy services.
  • Requirement for physical therapists in private practice to report at least 3 individual measures via claims or registry under the PQRS program to avoid the 2016 2.0% payment penalty. To receive a 0.5% bonus payment in 2014, physical therapists should report 9 measures (or 1-8 if 9 measures are not applicable).

Medicare Payment Updates and Policy Changes

The Center for Medicare and Medicaid Services (CMS) has issued several payment updates and policy changes that will affect outpatient physical therapy and home health providers for calendar year 2014. These updates and changes are included in the Medicare Physician Fee Schedule, Outpatient Prospective Payment System, and Home Health Prospective Payment System.

APTA has developed the following final rule summaries for members:

Note: APTA's Fee Schedule Calculators will be updated for members.

Review APTA's 2014 Medicare Therapy Cap FAQs posted January 2, 2014 to get information on the most commonly asked therapy cap questions.

Physician Quality Reporting System (PQRS)

Physical therapists (PTs) will be facing changes to Physician Quality Reporting System (PQRS) measures specifications in the new year. The changes recently announced by CMS affect areas including current medications, pain assessment, falls plan of care, and functional outcome assessment. PTs planning to participate in PQRS in 2014 are strongly encouraged to review the 2014 measures specifications, which contain information on how a measure is defined and how to report, and the qualifying case information that includes quality data codes for reporting. APTA has updated its PQRS resources to reflect the 2014 measures changes.

Functional Limitation Reporting

APTA has numerous resources to help you navigate >functional limitation reporting, including an online complaint form for members in need of staff assistance.

Pending Long-Term Fixes of SGR, Therapy Cap, and Medical Review

Because health care cost increases have slowed, the cost to permanently fix the SGR has decreased by more than $100 billion. This decrease provided Congress with an incentive to move away from its practice of granting annual extensions and toward proposals that would end the SGR. Policymakers have been clear that achieving a permanent fix is key, as they would no longer be able to guarantee annual extensions without associated payment cuts.

In light of these incentives and policy considerations, the Senate and House created proposals to repeal the sustainable growth rate (SGR). These proposals are also expected to affect the Medicare therapy cap, manual medical review, and more.

Senate Proposal

The Senate Finance Committee's proposal:

  • Repeals the sustainable growth rate formula and freezes Medicare payment rates for all providers for 10 years. Providers would be eligible for payments above the base rate by participating in value-based quality performance incentive programs and transitioning to alternative payment models.
  • Repeals the Medicare therapy cap, and eliminates the requirement of a KX modifier at the $1,900 level. Manual medical review would continue at the $3,700 level through 2014.
  • Implements a new medical review program for outpatient therapy services beginning in 2015. The new program would include a prior authorization mechanism in which physical therapists could request additional blocks of visits (as opposed to manual medical review, which requires every claim over $3,700 to be reviewed). The Secretary of Health and Human Services would determine the level at which prior authorization is applicable and what services are subject to review. Providers will be able to submit medical review claims by fax, mail or electronic means, and the Secretary would be required to make determinations within 10 business days or claims would be ruled medically necessary.
  • Establishes a new data collection system to replace the current functional limitation reporting procedures. The new data system would require providers to report demographic information, diagnosis, severity, affected body structures and functions, limitations with activities of daily living and participation, functional status, and other information deemed appropriate by the Secretary. The new data collection system would be functional in or around 2017.
  • Implements a new requirement that claim forms submitted on or after January 1, 2015 indicate whether the outpatient therapy services provided were rendered by a physical therapist assistant (PTA).
  • Extends the geographic practice cost index (GPCI) and leaves the work geographic floor at 1.00 through 2014. In 2015 the floor would become 0.995. In 2016 and beyond, the floor would be set at 0.99.

House Proposal

The House Ways and Means Committee's proposal for reform:

  • Repeals the SGR formula and allows a 0.5% payment increase per year until 2017.
  • Ends the yearly 0.5% increase in payment for Medicare providers in 2017, and creates a system that would make providers eligible for payment increases through value-based quality incentive programs and alternative payment systems.

The House bill did not address Medicare extenders, including the Medicare therapy cap. However, during the Committee discussion Chairman David Camp (R-MI, 4th) said that the Medicare extenders are important and he plans to address those policies as the SGR reform package moves forward in the House.

What You Can Do

Negotiations on these proposals will resume when the House and Senate return in January, so actions will be most effective after Congress is back in session.

APTA will be seeking your help to best position physical therapy throughout the legislative process as it continues to work with members of Congress to advocate for the profession. Members interested in joining APTA's advocacy efforts to reform SGR and repeal the therapy cap can sign-up for PTeam.

Socious - Hubba Hubba