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KX Modifier and Exceptions Process
As of 2018, the former Medicare therapy caps now are annual thresholds that physical therapists are permitted to exceed when they append claims with the KX modifier for medically necessary services. This change from the earlier "hard" therapy caps is the result of the Bipartisan Budget Act of 2018 (BBA of 2018) signed on February 9, 2018, by President Trump. The law, through section 50202, provides for Medicare payment for outpatient therapy services including physical therapy (PT), speech-language pathology (SLP), and occupational therapy (OT) services. If services exceed the annual threshold amounts, claims must include the KX modifier as confirmation that services are medically necessary as justified by appropriate documentation in the medical record. As with the incurred expenses for the old therapy cap amounts, there is one amount for PT and SLP services combined and a separate amount for OT services. This amount is indexed annually by the Medicare Economic Index (MEI). For 2019 this KX modifier threshold amount is:
- $2,040 for PT and SLP services combined, and
- $2,040 for OT services.
The exceptions process consists of 2 tiers:
- An automatic exception that applies when patients reach the outpatient therapy threshold for that year; providers must use the KX modifier and document the reasons for the additional services
- A targeted medical review process for services over $3,000
Using the KX Modifier
The KX modifier is added to claim lines to indicate that the clinician attests that services at and above the therapy thresholds are medically necessary, and that documentation in the patient's medical record justifies the services. This includes documentation that patients, based on their condition, require continued skilled therapy—ie, therapy beyond the amount payable under the threshold to achieve their prior functional status or maximum expected functional status within a reasonable amount of time.
No special documentation is submitted to the contractor for the KX modifier exceptions. The clinician is responsible for consulting guidance in the Medicare manuals and professional literature to determine if the beneficiary qualifies for the exception.
Note that while this exception process is "automatic," the clinician's submission is not binding on the Medicare contractor who makes the final determination on whether the claim is payable.
In making a decision about whether to use the KX modifier, clinicians need to consider, for example, whether services are appropriate to:
- The patient's condition, including the diagnosis, complexities, and severity
- The services provided, including their type, frequency, and duration
- The interaction of current active conditions and complexities that directly and significantly cause the treatment to exceed the therapy threshold
Targeted Medical Review Process
Along with the KX modifier threshold, the BBA of 2018 retains the targeted medical review process that was established in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). However, for 2018 through 2028, the targeted medical review threshold is $3,000 for PT and SLP services, and $3,000 for OT services—a reduction from $3,700 in previous years. (After 2028, the threshold will be indexed annually by the MEI.) The targeted medical review process means that not all claims exceeding the therapy threshold amount are subject to review, as they once were.
The Centers for Medicare and Medicaid Services (CMS) hired Noridian Healthcare Solutions as the supplemental medical review contractor (SMRC) to conduct these targeted medical record reviews. The SMRC's goals are lowering improper payment rates and increasing efficiencies of the medical review functions of the Medicare and Medicaid programs. Reviews may focus on issues identified by, among other sources, CMS internal data analysis, the Comprehensive Error Rate Testing program, professional organizations, other federal agencies such as the Office of Inspector General and Government Accounting Office, and comparative billing reports.
Factors used to select claims for review may include the following:
- The provider has had a high claims denial percentage for therapy services or is less compliant with applicable requirements.
- The provider has a pattern of billing for therapy services that is aberrant compared with peers, or otherwise has questionable billing practices for services, such as billing medically unlikely units of services within a single day.
- The provider is newly enrolled or has not previously furnished therapy services.
- The services are furnished to treat targeted types of medical conditions.
- The provider is part of group that includes another provider identified by the above factors.
As stated in the Medicare Claims Processing Manual, Chapter 5, Section 10.3.2: "Documentation justifying the services shall be submitted in response to any Additional Documentation Request (ADR) for claims that are selected for medical review. Follow the documentation requirements in Pub. 100-02, chapter 15, section 220.3. If medical records are requested for review, clinicians may include, at their discretion, a summary that specifically addresses the justification for therapy threshold exception."