CMS Proposes Major Change in Medicare Payments for Outpatient (Part B) Therapy Services [07-22-10]

Filed under: Industry Updates — Editor @ 8:29 am

On July 13th the Centers for Medicare and Medicaid Services (CMS) published in the Federal  Register a proposed rule (“Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2011”) that contains a proposal that would adversely impact reimbursement for rehabilitation providers under the Medicare program. If enacted, reimbursement for Part B services would be radically changed (meaning reduced).  A complete copy of this lengthy proposed rule is available at Among many items in the publication which may affect outpatient rehabilitation providers, the most concerning, by far, is a proposal to institute a Multiple Procedure Payment Reduction (MPPR) policy for therapy services.  Comments on the proposal are due on August 24, 2010 and a final rule is expected in early November.

Multiple Procedure Payment Reduction

In the proposed rule, CMS argued that “we believe that therapy services are misvalued for [physician fee schedule] payment when multiple services are furnished to a patient in a single session because duplicate clinical labor and supplies are included in the [practice expenses] of the services furnished.”  CMS stated that it had conducted an examination of rehabilitation services often provided together and determined that Medicare was making duplicative payments for some of the services provided during the same visit in an outpatient setting such as cleaning the room or equipment, education/instruction/counseling/coordinating home care, greeting the patient and gowning, measurements such as range of motion/strength/edema, and post-treatment patient assistance.  As a result, CMS proposes “to apply a 50 percent payment reduction to the [practice expense] component of the second and subsequent therapy services for multiple…services furnished to a single patient in a single day.”  Therefore, the most expensive service would be reimbursed at 100% and all subsequent services would be reimbursed at 50% of the value.  This 50% limitation would apply to all subsequent rehabilitation services provided on the same day, so if occupational therapy follows physical therapy, the most expensive service would be billed at 100% and then 50% for the rest.

In the virtually unanimous view of rehabilitation providers, this proposal would cause serious harm to patients and providers. Consider:

  • The proposal would restrict patient access to vital therapy services.  Particularly hard hit would be patients with multiple chronic conditions, who might benefit the most from intensive therapy treatment programs.  The MPPR provision would likely delay or divert care to these patients.
  • This proposed policy would result in draconian cuts in payment for outpatient physical therapy services. In the impact table included in the proposed rule (Table 73), CMS estimated that there would be 12 to 13% cut in payment in 2011 for therapy services.  Estimates by therapy professional associations and providers of therapy services showed that the impact would be in the range of 10 to 20%.
  • When the MPPR proposal is combined with the projected sustainable growth rate (SGR) reductions of 23.5% on December 1, 2010, and an additional 6.1% on January 1, 2011, payment for outpatient therapy services could be reduced by 35.5% in 2011.  The dollars saved would be redistributed across the fee schedule and would not contribute to deficit reduction.
  • Currently, physical therapists, occupational therapists, speech language pathologists and the facilities in which they provide patient care have very small margins between the cost of delivering that care and payments under Medicare. Cuts of such magnitude will force many therapy practices to close their doors or to choose not to treat Medicare beneficiaries.
  • Currently, there is a shortage of physical therapists, occupational therapists, and speech language pathologists. The MPPR policy will discourage individuals from choosing to enter the therapy professions in the future. Shortages of therapists will be problematic as the baby boom cohort enters the Medicare program, and more individuals seek access to services as health care reform provisions become effective.

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