Filed under: Industry Updates — Editor @ 12:00 pm

On the afternoon of November 1, 2012, the Medicare Payment Advisory Commission (“MedPAC”) unanimously adopted a series of recommendations, which, if ultimately enacted by Congress, would have a profound adverse impact on providers of outpatient therapy services and the patients they serve. The recommendations that MedPAC approved will be included in the Commission’s report to Congress that was mandated by the Middle Class Tax Relief and Job Creations Act of 2012. MedPAC’s actions do not carry the force of law and must be passed by Congress if they are to become effective. It should be stressed that MedPAC adopted the recommendations despite the vigorous and vocal opposition to many of them by a broad array of rehabilitation providers, patient and disease groups, and other health care stakeholders.

MedPAC adopted two recommendations that it believed would enhance Medicare program integrity:

(1) The certification period for outpatient therapy plans of care should be reduced from 90 days to 45 days; and

(2) Congress should require CMS to develop and implement national guidelines for payment edits that target “implausible therapy” and to utilize existing authority under the ACA to target resources on “aberrant billing patterns”.

MedPAC also accepted a series of recommendations designed to control Medicare costs for outpatient therapy services including:

(1) Reducing the therapy cap for combined physical therapy and speech-language pathology services as well as the cap for occupational therapy services to $1270 in 2013 and adjusting the caps each year by the Medical Economic Index (“MEI”)[1];

(2) Mandating that CMS establish a manual review process for requests to exceed the relevant cap and that adequate resources be appropriated for the process;

(3) Permanently extending the therapy caps to services provided in the hospital outpatient setting; and

(4) Increasing the MPPR to 50 percent (from 25 percent under current law) to the practice expense component of services provided to the same patient on the same day.[2]

As required by the Middle Class Tax Relief and Job Creation Act, MedPAC also adopted several recommendations for improving the management of the outpatient therapy benefit over the longer term. To this end, the use of V Codes as the principal diagnosis on an outpatient therapy claim would be prohibited. In addition, CMS would be directed to secure functional status data through a standardized assessment tool that incorporates information on patient demographics, diagnosis, surgery, medication, and functional limitations and to employ this data to assess the impact of therapy on functional status and form an underpinning for a global or episodic payment system.

With respect to the manual medical review process, MedPAC recommended that CMS consider using one or two MACs to conduct all manual medical review requests nationwide in order to ensure consistency in review decisions; permitting requests for review to be submitted electronically instead of just by fax or mail as is currently the case; requiring that reviews be accepted or denied within 10 business days and within the 10 day review period, permitting two visits for which the provider would bear the risk; requiring reviewers to immediately confirm receipt of a request for review; and ensuring that adequate resources are made available to conduct the manual review process appropriately.

From the discourse at the meeting, it was apparent that MedPAC was trying to find the middle ground between a hard cap on therapy services and a Medicare benefit with no limitations. It also appeared that MedPAC was driven to adopt these recommendations because it saw no other viable alternatives.


[1] According to MedPAC, 67 percent of Medicare beneficiaries receiving outpatient therapy services would be below the threshold for physical therapy/speech-language pathology services and likewise, 67 percent would fall below the cap for occupational therapy services.

[2] MedPAC has not yet finalized an estimate of the savings that would accrue to Medicare from adoption of these recommendations.

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