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A Guide to Medicare Physical Therapy Caps in 2022

Learn more about the therapy cap for 2022 and stay on top of Medicare compliance for your PT Practice.

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A Guide to Medicare Physical Therapy Caps in 2022

The Centers for Medicare and Medicaid Services (CMS) have released their final rule for the 2022 calendar year, which implemented changes for physical therapy, occupational therapy, and speech-language pathology practices effective January 1. If you’re a physical therapist or therapist assistant, you’ve likely been awaiting news of updates to Medicare physical therapy caps and the KX modifier ever since the proposed rule was released in early August.

Fortunately, you don’t need to read through more than 1,700 pages of CMS jargon to learn the latest on Medicare physical therapy caps in 2022. We’ve gathered the most important details from the recent final rule, which has embellished on the annual care thresholds established in 2018. Here’s what providers need to know about Medicare physical therapy caps and how to append claims with the KX modifier this year.

What is the Medicare Therapy Threshold?

Prior to 2018, Medicare enforced a ‘therapy cap’ for any beneficiary receiving physical therapy (PT), occupational therapy (OT), or speech-language pathology (SLP) services. Ultimately, a patient was only able to receive treatment until a set amount, after which the services would not be eligible for reimbursement by Medicare. To alleviate this issue, an exceptions process was put in place to allow billing for ‘medically necessary services’ furnished beyond the therapy cap.

According to CMS, ‘medically necessary services’ refer to healthcare services or supplies necessary to prevent, diagnose, or treat a condition, disease, illness, injury, or its symptoms. The American Physical Therapy Association (APTA), in particular, defines ‘medically necessary services’ as those that are based on an assessment by a licensed PT, have a purpose beyond patient convenience, and improve function or decrease injury risk.

The Bipartisan Budget Act of 2018 repealed the therapy cap, and instead replaced it with the Medicare therapy threshold or KX modifier threshold. Unlike the previous cap, the therapy threshold is not designed to be a hard stop for services. Instead, providers are directed to use the KX modifier to indicate the medical necessity of services that exceed the threshold amount, both to continue treatment and to continue reimbursement.

What are the Medicare Therapy Threshold Limits for 2022?

The threshold limits for this calendar year differ slightly from the Medicare physical therapy cap of 2021. In 2021, the thresholds were $2,110 for combined PT and SLP services and $2,110 for OT services. Effective January 1, 2022, the current Medicare physical therapy caps are:

  • $2,150 for combined physical therapy and speech-language pathology services.
  • $2,150 for occupational therapy services.

These Medicare therapy thresholds apply to all rehab services furnished in outpatient settings, including private practices, critical access hospitals, and skilled nursing facilities (SNFs) under Medicare Part B. Bear in mind, PTs are permitted to exceed these caps for medically necessary services with the inclusion of the KX modifier. However, a targeted medical review process may begin if the services rendered total more than $3,000.

How Does This Affect My Physical Therapy Practice?

With the Medicare physical therapy cap in 2021 just $40 less than the current therapy threshold, you may be wondering how this update may affect your physical therapy practice. Like the previous year, if furnished services exceed the annual threshold amounts, your claims must include the KX modifier as confirmation that services were medically necessary.

In terms of reporting, you must document the reasons for the additional services to remain in compliance with CMS regulations. CMS requests that claim lines listed with a KX modifier are justified by documentation in the patient’s electronic medical records (EMR). This includes documentation that the patient’s condition requires continued skilled therapy to achieve maximum expected functional status or their prior functional status within a reasonable time.

Reporting for claims with a KX modifier should:

  1. Adhere to Medicare billing requirements.
  2. Include a complete plan of care (POC) with relevant treatment goals.
  3. Cite the reasoning for the specific type of treatment, frequency, and duration of services.
  4. Detail each treatment session, including updates to the patient’s functional status.
  5. Enclose a detailed discharge summary.

If you already have an established documentation process for when patients surpass the therapy threshold, updates to the Medicare physical therapy cap of 2021 should not impact your practice.

When Do I Use the KX Modifier?

The KX modifier should be applied whenever furnished services exceed the annual threshold amount. So, the KX modifier for physical therapy should be applied when services total above $2,150 — either individually or paired with SLP services. This modifier confirms that services were medically necessary and justified, to safeguard potential reimbursement.

There are several instances when a PT would require the KX modifier:

  • A complex, single episode of care that necessitated therapy above the threshold, such as a complex shoulder rehabilitation.
  • A combined, single episode of care that involved both PT and SLP services, such as rehabilitation after a stroke.
  • Multiple episodes of care for a rehab diagnosis that requires additional therapy, such as total knee replacement rehabilitation followed by strengthening and flexibility services.

What is the Targeted Medical Review Process?

The targeted medical review process was implemented long before the Medicare physical therapy cap of 2021 and 2022. In fact, the process has been in place since the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and was upheld in the Bipartisan Budget Act of 2018. It serves as a type of checks and balances for providers who exceed the Medicare physical therapy cap.

Between 2018 and 2028, the targeted medical review threshold is $3,000 for combined PT and SLP services and $3,000 for OT services. Services above $3,000 may be subject to targeted medical review. As the name might imply, not all claims that exceed the therapy threshold will be reviewed. Rather, CMS uses a variety of factors to target specific claims for the review process.

A provider may be subject to targeted medical review if:

  • They are not in compliance with applicable requirements.
  • They have a high claims denial percentage for therapy services.
  • They have a pattern of billing for services that deviate from typical claims, such as billing for an unreasonable amount of units of services within a single day.
  • They are newly enrolled or have not previously rendered therapy services.
  • They are part of a group that includes providers that meet the above criteria.

If you’re selected for a targeted medical review, you will likely be served with an Additional Documentation Request (ADR) for the flagged claim(s). Documentation that may be provided to justify the services include but are not limited to patient medical records, a detailed plan of care, and a summary that specifically addresses the need for additional services beyond the threshold.

The Bottom Line

The first months following a final ruling are always a challenging time. Between navigating changes to the previous Medicare physical therapy cap of 2021 and properly citing the KX modifier for physical therapy, providers can feel flustered by roadblocks in documentation and billing. Fortunately, MWTherapy can help.

Our EMR has been specifically designed with PTs in mind, featuring a suite of compliance-friendly features such as alerts, notifications, and reporting systems that help providers maintain Medicare compliance standards like threshold limits. Our Billing feature even has claim scrubbing to help ensure you’re coding in a compliant fashion. What are you waiting for? Schedule a demo today.

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