The following guidelines have been prepared to help you evaluate whether therapy services are eligible for an exception to the therapy cap(s), and if so, how to apply.

The Centers for Medicare & Medicaid Services (CMS) has recently instructed carriers and fiscal intermediaries to implement plans for exceptions to the Congressionally-mandated therapy caps beyond the annual $1740 cap per beneficiary, per category of therapy.

• Physical and speech/language services are counted together against a $1740 annual cap.
• Occupational therapy services are paid against a separate $1740 cap.

Limits apply to outpatient Part B therapy services from all settings except outpatient hospital and hospital emergency rooms.

• Bill types affected: 22X, 23X, 34X, 74X, and 75X.

The common working file (CWF) is the engine used to count reimbursement rates.

When a beneficiary has met the cap, claims will have some or all lines rejected. The following is a list of the reject codes you may see on a claim:

V8022 Outpatient physical therapy limit has been met. The financial limit for 2006 is $1740. If this service is deemed as medically necessary, refer to MLN Matters article number MM4364.

V8024 Outpatient occupational therapy limit has been met. The financial limit for 2006 is $1740. If this service is deemed as medically necessary, refer to MLN Matters article number MM4364.

U5412 Physical therapy limit has been met. The financial limit for 2006 is $1740. If this service is deemed as medically necessary, refer to the MLN Matters article number MM4364. This is for claims when Medicare is secondary payer.

U5413 Occupational therapy limit has been met. The financial limit for 2006 is $1740. If this service is deemed as medically necessary, refer to the MLN Matters article number MM4364. This is for claims when Medicare is secondary payer.

10417 This is a claim level reject code for claims that have all line items rejected by V8022, V8024, U5412, or U5413 from CWF. The therapy limit for 2006 is $1740. If this service is deemed as medically necessary, refer to MLN Matters article number MM4364.

Cap Exceptions:

• Exceptions are automatically assumed for claims with diagnoses (beneficiary conditions or co-morbidities) included in IOM Pub 100-4, Chapter 5, Section c.3 & 4. It is not necessary to request an exception for additional services for these beneficiaries. Providers should append the KX modifier to submitted services. If the service is payable under Medicare guidelines, reimbursement will be made even if the cap limit has been exceeded.
• Some beneficiaries will not automatically qualify for a cap exception based upon clinical condition and complexity.
• It is recommended by CMS that a request be submitted as early as the clinician determines that the beneficiary may need services beyond the cap. However, therapy should have been provided before making a sound clinical decision that additional therapy beyond the cap will be needed.
• When there is a need to request a manual review for the exception, the following information is to be faxed to Empire Medicare Services at: (315) 442-4279:
• Provider name, address, telephone number, fax number, PIN.
• Beneficiary’s name and HIC.
• Date episode started; expected date to reach cap limit.
• ICD-9-CM code(s).
• A brief summary that supports outcome measurements that indicate the patient is progressing, has good prognosis, but has not reached expected outcomes for the condition, or research that indicates the length of treatment for this condition is appropriate.
• Estimate the date of completion and the number of additional therapy sessions anticipated (maximum = 15 days).
• Type of therapy and frequency to be performed.
• Understanding the contractor’s obligation to pay only medically necessary services (IOM Pub 100-02 Chapter 15, 220.2) is inherent to an implementation of these instructions. Therefore, diagnosis codes on therapy claims, even if listed within the CR, will be identified as payable only if documentation is maintained to support the medical necessity of the therapy services.
• Your records will be reviewed and a decision will be rendered on the cap exception within 10 business days of receipt of your request. If approved, you will be advised to append the KX modifier on subsequent claims for the specified number of additional days approved.
• Remember that the KX modifier is the therapist’s attestation that the services rendered are medically necessary.
• In the event that medical records are requested, the documentation must support the medical necessity of the services billed with the modifier.
• If your request for exception has been submitted after the cap has been exceeded, the contractor can be asked to reopen rejected services. When requesting a manual determination, indicate which dates of service on which claim should be reopened. These dates of service will be subtracted from the approved allotment (maximum of 15 days).
• If the contractor fails to render a decision within 10 business days, payment will be made for a maximum of 15 days.
• Exceptions will be granted to a maximum of 15 additional treatment days. The request for an additional 15 days may be repeated if clinically indicated.
• In the event that your request for additional treatment days is denied, use of the KX modifier on subsequent claims is prohibited.
• In the event that medical records are requested, the documentation must support the medical necessity of the services billed with the KX modifier.

Billing Reminders:

1. Use ICD-9-CM codes that are medically supported by retained documentation.
2. Use current billing practices for modalities/procedures and modifiers.
3. When appending the KX modifier and greater than two modifiers are needed, move to MAP 171A to append modifiers three through five of the two-digit modifiers.
4. Submit claims monthly and timely.

Appeals Related to Disapproval of the Cap Exceptions:

• A contractor’s decision regarding a “therapy cap exception” request is not an initial claim determination, and is not subject to the administrative appeals process.
• When a beneficiary elects to receive services that exceed the cap limitation and a claim is submitted for such services, the resulting determination would be subject to the administrative appeals process.
• An Advance Beneficiary Notice (ABN) is required to be given to a beneficiary whenever the treating clinician determines the services provided no longer satisfy Medicare’s medical necessity requirements. The ABN applies to services that are provided BEFORE the cap is exceeded.
• After the cap is exceeded, only the Notice of Exclusion from Medicare Benefits (NEMB) is appropriate, regardless of whether the services were excepted from the cap.

Note: For 2007, the therapy cap limit will be $1780.

Page Posted: 01/26/07