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Congressional Budget Deal Includes Positive Changes to Medicare's Rehabilitation Coverage

May 8, 2018

The Bipartisan Budget Act of 2018 included positive changes to Medicare’s coverage of rehabilitation services-- physical, occupational, and speech therapy -- provided to outpatients.  In the past, the amount of services a beneficiary could receive in a year was capped at amounts adjusted annually. Therapists and their patients could file for an “exception” for additional amounts until the services reached a second, higher cap ($3,700 in 2017). But the caps had a chilling effect and were often imposed without full consideration of a person’s real needs.  

Now Medicare’s therapy limits no longer serve as hard caps, and instead function as threshold amounts meant to flag higher spending levels for Medicare administrators so they can watch for possible abuse of the system, billing errors or fraud.  This means there is still a system in place to assure patients going over a certain amount are doing so out of medical necessity, and not because of over-use, fraud or billing errors. Exceeding the thresholds can still trigger a review, or audit, of the therapists’ records, so it is especially important for them to understand how they work.  After $2,100 for physical therapy and/or speech-language pathology– either separately or in combined, or $2100 for occupational therapy -- is spent in a year, the therapist must notify Medicare if additional services are medically necessary.  Therapists who fail to do so could be at risk of a Medicare review (or audit).  The new budget also put aside funding for Medicare reviews for claims over $3,000, but only certain therapists are likely to be reviewed.  Overall, most believe that access to needed therapy for Medicare beneficiaries will improve because of this important advocacy victory for Medicare beneficiaries and their rehabilitation therapists.  

Additionally, the repeal of the Medicare Therapy Caps supports the settlement agreement in the Jimmo v. Sebelius, or “improvement standard” case. Prior to the settlement of this class action lawsuit, Medicare coverage for rehabilitation and other skilled services was often erroneously cut off if the patient was considered “not likely to improve”.  The US District Court in VT ruled in favor of the plaintiffs, including The National MS Society, and agreed that nowhere does Medicare law stipulate that coverage is conditional on a beneficiary’s ability to improve. This is particularly important for people with long-term, progressive, or debilitating conditions such as MS, who use rehabilitation therapy to maintain their functional abilities and delay disability rather than to improve the way one might after a hip or knee replacement. This settlement forced a change in Medicare’s descriptive language of covered services and expectations for care, confirming that Medicare beneficiaries could continue to receive therapeutic care even while not showing improvement. 

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