The American Taxpayer Relief Act of 2012 (ATRA) was signed into law by President Obama on January 2, 2013.  This law extends the Medicare Part B Outpatient Therapy Cap Exceptions Process through December 31, 2013.  Section 603 of this Act contains a number of Medicare provisions affecting the outpatient therapy caps and manual medical review (MR) threshold.

Therapy Cap Update

The statutory Medicare Part B outpatient therapy cap for Occupational Therapy (OT) is $1,900 for 2013, and the combined cap for Physical Therapy (PT) and Speech-Language Pathology Services (SLP) is also $1,900 for 2013. This is an annual per beneficiary therapy cap amount determined for each calendar year. Exceptions to the therapy cap are allowed for reasonable and necessary therapy services.  Per beneficiary, services above $3,700 for PT and SLP services combined and/or $3,700 for OT services are subject to manual medical review.  CMS is not precluded from reviewing therapy services below these thresholds.

The therapy cap applies to all Part B outpatient therapy settings and providers including:

  • Therapists’ private practices
  • Offices of physicians and certain non-physician practitioners
  • Part B skilled nursing facilities (Type of Bill (TOB) 42X, 43X,44X)
  • Home health agencies (TOB 34X)
  • Rehabilitation agencies (also known as Outpatient Rehabilitation Facilities-ORFs)
  • Comprehensive Outpatient Rehabilitation Facilities (CORFs)
  • Hospital outpatient departments (HOPDs) (TOB 12X or 13X)

CMS is developing a long term strategy to deal with manual medical review. However, in the interim, Medicare Administrative Contractors (MACs) will conduct prepayment review on the claims reaching the $3700 threshold.  CMS requested MACs conduct these manual medical reviews within 10 days.  At this time, there is no advance request for an exception process.  Additional information will be provided on the MAC websites.

Section 603 (b) of the American Tax Relief Act counts outpatient therapy services furnished in a Critical Access Hospital (CAH) toward a beneficiary’s annual cap and threshold amount using the Medicare Physician Fee Schedule rate.  CAHs are not subject to the therapy cap, the manual medical review process, or the use of the KX modifier.

You can contact CMS with questions about the therapy cap and new threshold via a designated e-mail box at

Note:  Posted on the CMS website under Medical Review, Therapy Cap on 2-21-13.