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Legislative Update: Will Changes to Medicare Therapy Cap Improve Chronic Wound Care?

Two decades later, physical therapists may have regained their place in providing wound care services and can forget about any Medicare “therapy hard cap.”

Physical therapists (PTs) remain an integral part of the wound care team on both an inpatient and outpatient basis. However, PTs (and their employers) have been saddled with a therapy cap that for more than 20 years has limited payment for the services that they provide in the outpatient space. The Balanced Budget Act (BBA) of 19971 has placed an annual cap on rehabilitation services under Medicare, and many PTs have struggled with providing adequate wound care in the time since. In recent years, Congress has recognized the potential harmful effect of reduced services to Medicare beneficiaries and, as a result, has acted several times to prevent the implementation of a “hard cap.”2 Most notably was a two-tier exceptions process that allowed for payment of medically necessary services beyond the cap threshold, which included an automatic exception process (“KX” Modifier) and a manual medical review exception process. These exceptions expired Dec. 31, 2017.2 However, according to many PTs, this temporary exception process was an unstable and unsustainable option for therapy providers. 

On Feb. 9, 2018, a permanent fix to the Medicare cap was approved by Congress, essentially ending the 20-year cycle of uncertainty. (The law was made retroactive to Jan. 1, 2018.) Today, the annual (calendar-based) per-beneficiary therapy cap amount is $2,010 for PTs and speech therapy combined, while a separate $2,010 amount is allotted for occupational therapy. The cap may be adjusted annually (it resets each January), but the amount may vary. The therapy cap applies to all Medicare Part B outpatient settings, including hospital outpatient departments, and only Medicare-allowable charges are counted toward the cap.

Effective Jan. 1, 2018, therapy claims for outpatient Medicare Part B that will go above $2,010 (adjusted annually) still require the use of the “KX” Modifier for attestation that the services are medically necessary. Also, the threshold for targeted medical review has been lowered to $3,000 (from the previously published $3,700) through 2027.3 The interesting twist in all of this is that the Centers for Medicare & Medicaid Services will not receive any increased funding to pursue expanded medical review, and the overall number of targeted medical reviews is not expected to increase.

Claims that go above $3,000 may be subject to targeted medical review, but only a percentage of providers who meet certain criteria will be targeted, such as those who have had a high claims-denial percentage, have aberrant or questionable billing patterns compared to their peers, and/or are a newly enrolled therapy provider.3 The disappointing news is that, in order to offset the cost of the permanent fix, a payment differential for services provided by physical/occupational therapy assistants has been added. Hence, these assistants will be paid at a rate of 85% of the Medicare Physician Fee Schedule beginning in 2022.3 This is similar to the payment differential seen between physician assistants and nurse practitioners compared to their physician peers. While the result with Congress is not a complete elimination of the “hard cap,” this exception process will no longer require annual renewal. In reality, this is a permanent extension of the current exception process. 

Pamela G. Unger is vice president of health policy and market access at AlliquaTM BioMedical, Yardley, PA.


1. History of medicare therapy caps. American Physical Therapy Association. 2016. Accessed online:

2. Medicare therapy cap. American Physical Therapy Association. 2018. Accessed online:

3. Soliman B. A permanent fix to the therapy cap: improved access for medicare patients comes with pending APTA-opposed cut to PTA payment. PTinMotion. 2018. Accessed online:

Pamela G. Unger, PT, CWS, FCCWS
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