Medicare Beneficiaries Needing Outpatient Therapy Face Higher Costs in 2018

At the end of 2017, Congress failed to extend several Medicare health care provisions that have now expired. One critical provision that has expired — the therapy caps exceptions process – is already harming thousands of Medicare beneficiaries. The “therapy cap” limits the dollar amount Medicare will cover for outpatient therapy services. Without the “exceptions process”, Medicare beneficiaries will have to pay the full cost of care – rather than only the 20 percent coinsurance – after they hit the cap, or forego care altogether.

The cap applies to all Part B outpatient therapy settings and providers, including: private practices, skilled nursing facilities, home health agencies, outpatient rehabilitation facilities, comprehensive outpatient rehabilitation facilities and hospital outpatient departments. Unfortunately, the caps were designed to limit spending – they were not designed to improve care. The caps reduce Medicare beneficiaries’ access to rehabilitation services by forcing them to bear 100 percent of the cost of care once they exceed the cap, or to ration their care to avoid exhausting their benefits. The caps prevent beneficiaries from receiving the rehabilitation care they need from therapists in a timely fashion, particularly among the most vulnerable individuals needing care after a stroke or to effectively manage conditions such as Parkinson’s disease, multiple sclerosis, and arthritis. Delaying or reducing care can diminish an individual’s independence in his or her home and community. As a result, these beneficiaries are more likely to require higher-cost institutional interventions to remain functional.

The Balanced Budget Act of 1997 imposed the arbitrary limit on the annual amount of Medicare coverage available for beneficiaries receiving outpatient therapy services. Two distinct caps were placed on therapy services: In 2018 the cap is $2,010 for physical therapy (PT) and speech language pathology (SLP) service combined; and $2,010 for occupational therapy (OT) services. Since 1997, Congress has acted 16 times to prevent this policy from harming older Americans and people with disabilities – by creating a temporary “exceptions process” which gives beneficiaries permission to go beyond the cap and maintain Medicare coverage. The latest exceptions process expired on December 31, 2017.

According to a recent analysis commissioned by the American Occupational Therapy Association, nearly six million Medicare beneficiaries accessed outpatient therapy services in 2015, and of these, nearly one million surpassed the PT/SLP cap threshold while nearly one-quarter million surpassed the OT cap threshold.

Without immediate congressional action, Medicare beneficiaries who need therapy services will be forced to pay the full amount for care once they hit the cap. For some beneficiaries with high-cost chronic conditions, they could hit the cap in a matter of weeks. For instance, a person who suffered a stroke may require extensive occupational therapy to relearn how to walk or feed themselves. AARP is urging Congress to fully repeal the therapy caps and replace the temporary exceptions process with a permanent fix that ensures care is delivered to vulnerable patients, protects beneficiaries from high out-of-pocket costs, and safeguards the long-term viability of the Medicare program.