(Medicare Claims Processing Manual)

The following table identifies the provider and supplier types, and identifies which claim format they may use to submit claims for outpatient therapy services to the contractor.   Provider/Supplier Service Type  Format  Bill Type  Comment  Inpatient SNF Part A  Institutional  21X Included in PPS  Inpatient hospital Part B  Institutional  12X Hospital may obtain services under arrangements and bill, or rendering provider may bill.  Inpatient SNF Part B (audiology tests are not included)  Institutional  22X SNF must provide and bill, or obtain under arrangements and bill. Outpatient hospital  Institutional  13X Hospital may provide and bill or obtain under arrangements and bill. Outpatient SNF  Institutional  23X SNF must provide and bill or obtain under arrangements and bill. HHA billing for services not rendered under a Part A or Part B home health plan of care, but rendered under a therapy plan of care.  Institutional  34X Service not under home health plan of care.  Outpatient physical therapy providers (OPTs), also known as rehabilitation agencies   Institutional  74X Paid MPFS for outpatient rehabilitation services.  Comprehensive Outpatient Rehabilitation Facility (CORF)  Institutional  75X Paid MPFS for outpatient rehabilitation services and all other services except  drugs.  Drugs are paid 95% of the AWP.  Physician, NPPs, TPPs, (therapy services in hospital or SNF)  Professional  See Chapter 26 for place of service coding.  Payment may not be made for therapy services to Part A inpatients of hospitals or SNFs, or for Part B SNF residents.   NOTE:  Payment may be made to physicians and NPPs for their professional services defined as sometimes therapy (not part of a therapy plan) in certain situations; for example, when furnished to a beneficiary   Provider/Supplier Service Type  Format  Bill Type  Comment  registered as an outpat ient of a hospital.  Physician/NPP/TPPs office, or patients home  Professional  See Chapter 26 for place of service coding.  Paid via MPFS.  Critical Access Hospital - inpatient Part B  Institutional  12X Rehabilitation services are paid at cost.  Critical A ccess Hospital  outpatient Part B  Institutional  85X Rehabilitation services are paid at cost.   For a list of the outpatient rehabilitation HCPCS codes see 20.   If a contractor receives an institutional claim for one of these HCPCS codes with dates of service on or after July 1, 2003, that does not appear on the supplemental file it currently uses to pay the therapy claims, it contacts its professional claims area to obtain the non -facility price in order to pay the claim.   NOTE: The list of codes in 20 contains commonly utilized codes for outpatient rehabilitation services.  Contractors may consider other codes on institutional claims for payment under the MPFS as outpatient rehabilitation services to the extent that such codes are determined to be med ically reasonable and necessary and could be performed within the scope of practice of the therapist providing the service.   10.1 - New Payment Requirement for A/B MACs (A)  (Rev. 1, 10- 01-03)  Effective with claims with dates of service on or after July 1, 2003, OPTs/outpatient rehabilitation facilities (ORFs), (74X and 75X bill type) are required to report all their services utilizing HCPCS.  A/B MACs (A) are required to make payment for these services under the MPFS unless the item or service is currently being paid under the orthotic fee schedule or the item is a drug, biological, supply or vaccine (see below for an explanation of these services).   The CMS currently provides A/B MACs (A) with a CORF supplemental file that contains all physician fee schedule services and their related prices.  A/B MACs (A)  use this file to price and pay OPT claims.  The format of the record layout is provided in Attachment E of PM A -02-090, dated September 27, 2002.  This is located in Chapter 23, section 50.3 .  A/B MACs (A)  will be notified in a one -time instruction of updates to this file and when it will be ava ilable for retrieval.     If an A/B MAC (A)  receives a claim for one of the above HCPCS codes with dates of service on or after July 1, 2003, that does not appear on the CORF supplemental file it currently uses to pay the CORF claims, it contacts its local A/ B MAC (B) to obtain the price in order to pay the claim.  When requesting the pricing data, it advises the A/B MAC (B)  to provide it with the nonfacility fee.   10.2 -  The Financial Limitation Legislation  (Rev. 4214, Issued: 01- 25-19, Effective: 01- 01-19, I mplementation: 02 -26-19)  A.  Legislation on Limitations   The dollar amount of the limitations (caps) on outpatient therapy services is established by statute.  The updated amount of the caps is released annually via Recurring Update Notifications and posted on the CMS Website  www.cms.gov/TherapyServices, on contractor Websites, and on each beneficiarys Medicare Summary Notice.  Medicare contractors shall publish the financial limitation amount in educational articles.  It is also available at 1 -800-Medicare.   Section 4541(a)(2) of the Balanced Budget Act (BBA) (P.L. 105- 33) of 1997, which added 1834(k)(5) to the Act, required payment under a prospective payment system (PPS) for outpatie nt rehabilitation services (except those furnished by or under arrangements with a hospital).  Outpatient rehabilitation services include the following services:   Physical therapy   Speech -language pathology; and   Occupational therapy.   Section 4541(c) of the BBA required application of financial limitations to all outpatient rehabilitation services (except those furnished by or under arrangements with a hospital).  In 1999, an annual per beneficiary limit of $1,500 was applied, including  all outpatient physical therapy services and speech -language pathology services.  A separate limit applied to all occupational therapy services.  The limits were based on incurred expenses and included applicable deductible and coinsurance.  The BBA provi ded that the limits be indexed by the Medicare Economic Index (MEI) each year beginning in 2002.  Since the limitations apply to outpatient services, they do not apply to skilled nursing facility (SNF) residents in a covered Part A stay, including patients  occupying swing beds.  Rehabilitation services are included within the global Part A per diem payment that the SNF receives under the prospective payment system (PPS) for the covered stay.  Also, limitations do not apply to any therapy services covered under prospective payment systems for home health or inpatient hospitals, including critical access hospitals.   The limitation is based on therapy services the Medicare beneficiary receives, not the type of practitioner who provides the service.  Physical therapists, speech -language pathologists, and occupational therapists, as well as physicians and certain nonphysician practitioners, could render a therapy service.     B.  Moratoria and Exceptions for Therapy Claims   Since the creation of therapy caps, Congres s has enacted several moratoria.  The Deficit Reduction Act of 2005 directed CMS to develop exceptions to therapy caps for calendar year 2006 and the exceptions have been extended periodically.  The cap exception for therapy services billed by outpatient h ospitals was part of the original legislation and applies as long as caps are in effect.  Exceptions to caps based on the medical necessity of the service are in effect only when Congress legislates the exceptions.   C. Repeal of Original Legislation and Re placement with Thresholds to Ensure Appropriate Therapy .  Section 50202 of the Bipartisan Budget Act of 2018 repeals application of the Medicare outpatient therapy caps but retains the former cap amounts as a threshold of incurred expenses above which clai ms must include a modifier as a confirmation that services are medically necessary as justified by appropriate documentation in the medical record. This is termed the KX modifier threshold.  Along with this KX modifier threshold, the new law retains the tar geted medical review  process but at a lower threshold amount of $3,000. For more information about the medical review (MR) threshold see the below section 10.3.4.    10.3 - Application of Financial Limitations  (Rev.  4214, Issued: 01- 25-19, Effective: 01- 01-19, Implementation: 02- 26-19)  (Additions, deletions or changes to the therapy code list are updated via a Recurring Update Notification)   Financial limitations on outpatient therapy services, as described above, b egan for therapy services rendered on or after on January 1, 2006.  References and polices relevant to the exceptions process in this chapter apply only when exceptions to therapy caps are in effect.  For dates of service before October 1, 2012, limits apply to outpatient Part B therapy services furnished in all settings except outpatient hospitals, including hospital emergency departments.  These excluded hospital services are reported on types of bill 12x or 13x, or 85x.  Effective for dates of service on or after October 1, 2012, the limits also apply to outpatient Part B therapy services furnished in outpatient hospitals other than CAHs and hospitals in Maryland.  During this period, only type of bill 12x claims with a CMS certification number in the CAH  range, type of bill 12x and 13x claims with a CMS certification number beginning with the State code for Maryland, and type of bill 85x claims are excluded.    Effective for dates of service on or after January 1, 2014, the limits also apply to CAHs.  Effective for dates of service on or after January 1, 2016, the limits also apply to hospitals in Maryland.  Effective for dates of service on or after January 1, 2018, the KX modifier threshold applies to all the therapy provider types to which the limits applied.     Contractors apply the financial limitations or thresholds to the MPFS amount (or the amount charged if it is smaller) for therapy services for each beneficiary.   As with any Medicare payment, beneficiaries pay the coinsurance (20 percent) and any deductible that may apply.  Medicare will pay the remaining 80 percent of the limit after the deductible is met.  These amounts will change each calendar year.   Medicare shall apply these financial limitations or KX modifier thresholds in order, according to the dates when the claims were received.  When limitations or KX modifier thresholds apply, the Common Working File (CWF) tracks them.  Shared system maintainers are not responsible for tracking the dollar amounts of incurred expenses.  In processing cl aims where Medicare is the secondary payer, the shared system takes the lowest secondary payment amount from MSPPAY and sends this amount on to CWF as the amount applied to therapy limits or KX modifier thresholds.   10.3.1 - Exceptions to Therapy Caps   General  (Rev. 3367 Issued: 10- 07-15, Effective: 01- 01-16, Implementation: 01- 04-16)  The following policies concerning exceptions to caps due to medical necessity apply only when  the exceptions process is in effect.  Except for the requirement to use the KX modifier, the guidance in this section concerning medical necessity applies as well to services provided before caps are reached.   Provider and supplier information concerning exceptions is in this chapter and in Pub. 100-02, Chapter 15, section 220.3.  Exceptions shall be identified by a modifier on the claim and supported by documentation.  The beneficiary may qualify for use of the cap exceptions process at any time during the episode when documented medically necessary services exceed caps.  All covered and medically necessary services qualify for exceptions to caps.  All requests for exception are in the form of a KX modifier added to claim lines.  (See subsection D. for use  of the KX modifier.)   Use of the exception process does not exempt services from manual or other medical review processes as described in Pub. 100- 08.  Rather, atypical use of the exception process may invite contractor scrutiny, for example, when the KX modifier is applied to all services on claims that are below the therapy caps or when the KX modifier is used for all beneficiaries of a therapy provider.  To substantiate the medical necessity of the therapy services, document in the medical record (see P ub. 100- 02, chapter 15, sections 220.2, 220.3, and 230).   The KX modifier, described in subsection D., is added to claim lines to indicate that the clinician attests that services at and above the therapy caps are medically necessary and justification is documented in the medical record.     10.3.2 - Exceptions Process  (Rev. 3670, Issued: 12- 01-16, Effective: 01- 01-17, Implementation: 01- 03-17)  An exception may be made when the patients condition is justified by documentation indicating that the beneficiary  requires continued skilled therapy, i.e., therapy beyond the amount payable under the therapy cap, to achieve their prior functional status or maximum expected functional status within a reasonable amount of time.