Medicare Compliance & Reimbursement

Therapy cap controversy renews focus on coverage and spending growth

Notable growth in outpatient therapy spending has led providers and physician groups to question just who and what Medicare covers, as well as the positive effects that coverage has stimulated.

The Medicare Payment Advisory Commission defines outpatient therapy as the collective term for physical therapy, occupational therapy and speech-language pathology services in a recent 'Medicare Basics' report. Medicare covers 80 percent of all Part B outpatient therapy services, and beneficiaries are responsible for the remainder. To receive coverage, patients must obtain a physician's referral and receive follow-up evaluations.

Medicare covers physicians, physical therapists, occupational therapists and speech-language pathologists who provide therapy services, the report confirms. In addition, Medicare also covers physician assistants, nurse practitioners and clinical nurse specialists in states that permit them to provide therapy services. Services obtained from qualified physical and occupational assistants, when supervised, also fall within the Medicare coverage scope. In contrast, after reviewing many improper claims last year, Medicare confirmed that athletic trainers, chiropractors and nurses do not meet therapists' requisite qualification and training and does not cover therapy services these practitioners provide.

The most commonly billed OT services are therapeutic exercise, therapeutic activities and functional training in self-care and home management, according to the report. PT services center primarily around therapeutic exercise, therapeutic activities and manual therapy. The most commonly billed SLP services are for evaluation and treatment relating to speech and swallowing disorders.

Vague Outcomes Data And Inadequate Risk Adjustment Offer Questionable Distribution Metrics

About nine percent of Medicare beneficiaries use outpatient therapy services according to the MedPAC report. In turn, 88 percent of these benes use PT services. But Medicare doesn't require institutions to include specific diagnoses on therapy claims, which gives usage and distribution estimates questionable significance. "The poor state of diagnoses coding limits the development of a classification system and a risk adjustment methodology needed to establish a prospective payment system for [outpatient therapy] services," MedPAC reports.

Medicare pays out about three-fourths of all outpatient therapy spending to PT services alone. In addition, therapeutic exercise and therapeutic activities make up nearly half of all outpatient therapy spending.

Skilled nursing facilities account for the lion's share of therapy spending, taking in 30 percent of outpatient therapy costs, according to the report. Hospital outpatient departments rank in at 24 percent, and physical therapists operating private practices account for another 18 percent. Outpatient rehabilitation facilities, physicians and private-practice occupational therapists make up the remainder.

To view the full 'Medicare Basics' report, visit www.medpac.gov/publications/other_reports/Dec05_Medicare_Basics_OPT.pdf.