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On February 9, 2018, the Bipartisan Budget Act of 2018 was signed into law by the President. The budget act includes a “health extenders” package that, among other changes, permanently repeals annual Medicare payment limits (or caps) on outpatient physical, speech, and occupational therapy services.[1] Pursuant to the Balanced Budget Act of 1997, Medicare Part B outpatient therapy has been subject to payment caps that required therapists to seek “exceptions” in order to continue providing care to Medicare beneficiaries once those caps were reached. Medicare beneficiaries were often left with uncertainty as Congress frequently wrestled with extending the exceptions process over the last twenty years, as was the case this year when the exceptions process expired on December 31, 2017.

Although the 2018 budget act repeals outpatient therapy caps, it still requires providers to continue using a modifier code when submitting claims above $2,100 annually for the purposes of “indicating that such services are medically necessary as justified by appropriate documentation in the medical record involved.”[2] The budget act also provides the Centers for Medicare & Medicaid Services (CMS) with five million dollars a year for nationwide targeted medical reviews of claims that surpass $3,000. However, the American Physical Therapy Association (APTA) clarifies that “[c]laims that go above $3,000 will not automatically be subject to targeted medical review. Instead, only a percentage of providers who meet certain criteria will be targeted, such as those who have had a high claims denial percentage or have aberrant billing patterns compared with their peers.”[3] Further, the American Occupational Therapy Association (AOTA) notes, “the therapy cap will never again put beneficiaries at risk for being denied essential occupational therapy services.”[4]

The repeal of the therapy caps bolsters the implementation of the court-approved settlement agreement in Jimmo v. Sebelius, No. 11-cv-17 (D. VT), also known as the “Improvement Standard” case. The Jimmo Settlement – reached by the Center for Medicare Advocacy and Vermont Legal Aid with CMS – required CMS to confirm that “[s]killed care may be necessary to improve a patient’s condition, to maintain a patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”[5] Although the Jimmo Settlement protects all Medicare beneficiaries who need ongoing maintenance therapy services, including those with chronic conditions, beneficiaries still faced the annual therapy caps.

The Jimmo Settlement, along with the repeal of the outpatient therapy caps, confirms that beneficiaries in need of ongoing therapy should no longer need to worry about these arbitrary barriers to care.

D. Valanejad, February 14 2018


[1] Bipartisan Budget Act of 2018, H.R. 1892, 115th Cong. 50202 (2018) (to be codified at 42 U.S.C. § 1395l(g)).  
[2] Id.
[3] A Permanent Fix to the Therapy Cap: Improved Access for Medicare Patients Comes With Pending APTA-Opposed Cut to PTA Payment, PT In Motion, APTA (Feb. 9, 2018),
[4] Amy Lamb, Therapy Cap Repealed After 20 Years: Message from AOTA President, AOTA (Feb. 9, 2018),
[5] CMS Transmittal 179, Pub 100-02, 1/14/2014, available at



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