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CENTER FOR MEDICARE ADVOCACY WRITES PAPER ON MEDICARE THERAPY SERVICES AND CHRONIC CONDITIONS


Medicare Coverage of Therapy Services:  Are the Interests of Beneficiaries With Chronic Conditions Being Met?, a paper commissioned by Johns Hopkins University, and written by Center for Medicare Advocacy, Inc. attorney Vicki Gottlich, identifies barriers to Medicare coverage for beneficiaries with chronic conditions and reviews standards for such coverage. Most importantly, however, the paper dispels the widely accepted Medicare myth that "improvement" is necessary for coverage of therapy services."

Click here to view the paper in its entirety.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Medicare Coverage of Therapy Services:  Are the Interests of Beneficiaries With Chronic Conditions Being Met? 

Vicki Gottlich, J.D., L.L.M.
Center for Medicare Advocacy, Inc.
Washington, D.C.

 

Prepared for

Partnership for Solutions: Better Lives for People with Chronic Conditions

A project of the Johns Hopkins University and the Robert Wood Johnson Foundation

November 2003

 

Preface

This paper, Coverage of Therapy Services in the Medicare Program: Are the Interests of People with Chronic Conditions Being Met?, was commissioned by the Partnership for Solutions: Better Lives for People with Chronic Conditions a project of the Johns Hopkins University and the Robert Wood Johnson Foundation.  The author would like to thank Lori Buchsbaum for the research she contributed to this paper.  She would also like to thank Judith Stein, Alfred Chiplin, and Toby Edelman for their thoughtful review of the paper and their helpful comments.

Executive Summary

Of the 40 million Medicare beneficiaries, over three-quarters (78%) have at least one chronic condition which requires ongoing medical care and management.  Almost two-thirds (63%) have two or more chronic conditions, and twenty percent (20%) of Medicare beneficiaries have five or more chronic conditions.  Thus, access to medical services that address the needs of people with chronic conditions is critical for the majority of Medicare beneficiaries.

Among the services people with ongoing chronic conditions require but have trouble accessing are physical, occupation, and speech therapy. Fifteen percent (15%) of people with serious chronic conditions who were surveyed  reported having difficulties receiving the therapy services they require.  

The focus of therapy services for people with chronic conditions is different from the focus for people who need therapy to address an acute condition.  Those with acute conditions require therapy services for restoration of functioning; the goal is to restore them to their level of functioning before the acute episode.  In contrast, individuals with ongoing chronic conditions are often not expected to improve their functional abilities, and the underlying condition, such as multiple sclerosis, will not improve.  These individuals may nonetheless require physical, occupational, and/or speech therapy to slow the progression of their deterioration or to maintain their current functional ability. By slowing deterioration or maintaining function, people with chronic conditions are able to live independently longer and to have an improved quality of life.

Unfortunately, people with chronic conditions who rely on Medicare are too frequently denied Medicare coverage for therapy services.  The Medicare contractors that review Medicare claims often incorporate an improvement standard, not present in the Medicare statute or regulations, into the medical necessity requirement. Thus, the contractors often deny Medicare claims as not being reasonable and necessary when therapy is needed to prevent deterioration or to maintain functioning.

In denying claims for therapy services, Medicare contractors rely upon Medicare policy manuals, many of which add standards more stringent than the statutory standards.  Inconsistencies among the various Medicare manuals create additional barriers to receipt of necessary therapy services.  Medicare contractors also look for guidance to local coverage determinations which, like the Medicare policy manuals, may also be more restrictive than the Medicare statute. Thus, the medical necessity standards followed by Medicare contractors are a barrier to receipt of prescribed therapy services for people with chronic conditions.

Improved access to Medicare-covered therapy services for people with chronic conditions could be achieved by a reevaluation of Medicare policies and contractor local coverage determinations to make them consistent with the statute and regulations, and with each other.  Current language included in some Medicare manuals could be incorporated into other policy manual sections that address the reasonableness and necessity of therapy service. The language is consistent with the Medicare statute, regulations, and case law. This would establish a consistent, fair approach towards covering medically appropriate therapy for people with chronic conditions. 

Language to be included would:

  • Prohibit utilization of screens and rules of thumb in determination whether physical therapy, occupational therapy and speech therapy are reasonable and necessary.  Determinations would instead be based on assessment of a patient’s individual care needs.

  • Consider a therapy service to be skilled, even if normally considered an unskilled service,  if its inherent complexity requires that it be performed only by or under the supervision of a skilled therapist.

  • Recognize that skilled therapy services could be reasonable or necessary to prevent deterioration or to maintain current capabilities.  The deciding factor is not the potential for recovery, but whether the services needed require the skills of a therapist.

  • Find a therapy service reasonable and necessary where there is a reasonable expectation that a patient’s condition would deteriorate, relapse further, or require hospitalization if treatment services are withdrawn.

 

In addition, as part of Medicare contractor evaluation, the Medicare agency should review and evaluate local coverage determinations relating to therapy services to assure that they do not impose medical necessity criteria that are not warranted by the Medicare statute or regulations.  Contractors should be required to compare their policies with the Medicare manual provisions identified above, eliminate policies that are conflicting, and adopt policies that implement Medicare requirements.

Physical, occupational, and speech therapy services are essential treatments for many Medicare beneficiaries with chronic conditions to assure their continued ability to live in the community and to function at their highest practicable level.  These individuals should not be denied access to medically necessary care simply because they need care for an extended period of time, or because care is required to maintain rather than restore functional ability.  Medicare policy can help promote the goal of independence by establishing consistent standards that comport with the Medicare statute, that do not erroneously require restoration potential, and that are applied in the context of each individual’s unique situation.

I.   Introduction

The prevalence of chronic conditions among people who rely on Medicare has been well documented. Of the 41 million Medicare beneficiaries, over three-quarters (78%) have at least one chronic condition which requires ongoing medical care and management.  Almost two-thirds (63%) have two or more chronic conditions, and twenty percent (20%)  of Medicare beneficiaries have five or more chronic conditions.[1]  Medicare beneficiaries with chronic conditions have functional limitations at a rate that is almost three times greater than younger people with chronic conditions.[2]

Thus, access to medical services that address the needs of people with chronic conditions is critical for the majority of Medicare beneficiaries. While care coordination is key to improving medical services for these individuals,[3] specific items and services, including access to prescription drugs, improve both functional ability and quality of life. Care coordination is the key to access to these services.  Among the services people with ongoing chronic conditions require but have trouble accessing are physical, occupation, and speech therapy (referred to herein as therapy services). Fifteen percent (15%) of people with serious chronic conditions who were surveyed  reported having difficulties receiving the therapy services they require.[4]  Indeed, one-third (34%) of physicians believe that poor care coordination results in their patients’ failure to function to their full potential.[5]

The focus of therapy services for people with chronic conditions is different from the focus for people who need therapy to address an acute condition.  Those with acute conditions require therapy services for restoration of functioning; the goal is to restore them to their level of functioning before the acute episode.  In contrast, individuals with ongoing chronic conditions are often not expected to improve their functional abilities, and the underlying condition, such as multiple sclerosis, will not improve.  These individuals may nonetheless require physical, occupational, and/or speech therapy to slow the progression of their deterioration or to maintain their current functional ability. By slowing deterioration or maintaining function, people with chronic conditions are able to live independently longer and to have an improved quality of life.

Unfortunately, people with chronic conditions who rely on Medicare are too frequently denied Medicare coverage for therapy services.  The Medicare contractors that review Medicare claims often incorporate an improvement standard, not present in the Medicare statute, into the medical necessity requirement.  Thus, they often deny Medicare claims as not being reasonable and necessary when therapy is needed to prevent deterioration or to maintain functioning.  These Medicare contractor standards are a barrier to receipt of prescribed therapy services for people with chronic conditions.[6]

This paper reviews the standards for making medical necessity determinations for the receipt of Medicare-covered physical and occupational therapy services and speech pathology services.  It begins with a discussion of the different standards applicable to therapy services received in different settings.  The paper will identify barriers to receipt of care and make recommendations on how to improve the system for determining the reasonableness and necessity of claims for Medicare-covered therapy services.

II.   STANDARDS FOR RECEIPT OF CARE

Statutory and Regulatory Standards

Medicare pays for therapy services under both Parts A and B.  As with all Medicare benefits, the setting in which the services are received determines whether Part A or Part B pays for the services.  Therapy services received in a hospital or skilled nursing facility (SNF) are paid for under Part A.  Therapy services received as part of the home health benefit are paid for under Part A or Part B, depending on whether the services follow an in-patient hospital stay and/or the total number of home care visits the patient receives.  Therapy services received on an out-patient basis are paid for under Part B.[7]

The need for physical therapy services can be used to establish entitlement to both SNF[8] and home health[9] Medicare coverage.  In order to receive SNF coverage, a patient must require skilled services on a daily basis.  The Centers for Medicare and Medicaid Services (CMS), the Medicare agency, in its regulations, defines receipt of skilled therapy services five days a week as satisfying this requirement.[10]  Similarly, a homebound individual who requires physical therapy may receive therapy services in the home under the home health benefit.  The individual may then also be entitled to home health aides and occupational and speech therapy, and nursing, even if the skilled physical therapy services have stopped.[11]

The Medicare statute itself does not set out a standard for determining medical necessity that is specific to therapy services.  Rather, the general Medicare statutory standard applies.  Medicare will only pay for these services if they are reasonable and necessary for the treatment or diagnosis of an illness or injury.  The statute does not require a determination of whether therapy or any other services are needed to improve the person’s condition, unless the services are provided in regard to a malformed body member.[12]   Thus, the Medicare statute distinguishes between items and services for diagnosis and treatment of an illness or injury, on the one hand, and items and services to improve functioning of a malformed body member, on the other.  Because physical, occupational, and speech pathology therapy services for people with chronic conditions fall within the former category as services for the treatment of an illness or injury, the statute does not impose an improvement requirement.[13] 

It is important to note, however, that Congress has imposed a fiscal cap on the amount of much of the outpatient therapy services for which Medicare will pay.  The Balanced Budget Act of 1997 limited Medicare payments to $1500 worth of outpatient physical and occupational therapy services, and $1500 worth of outpatient speech-language pathology.[14]  Thus, under BBA, even if a physician ordered continued physical therapy as medically necessary for an individual, Medicare would no longer pay for therapy once the cap had been reached.[15]  A Congressional moratorium on the therapy cap expired, so that the limitations on Medicare payment, adjusted for cost increases, applied to outpatient therapy services received on or after September 1, 2003.[16]  However, the moratorium was reinstated effective December 8, 2003, until December 31, 2005, as a result of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173 (December 8, 2003). The moratorium has since lapsed, and the caps are in place as of 2006.

CMS, through regulation, expands somewhat on the statutory reasonable and necessary standard for skilled therapy services in some settings.  Some of these regulatory standards reflect the fact that patients with chronic conditions may require on-going therapy as part of the course of treatment.  In the nursing home setting, the regulations state that a patient’s restoration potential is not the deciding factor in determining whether skilled services, including therapy services, are needed.[17]  The patient may require, and may therefore be entitled to, skilled services to prevent deterioration or to preserve current functioning.[18]  In the home health setting, the regulations provide that skilled therapy services may be reasonable and necessary (1) to establish a safe and effective maintenance program, or (2) to perform a safe and effective maintenance program.[19]

The regulations provide little further guidance on how to determine the reasonableness and necessity of therapy services provided in outpatient settings and paid for under Part B.  They only require that therapy be furnished to a patient under the care of a doctor, pursuant to a plan of treatment developed and reviewed by a doctor or authorized professional, and provided by an authorized therapy provider or supplier.[20]

Thus, unlike the regulations governing therapy services provided under the SNF and home health benefits, the regulations governing outpatient therapy are silent about the needs of people with chronic conditions for care to maintain functioning and that will not result in improvement or total restoration of functioning.  The regulations do not differentiate between restoration and maintenance therapy; they mention neither.  Nor do the regulations discuss the need to review each patient individually.  By their silence, the regulations could be interpreted to mean that Medicare makes no distinction between restoration and maintenance therapy received in an outpatient setting. Unfortunately, the agency that oversees the Medicare program did not interpret the regulations in a light favorable to patients with chronic conditions. Instead, the agency used the silence to create inconsistencies regarding the medical necessity determination for therapy services in the guidance contained in agency policy manuals. 

Policy Manuals

CMS develops policy manuals to help medical providers and Medicare contractors interpret and implement the Medicare statute and regulations.  In the context of therapy services, many of the manual provisions add standards that are more stringent than the statutory standards for determining medical necessity.  In addition, inconsistencies among the various Medicare manuals create inconsistencies in standards of care and additional barriers to receipt of necessary services.

Skilled Nursing Facility and Home Health Manuals: The CMS SNF and  home health manuals contain standards that most accurately reflect the Medicare statutory and regulatory requirements.  Thus, the manuals establish coverage criteria that should enable people with chronic conditions to receive therapy services prescribed by their treating physicians even if the services will not restore function.

The SNF and home health manuals instruct providers that therapy does not need to be restorative in order to satisfy the medical necessity requirement and to be a skilled service as defined under the statute. For example, the SNF manual provides that a skilled service may be needed to prevent deterioration or to maintain functioning.  In reviewing the necessity of rehabilitation services received in a SNF, the Medicare contractor does not look to the patient’s potential for recovery, but instead considers whether the services must be carried out by skilled personnel.[21]  The SNF Manual further prohibits making medical necessity determinations based on “rules of thumb” such as lack of restoration potential, but requires an individualized assessment of a patient’s condition and care needs.[22]

Similarly, the home health manual states that skilled services must be reasonable and necessary for the treatment of the patient’s illness or injury, for the restoration of function, or for the maintenance of function affected by the patient’s illness or injury.  Again, services would be deemed to be skilled services where the skills of a therapist are needed to manage and periodically reevaluate a maintenance program, even if the activities are performed by non-skilled individuals.[23]  The reasonable and necessity determination must also be based on an individualized assessment of the need for care.[24]

Medicare Intermediary Manual Provisions; Subtle differences begin to appear in the Medicare Intermediary Manual which is relied upon by fiscal intermediaries in reviewing claims under Medicare Part A.  The manual begins with a statement similar to the one in the home health regulations:

Services must be provided with the expectation that the condition of the patient will improve materially in a reasonable and generally predictable period of time; OR the services are necessary to the establishment of a safe and effective maintenance program.[25](emphasis added.)

As in the Home Health Manual, the Intermediary Manual covers establishment of a maintenance physical therapy program “ ... if the judgment and skill of a physical therapist is required to safely and effectively treat the illness or injury.”[26]  However, the Intermediary Manual only allows coverage for the establishment, not the provision, of a maintenance program, as provided by the home health regulations.[27]

Further, the Medicare Intermediary Manual has different requirements for speech-language pathology services. They will be covered only if “... it is reasonably expected that the services will materially improve the patient’s ability .... in a manner that is measurably at a higher level of attainment than that prior to the initiation of the services.” (Emphasis added).[28]  This standard precludes coverage if improvement cannot be reasonably expected. Thus, coverage for therapy to help maintain such activities as speech and swallowing is not available, according to this manual, though such services would be available to someone receiving them at home, as long as a skilled therapist was required to provide them.

Medicare Carrier Manual Provisions:  The Medicare Carrier Manual sets forth conditions for coverage of outpatient physical therapy, occupational therapy, or speech pathology services under Part B that are even more confusing and inconsistent than those in the Intermediary Manual. The Carrier Manual begins similarly to the Intermediary and Home Health Manuals. For physical therapy, speech pathology, and/or occupational therapy services to be considered reasonable and necessary, there must be an expectation of significant improvement over time or the services must be necessary to establish a safe and effective maintenance program.[29]

Further, the Carrier Manual goes on specifically to discuss restoration potential, and sets a policy which conflicts directly with the provisions of the SNF manual.  For example, the Carrier Manual states with regard to physical therapy:

Restorative Therapy:   If an individual’s expected restoration potential would be insignificant in relation to the extent and duration of physical therapy services required to achieve such potential, the physical therapy would not be considered reasonable and necessary.[30]        

The manual further distinguishes range of motion exercises not related to restoration of a specific loss of function, but related to maintenance of function, as services that do not require the skills of a qualified therapist.[31] Thus, while restoration is not a factor for skilled services received in a SNF when paid for under the Medicare Part A SNF benefit, restoration suddenly plays an important role for physical therapy services received when paid for under Medicare Part B in the SNF or in an outpatient setting.

More confusion arises in the discussion of physical therapy maintenance programs.  The Carrier Manual states in two consecutive parts of the same section

  • The repetitive services required to maintain function generally do not involve complex and sophisticated physical therapy procedures, and, consequently, the judgment and skill of a qualified physical therapist are not required for safety and effectiveness.

  • The repetitive services required to maintain function sometimes involve the use of complex and sophisticated therapy procedures, and, consequently, the judgment and skill of a physical therapist might be required for the safe and effective rendition of such services.[32]


No further guidance is provided as to the factors used to determine the “sometimes” in which maintenance programs become a skilled service and therefore subject to Medicare coverage.

The Carrier Manual recognizes that a speech pathology maintenance program may be covered under Medicare, but the manual imposes several conditions, not all of which assist people with chronic conditions.  The services must be needed to establish “a safe and effective maintenance program,” the maintenance program must be “required in connection with a specific disease state,” and the maintenance program must be established before “the restorative physical therapy program has been completed...”[33]

Thus, the manual requires establishment of a maintenance program to occur during the course of the initial restorative program.  For this initial restorative program to be covered by Medicare, the Carrier Manual requires “....  a reasonable expectation that the patient’s condition will improve significantly in a reasonable (and generally predictable) period of time.”[34]   Presumably, then, speech pathology services would not be for someone who needs the services simply to maintain current levels of functioning, without first requiring such services to restore ability, or where “expected restoration potential would be insignificant,”[35]would not be covered,  since the maintenance program would not be designed before a restorative program was completed. 

Perhaps most importantly, the Carrier Manual again speaks to the establishment of a maintenance program, not to the provision of such a program. Thus it is far from clear whether the actual carrying out of a maintenance program, once established, can ever be covered, even if the services required are those performed by a skilled professional.

The Carrier Manual provisions concerning occupational therapy also require an expectation of significant practical improvement within a reasonable time period.[36]  They do not address coverage of maintenance programs.  Applying these provisions, therefore, these services would be denied where no expectation of improvement exists.

Medicare Outpatient Physical Therapy/CORF Manual Provisions:  The Comprehensive Outpatient Rehabilitation Facility (CORF) Manual also requires an expectation of “significant practical improvement ... within a reasonable period of time” in order for physical therapy to be considered reasonable and necessary.[37]  Further, the CORF Manual precludes coverage for maintenance physical therapy involving repetitive services required to maintain a level of functioning. According to the standards in the CORF Manual,  Medicare will pay a therapist to design a maintenance program for either physical therapy or speech pathology  and to make “infrequent but periodic evaluations of its effectiveness.”  No payment will be made for carrying out the program, as those services will not be considered reasonable and necessary under the manual.[38]  In effect, then, the manual only provides limited coverage for the services most needed by people with chronic conditions.

Taken together, the various Medicare manuals send inconsistent messages to medical providers and to Medicare contractors about Medicare coverage for therapy services.  Some of the inconsistent messages include:   Evaluate each patient separately to determine his or her individual medical needs, but consider only the patient’s restoration potential.  Services for maintenance of functioning or to prevent deterioration may be covered in some settings if performed by a skilled professional, but in other settings they may or may not be medically necessary, depending on circumstances not clearly specified in the governing manual.  Development - but not implementation - of a maintenance program may be covered, and sometimes only as an adjunct to a therapy regimen designed to improve or restore functioning.  As a result, a person with chronic conditions may receive an individualized assessment that recognizes the medical need for maintenance therapy but denies coverage for the required therapy as not medically necessary because it will not result in improvement of the person’s condition or functioning.  These inconsistent and restrictive messages build barriers to receipt of important therapy services for people with chronic conditions.

Coverage Policies

The Medicare statute establishes coverage, and therefore payment, for broad categories of care.  Medicare contractors that review Medicare claims develop local coverage determinations (LCDs) to delineate whether and under what circumstances Medicare will pay for a particular item or service that falls within a broad category. Thus, LCDs provide further guidance about when a service is considered reasonable and necessary.[39]  LCDs do not carry the same legal weight as the Medicare statute and regulations and are not binding on administrative law judges who review denials of Medicare claims.[40] However, Medicare contractors tend to look first to their own policies when reviewing initial claims for payment.  They rely on their own LCDs, even if the LCDs conflict with the Medicare statute or regulations.  As a result, LCDs that are more restrictive than the Medicare statute, regulations, and even the Medicare manuals cause barriers to obtaining coverage for medical treatment prescribed by a treating physician.

Medicare contractors in most states have developed LCDs that apply to claims for payment of therapy services.[41]  Some contractors, such as Blue Cross/ Blue Shield in Montana, have different LCDs with similar standards for physical therapy, occupational therapy, and speech therapy.  Others, such as Blue Cross/ Blue Shield in Georgia,  have different LCDs for each therapy service, but the medical necessity standards are not the same.  Still other contractors may only issue an LCD for a particular therapy service, such as physical therapy (CIGNA in Idaho) or speech language pathology (Cahaba in Iowa and South Dakota).

Most of these LCDs rely on language that is similar to the language in the CMS manuals. For example, the overwhelming majority mirror language in the Intermediary and Carrier Manuals in stating that claims for therapy services are reasonable and necessary if there is an expectation for improvement or the therapy is necessary to establish a maintenance plan.  Most also state that the therapy service must require the skills of a professional therapist.  A few also adopt other limiting criteria from the CMS manuals that are more restrictive than the Medicare statute.  For example, three contractors[42] require that a maintenance plan be established during the course of restoration therapy. Nine contractors [43] adopt the Carrier and CORF Manual provision that finds a claim for some or all types of therapy services not reasonable and necessary if the restoration potential or the response to treatment is insignificant. 

Contractors also include in LCDs provisions that are different from, and sometimes more restrictive than, the CMS manual provisions.  The most common of these provisions, found in LCDs affecting approximately fourteen states, concerns the medical necessity of maintenance programs. The LCDs that utilize this provision find no medical necessity for services to alleviate chronic pain or to maintain functioning, including: 1) services for the general good and welfare of the patient; 2) repetitive exercises to maintain gait, strength or endurance and assisted walking; 3) exercises not related to the restoration of a specific loss of function; 4) services provided after the patient has achieved therapeutic goals or show no further meaningful progress.[44]

The limitations described above are significant for people with chronic conditions.  The LCDs that contain the limitations, in essence, preclude all therapies related to alleviation of pain, though no such exclusion exists in the Medicare statute.[45]  Indeed, many people with chronic conditions experience on-going pain, and sixty-three percent (63%) of physicians surveyed believe their training in the management of chronic pain was inadequate.[46]  The LCDs described above exclude coverage for maintenance therapy, focus on restoration, and stop coverage when an undefined concept of meaningful progress is not attained. All of these limitations hinder a plan of care designed to maintain function or prevent further deterioration.

A few Medicare contractors include provisions in their LCDs that may be useful for people with chronic conditions seeking maintenance therapy.  Three LCDs allow as medically necessary periodic evaluation of the patient’s condition and response to therapies where the judgment and skills of a professional are required, or where the patient’s condition has changed.[47]  LCDs adopted by CIGNA, as the Part B carrier for Idaho, North Carolina, and Tennessee, include language similar to the language in the SNF and Home Health manuals.  The LCDs state that the restoration potential of a patient is not the deciding factor, and that, even if full recovery or medical improvement is not possible, the patient may need skilled services to prevent further deterioration or to preserve capacity.  Ironically, although Tennessee residents with chronic conditions may benefit from this LCD if their physical therapy services are paid for under Part B, physical therapy services in Tennessee paid for under Part A are subject to the more restrictive LCD discussed above.

III.  CONCLUSION AND RECOMMENDATIONS TO INCREASE ACCESS TO THERAPY SERVICES

As described, the Medicare statute itself contains no limitations on the ability of people with chronic conditions to receive therapy services based upon their restoration potential.  As long as Medicare statutory eligibility criteria are met, including existence of the requisite plan of care by the treating physician, coverage should be available.  Thus, improved access to therapy services could be achieved by a reevaluation of CMS policy manuals and contractor LCDs to make them consistent with the statute and regulations, and with each other.

CMS has acknowledged in both regulations and policy manuals that, in certain settings, coverage for maintenance therapy is medically appropriate. Thus, the Medicare agency would not be required to change its thinking and policies in order to remove this significant barrier for people with chronic conditions regarding access to therapy services. Indeed, current language included in some CMS manuals could be incorporated into other manual sections that address the reasonableness and necessity of therapy services.  This would establish a consistent, fair approach towards covering medically appropriate therapy for people with chronic conditions.

To promote consistency, all of the following language should be included in the Skilled Nursing Facility Manual, the Home Health Manual, the Intermediary Manual, the Carriers Manual and the OPT/CORF Manual.  The language reflects existing language from CMS manuals and is consistent with the Medicare statute, regulations, and case law.

  • Utilization of Screens and “Rules of Thumb”: Determinations of whether physical therapy, occupational therapy and speech therapy services are reasonable and necessary must be based on an objective clinical assessment of each patient’s individual care needs.  Denial of services based on numerical utilization screens, diagnostic screens, diagnosis, prognosis or specific treatment norms is not appropriate.  (from Home Health  Manual, 203.1 and 203.3)

  • Determination of a skilled service:  Physical therapy, occupational therapy and speech therapy services are considered “skilled” if the inherent complexity of the service is such that it can be performed safely and/or effectively only by or under the general supervision of a skilled therapist.  (from Home Health Manual, 205.2.1)

  • Reasonable and necessary:  Skilled physical therapy, occupational therapy and speech therapy services must be  reasonable and necessary to the treatment of a patient’s illness or injury OR to the restoration or maintenance of function affected by the patient’s illness or injury. (from Home Health Manual, 205.2.1, Emphasis Added)

  • Unskilled services as skilled services:  A service that is normally considered unskilled could be considered a skilled therapy service in cases in which there is clear documentation that, because of special medical complications, skilled rehabilitation personnel are required to perform or supervise the service or to observe the patient. (from Home Health  Manual, 202.5.4)

  • Maintenance:  Even where a patient’s full or partial recovery is not possible, a skilled service still could be needed to prevent deterioration or maintain current capabilities. The deciding factor is not the patient’s potential for recovery, but whether the services needed require the skills of a therapist.   (from SNF Manual, 214.1)

  • Prevention of deterioration: Compare the effect of continuing treatment versus discontinuing it.  Where there is a reasonable expectation that a patient's condition would deteriorate, relapse further, or require hospitalization if treatment services are withdrawn, the medical necessity criterion is met.  (adapted from Program Memoranda AB 03-037 March 28, 2003, Medicare Payments for Part B Mental Health Services)


Revisions to LCDs

As part of Medicare contractor evaluation, CMS should review and evaluate LCDs relating to therapy services to assure that they do not impose medical necessity criteria that are not warranted by the Medicare statute or regulations.  Contractors should be required to compare their policies with the Medicare manual provisions identified above, eliminate policies that are conflicting, and adopt policies that implement Medicare requirements.

On a more immediate basis, CMS should issue a program memorandum advising all contractors:

  • That they cannot automatically exclude all therapy services related to alleviation of pain;

  • That they cannot use screens and rules of thumb to deny services, but must make decisions based on an objective clinical assessment of each patient’s individual care needs.

  • That maintenance therapy may be a covered service.


In a society in which living independently is valued and promoted for all individuals, services that help achieve and sustain independence should be promoted.  Physical, occupational, and speech pathology therapy services are essential treatments for many Medicare beneficiaries with chronic conditions to assure their continued ability to live in the community and to function at their highest practicable level.  These individuals should not be denied access to medically necessary care simply because they need care for an extended period of time, or because care is required to maintain rather than restore functional ability.  Medicare policy can help promote the goal of independence by establishing consistent standards that comport with the Medicare statute, that do not erroneously require restoration potential, and that are applied in the context of each individual’s unique situation.


[1]  Robert Berenson, Jane Horvath, Confronting the Barriers to Chronic Care Management in Medicare, Health Affairs Web Exclusive, (Jan. 22, 2003).

[2] National Academy of Social Insurance, Medicare in the 21st Century: Building a Better Chronic Care System (Washington, D.C. January 2003) at 27.

[3] Id.; Partnership for Solutions, Chronic Conditions: Making the Case for Ongoing Care (December 2002).

[4]  Partnership for Solutions, Id. at 33.

[5]  Id. at 36.

[6]  National Academy of Social Insurance, Id., at 18-19, 29.

[7]  Therapy services provided to a resident of a SNF who has exhausted or is ineligible for Part A benefits are treated as outpatient therapy services and paid for under Part B.  42 C.F.R. 410.60(b).

[8]  42 C.F.R. 409.31, 409.32.

[9]  42 U.S.C. 1395f(a)(2)(C);   42 C.F.R. 409.42.

[10]  42 C.F.R. 409.23, 409.32.

[11]  42 C.F.R. 409.44.

[12]  The Medicare statute prohibits payment "for items and services... not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” S.S.A. 1862(a)(1)(A), 42 U.S.C. 1395y(a)(1)(A).  Gottlich, Medical Necessity Determinations in the Medicare Program: Are the Interests of Beneficiaries with Chronic Conditions Being Met?  (Partnership for Solutions, January 2003).

[13]  Gottlich, supra.

[14]  Starting in 2002, the cap was to be increased by the Medicare Economic Index for the current year. 42 C.F.R. 410.60(e), 41.062(d).  The cap was increased to $1590 in 2003.

[15] For beneficiaries who live in the community the cap does not apply to therapy received through a hospital outpatient therapy department. CMS Publication 10988 (June 2003).

[16]  Id.

[17]  42 C.F.R. 409.32(c).

[18]  Id.

[19]  42 C.F.R. 409.44(c)(iii).

[20]  42 C.F.R. 410.60(a), 410.62(a).

[21]  CMS Publication 9, Skilled Nursing Facility Manual 214.1.

[22]  Id. 214.7. The prohibition against using rules of thumb derives from the ruling in Fox v. Bowen, 656 F. Supp. 1236 (D.Ct. 1987).

[23]  CMS Publication 11, Home Health Manual 205.2.

[24] Id. 203.1B.

[25]  CMS Publication 13, Intermediary Manual 3118.2.

[26]  Id.

[27]  42 C.F.R. 409.44(c)(ii).

[28]  Intermediary Manual 3118.2.

[29]  CMS Publication 14, Carrier Manual 22101.1, 2216, 2217.

[30]  Id.

[31]  Id.

[32] Id., Section 2210.2.

[33] Id., Section 2216.

[34]  Id.

[35]  Id.

[36] Id, 2217.

[37]  CMS Publication 9, Outpatient Physical Therapy/CORF Manual, 253

[38]  Id., 253.2, 253.3, 271.1.

[39]  42 U.S.C. 1395ff(f)(2)(B).   Program Integrity Manual, Chapter 13, 1.3 (Rev. April 5, 2002).  LCDs apply only within the jurisdiction of the issuing contractor.

[40]  For a more detailed discussion of LCDs, see Gottlich, Medical Necessity Determinations in the Medicare Program: Are the Interests of beneficiaries with Chronic Conditions Being Met?  (Partnership for Solutions, January 2003).

[41]  This analysis is based on a review, conducted in February 2003, of thirty-nine LCDs that were posted on the CMS coverage data base.  This  web site, http://www.cms.gov/ncd,  was specifically designed to give providers and consumers better access to fiscal intermediary and carrier policies.

[42] The three are Blue Cross/Blue Shield in Georgia,  Blue Cross/Blue Shield (Regence) in Utah, and Blue Cross/Blue Shield in Wyoming.

[43] First Coast in Connecticut,  Blue Cross/Blue Shield in Georgia (speech therapy), Empire Medicare Services in New Jersey (physical therapy), Empire Medicare Services serving most of downstate New York (PT), GHI in Queens County, New York, HealthNow in  Upstate New York, HGS Administrators in Pennsylvania (PT and OT), Blue Cross/Blue Shield (Regence) in Utah, and Blue Cross/Blue Shield in Wyoming (PT and OT)

[44]  The affected states include Arkansas, Florida, Georgia,  Louisiana, Maine, Maryland, Missouri, New Hampshire, New Jersey and New York (except for where the relief of pain is necessary for the delivery of therapy), New Mexico, Oklahoma, Tennessee (PT), and Vermont. 

[45]  Three LCDs, developed by Empire Medicare Services for New Jersey, Empire Medicare Services for downstate New York excluding Queens County, and GHI for Queens County, New York, make an exception and cover services when relief of pain is necessary for delivery of therapy.

[46]  NASI, supra, at 33.

[47] These includes LCDs by Cahaba for Georgia, Cahaba for Iowa and South Dakota, and HGS Administrators in Pennsylvania.

 
 


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