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Since the Balanced Budget Act of 1997, outpatient therapy under Medicare Part B has been subject to dollar limits, or caps.[1]  During most of these 20 years, an “exceptions” process has allowed beneficiaries and providers to seek coverage above the caps.  The exceptions process expired December 31, 2017.  Although legislation to repeal the therapy caps and replace them with a process of targeted medical review has bipartisan and bicameral support, it was not included in the budget bill that Congress passed in January 2018.

Effective January 1, 2018, there are hard, unavoidable caps on therapy – a $2010 cap for physical and speech therapy combined, and a separate $2010 cap for occupational therapy. 

The Centers for Medicare & Medicaid Services (CMS) has announced that it will change its method for processing therapy claims.[2]  Just after January 1, 2018, when the caps went into effect, “CMS took steps to limit the impact on Medicare beneficiaries by holding claims affected by the therapy caps exceptions process expiration.”  It paid claims without the KX modifier (which signals that therapy was provided above the cap and that the provider considered the therapy medically necessary) as long as the beneficiary had not exceeded the cap.  Claims exceeding the cap were denied.

Beginning January 25, however, CMS “will immediately release for processing held therapy claims with the KX modifier” for claims beginning January 1-10, 2018.  Beginning January 31, “CMS will release for processing the held claims one day at a time based on the date the claim was received, i.e., on a first-in, first-out basis.”  CMS will use a “rolling hold” of 20 days “to help minimize the number of claims requiring reprocessing and minimize the impact on beneficiaries if legislation regarding therapy caps is enacted.”

As time goes by, the number of beneficiaries reaching the arbitrary caps will continue to increase.  This issue requires resolution immediately to assure that beneficiaries receive the therapy services they need to improve and, as guaranteed by the Jimmo v. Sebelius Settlement,[3] to maintain, prevent or slow decline of their condition.

T. Edelman, January 2018

[1] For a history of therapy caps, see CMA, “Medicare Therapy Caps: A Call for Repeal” (CMA Alert, ),  See also CMA, “Remember People with Medicare in Renewed Spending Bill Debates” (Alert, Jan. 24, 2018),
[2] CMS, “Expired Medicare Legislative Provisions and Therapy Cap Claims with the KX Modifier Rolling Hold” (Jan. 25, 2018),
[3] See the Center’s materials on Jimmo at  

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