Medicare Therapy Cap Update

With the passage of the Deficit Reduction Act on January 1, 2006, a cap was placed on outpatient therapy services ($1740 for Physical and Speech Therapy combined, and $1740 for Occupational Therapy.) In most cases, this is 15 visits per year. Due to the severe limitations this Act provided, an exceptions process was created. This allows patients with certain conditions and diagnoses to receive treatment, regardless of the amount of therapy they have received.

With the exception process evaluations are automatically allowed. For example, if you are referred by a physician, a physical therapy evaluation would be covered. It is then up to the physical therapist to determine if it is “medically necessary” to continue treatment.

Even after the cap has been met, certain diagnoses (examples include hip or knee replacement, stroke, and rotator cuff disorder) are automatically excepted, as long as the therapist determines that the care is “medically necessary.” Diagnoses or conditions that are not automatically excepted require documentation, which then needs to be approved from Medicare before treatment is performed.

To be considered “medically necessary” therapy services must :

Qualify as skilled therapy services


Be considered effective treatment for the patient’s condition


Be of such complexity and sophistication that the services provided can be provided only by a qualified therapist


Be an expectation that the patient’s condition will improve significantly in a reasonable period of time


In a case of a progressive degenerative disease, therapy may be intermittently necessary to determine the need for equipment or to maximize function.

If you are a Medicare beneficiary, you may check your status regarding the cap by calling 1-(800)-Medicare. (633-4227)

The therapy cap continues until the end of this 2006. The American Physical Therapy Association continues to support legislation to repeal this cap.