Q&A: Billing for therapy caps

Q: Are outpatient departments considered part of the therapy cap for hospital-owned facilities? If so, do we need to bill with modifier KX (Type of Bill 012X)? I want to ensure I’m billing correctly.

A: At the current time, outpatient hospitals described under the Social Security Act, section 1833(a)(8)(B), are not subject to the therapy caps. The Medicare Physician Fee Schedule final rule contains a detailed discussion, but the statutory authority for continuing the therapy caps for outpatient hospitals expired on December 31, 2017. Medicare is holding claims in the expectation that Congress may act to reinstate the therapy cap to outpatient hospitals. Modifier –KX expired on December 31, 2017, as part of the exceptions process. According to the current guidelines, anything over the cap is patient responsibility.   

The Bipartisan Budget Act of 2018 provides a fix for the therapy cap by permanently extending the current exceptions process, eliminating the need to address this issue from year to year. Among the provisions included in the new policy:

  • Claims that exceed $2,010 (adjusted annually) still will require the use of modifier –KX for attestation that services are medically necessary.
  • The threshold for targeted medical review will be lowered from the current $3,700 to $3,000 through 2027; however, CMS will not receive any increased funding to pursue expanded medical review, and the overall number of targeted medical reviews is not expected to increase.
  • Claims that exceed $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.

Note: This question can be found in the billing and claims section on the NAHRI Forums where you can find answers to questions on a variety of topics from billing and claims to compliance to reimbursement. This question was answered by Denise Williams, RN, COC, senior vice president of revenue integrity services at Revant Solutions in Trussville, Alabama, and Valerie Rinkle, MPA, lead regulatory specialist for HCPro in Middleton, Massachusetts.  

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