Final 2011 Medicare Fee Schedule Rule Released: Major Therapy Payment Reductions Included
The final version of a policy first proposed in June was released on November 2, 2010. Although AOTA advocacy achieved critical changes in the rule, it remains a concerning change to payment for Medicare outpatient occupational therapy that may have consequences in other payment systems.
On July 13, 2010, the Centers for Medicare & Medicaid Services (CMS) published the CY 2011 Medicare Physician Fee Schedule proposed rule that included a harmful proposal to implement a multiple procedure payment reduction (MPPR) policy for therapy services. These cuts were estimated to reduce therapy payment by $500 million in 2011. Since that time, AOTA has been working hard to fight these therapy cuts as they were proposed. We have worked in coalition with other therapy and provider organizations, and met with members of Congress, senior CMS officials, and MedPAC representatives.
On November 2, CMS released its Physician Fee Schedule final rule, which includes a modified MPPR policy for therapy services beginning January 1, 2011. This policy will pay 100% of the practice expense (PE) component of the CPT code/unit with the highest Relative Value Unit (RVU), and then apply a 25% payment reduction to the PE of any second and subsequent codes or units. The policy applies to all “always therapy” service codes billed by a single Part B provider or institution (as identified by NPI) for a patient in one day.
These reductions apply across all therapy disciplines—occupational therapy, physical therapy, and speech-language pathology—and fail to recognize the distinct nature of each. AOTA strongly believes that the policy is inappropriately blind to the separation of these three distinct disciplines and contravenes other Medicare law and agency guidance, which distinguishes between the disciplines in terms of benefits, payment, and separate medical necessity standards.
These cuts are widespread, cutting across settings and disciplines, and consequently the financial impact, although difficult to estimate, is projected by CMS to be a 7% to 9% reduction for 2011. The impact of these payment reductions on occupational therapy is exacerbated by additional statutorily required cuts, including a 25% reduction under the SGR, additional modifications to geographic-based payments, and the Medicare Economic Indicator (MEI), which, if fully implemented, will result in payment reductions for therapy services exceeding 30%. Because Medicare is often used as a model for private and other public payers, the precedent is concerning and should be of critical interest to every occupational therapy practitioner, regardless of practice setting or payer.
“We have to work hard to counter this problematic policy,” responded AOTA President Florence Clark, PhD, OTR/L, FAOTA. “It will put unreasonable constraints on access to occupational therapy services for Medicare beneficiaries. It also fails to distinguish the unique contributions that each of the rehabilitation professions makes to the recovery of those who are facing catastrophic illness, disability, or the challenges that can surface as we age.
The combining of the three therapies cannot be justified. AOTA will continue to work aggressively to change this policy. The failure to differentiate the three much-needed types of therapy creates a commodity-type reimbursement structure which, without sound justification, devalues the three professions. We must protect consumer access to services that improve function and independence so people can live life to its fullest. We must band together to show occupational therapy in high definition in outcomes, efficiency, and long-term cost savings.”
AOTA’s advocacy work achieved partial success in reducing the originally proposed MPPR cut from 50% to 25%, reducing the expected impact on therapy payments from $500 million to $250 million. The underlying construct of the policy remains indefensible, however, and is based on a flawed analysis of incomplete data. Furthermore, the policy contravenes the deliberative, stakeholder-backed work being done by the AMA-RUC to eliminate redundancies and assure fair payment for Medicare services. AOTA has been participating in the AMA-RUC process and fighting for appropriate values for occupational therapy interventions since 1993. “We will continue to do so as this issue moves forward,” notes Clark.
More information from AOTA, including a comprehensive analysis of the rule, is forthcoming. The modification of the proposal could not have been accomplished without a combination of direct advocacy by AOTA and our coalition partners, as well as the grassroots support provided by AOTA members. Our advocacy work is not complete, as AOTA Executive Director Fred Somers states, “We are exploring a wide range of legislative, legal, and administrative options to fight this fundamentally unfair proposal; AOTA is determined to explore every avenue available to us to modify the impact of this rule.”
Other Elements of the Fee Schedule Rule Important to Occupational Therapy:
- The therapy cap amount for occupational therapy in 2011 is set at $1,870 with no exceptions process (Note- The Medicare and Medicaid Extenders Act of 2011 (P.L. 111-309) signed into law on December 15, 2010 extended the exception process through December 31, 2011).
- New quality reporting measures were approved for occupational therapists under the Physician Quality Reporting System (PQRS).
- Other across-the-board fee schedule cuts of nearly 30% will result from projected changes to the sustainable growth rate (SGR) conversion factor.
- CMS has made clear it will continue to pursue alternative payment mechanisms for therapy services.