Recent Fiscal Cliff Legislation and the Implications for Occupational Therapy
On January 2, 2013, President Obama signed legislation passed by Congress to address the looming “fiscal cliff” – the concurrent expiration of tax cuts and the beginning of automatic across-the-board spending cuts (the “sequester”) that was set to take place on January 1. Known as the American Taxpayer Relief Act (Pub.L. 112-240), the new law does not completely resolve debt ceiling concerns and delays spending cuts for two months, but does contain language extending tax breaks to individuals earning up to $400,000 per year ($450,000 for married couples), extending emergency unemployment benefits for one year, and allowing for the continuation of tax extenders such as the research and development tax credit and deduction for state and local taxes.
The law also extends several provisions of the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA) as well as the health care reform law, the Affordable Care Act (ACA), which has a significant impact on policies impacting therapy practitioners and Medicare beneficiaries.
Most notably for occupational therapy, the American Taxpayer Relief Act does the following:
- Extends the therapy cap exceptions process for claims over the $1,900 therapy cap amount
This extension is absolutely critical for the profession, and means that providers may file for an exception to the CY2013 $1,900 therapy cap amount by using the KX modifier on claims where additional therapy services above and beyond the cap amount are deemed medically necessary. The exceptions process is now set to expire December 31, 2013.
- Extends manual medical reviews (MMRs) for claims over the $3,700 threshold
Outpatient therapy services above $3,700 are subject to manual medical review. Medicare Administrative Contractors (MACs) will conduct prepayment review on the claims reaching the threshold. There is no advance request for an exception process. Read more.
- Subjects Therapy Dollars Accrued at Critical Access Hospitals (CAHs) to the therapy cap ($1900) and therapy threshold ($3700)
Beginning in CY 2013, therapy dollars accrued in CAH outpatient departments will now count toward a patient’s total therapy dollars for purposes of the cap and threshold. CAHs themselves are not subject to these provisions, however –CAHs will not need to monitor therapy service dollars, they will not need to affix the KX modifier to medically necessary services over $1900, and they are not subject to manual medical reviews for therapy services exceeding $3700. Only the dollars toward outpatient therapy services in a CAH will be converted from the cost-plus CAH payment system to the physician fee schedule-based payment system and entered into the electronic system accordingly. When treating patients who have received therapy services in a variety of outpatient settings, providers in non-CAH settings will thus need to continue to be vigilant about querying the system for updated dollar totals.
- Increases the multiple procedure payment reduction (MPPR) amount to 50% across all settings beginning April 1, 2013 This is an increase from the earlier rate of 20% in office settings and 25% in facilities, and will go into effect April 1, 2013. The cut is scored as saving $1.8 billion over ten years and will result in an estimated payment reduction to therapy of 7%. Also problematic is the fact that Congress failed to act to distinguish the three therapy disciplines and separately apply the MPPR to each.
- Avoids the scheduled 26.5% cut to fee schedule payments based on the sustainable growth rate (SGR) formula
- Increases the statute of limitations for recovering overpayments Based on recommendations from the Office of Inspector General (OIG), Congress increased the statute of limitation to recover overpayments from three to five years, a move that is estimate to save the federal government $0.5 billion.
- Establishes a Commission on Long Term Care The Act established a 15-member Commission on Long Term Care to develop a plan for the establishment, implementation, and financing of a high-quality system that ensures the availability of long-term services and supports. Commission members will be appointed by House and Senate leaders as well as by the White House, and they will be tasked with producing a comprehensive and detailed report with recommendations for legislative or administrative action within six months. If approved by a majority of the Commission members, this report will be introduced as a Senate bill.
- Other Provider Payment Provisions The American Taxpayer Relief Act also includes a number of provisions adjusting how Medicare providers are paid. Hospitals were cut $10.5 billion through an adjustment as part of their transition to MS-DRGs, and another $4.2 billion by rebasing Medicaid Disproportionate Share Hospital (DSH) payments. Other specialties and sectors facing cuts include radiology services, pharmacies, end-stage renal disease (ESRD) treatment, diabetic supplies, ambulance transportation, and others.
- Extends the work geographic adjustment The existing 1.0 floor on the “physician work” index is extended through 2013.
- Continues outreach to enroll Medicare beneficiaries in low-income programs Funding to improve enrollment in programs for low-income Medicare beneficiaries was reauthorized for another year. This funding is allocated to State Health Insurance Programs (SHIPs), Area Agencies on Aging (AAA), Aging and Disability Resource Center (ARDCs), and the National Center for Benefits Outreach and Enrollment. The money is intended to help eligible individuals enroll in Medicare Savings Programs, the Part D Low Income Subsidy, and other programs.
- Extends the Qualified Individual (QI) Medicare Savings Program The QI program provides a block grant to Medicaid programs to pay Medicare Part B premiums for Medicare beneficiaries with incomes between 120% and 135% of poverty. QI was set to expire December 31, 2012, and the new law extends the program through December 31, 2013.
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AOTA’s Federal Affairs and Regulatory Affairs staff will continue to work with Congress and the Centers for Medicare & Medicaid Services (CMS) to address these issues. Please write to fad@aota.org or regulatory@aota.org with comments or questions.
