MedPac Recommends Significant Cuts to Medicare Payment Caps for Therapy by Nearly 33 Percent


During its November 2 meeting, the Medicare Payment Advisory Commission (MedPAC) voted to recommend lowering Medicare payment caps for outpatient therapy by almost 33 percent.  Medicare currently caps combined payments for occupational and physical therapy at $1,880, and it caps payments for speech-language pathology therapy at the same level. MedPAC will recommend lowering both of these caps to $1,270. 

According to a transcript released by MedPAC, Commission Chairman Glenn M. Hackbarth stated that the recommendation “seeks to strike an appropriate balance” between “limit[ing] Medicare spending and ensuring quality of care by “[d]oing away with hard caps yet tak[ing] steps to manage that cost insofar as possible and, in effect, have . . . a rate of spending that is lower than is happening as we speak.”  Currently, beneficiaries can seek exception from the caps if the beneficiary’s provider attests that the outpatient therapy is medically necessary.  Nevertheless, Congress is required to reauthorize the exceptions process each year, and the current “exceptions process sunsets at the end of 2012,” according to a presentation released by MedPAC in connection with its November 2 meeting.  MedPAC believes that “caps without exceptions may impede access to necessary treatment.” 

“Currently, we have a system effectively with no caps because there are open-ended exceptions to the caps.  So that’s the current high level of spending, if you will,” Hackbarth added.  “If we allow hard caps to go into effect, there would be a dramatic drop down beginning January 1.  I’m looking for a line somewhere in between those two levels that can help assure appropriate access to needed services while keeping the cost below an unrestrained level of spending.”

MedPAC’s November 2 recommendation to lower outpatient therapy caps was part of a Congressionally-mandated report entitled “Improving Medicare’s payment system for outpatient therapy services.”  MedPAC  is an independent Congressional agency established by the Balanced Budget Act of 1997 to advise Congress regarding issues that affect Medicare.

MedPAC’s report is available by clicking here.

Reporter, Ramsey Prather, Atlanta, +1 404 572-4624,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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