Update on Therapy Caps Legislation

November 15, 2017

On October 26, bipartisan leaders of the House Energy and Commerce Committee, the House Ways and Means Committee, and Senate Finance Committee released a discussion draft of proposed legislation to permanently repeal the Medicare therapy caps, the annual limit on per-patient therapy expenditures under Medicare Part B, effective January 1, 2018.

To replace the therapy caps, the legislation extends targeted medical review of claims established by the Medicare Access and CHIP Reauthorization Act (MACRA) to cases above $3,000 permanently. The proposal would permanently repeal the therapy caps and set in statute a $3,000 “threshold” of services. This legislation is similar to current policy, but with a lower threshold than the current $3,700 threshold. Beginning in 2028, the $3,000 threshold will be adjusted for inflation annually using the Medicare Economic Index (MEI) over which therapy claims would be subject to additional scrutiny. Despite requests of stakeholders, physical therapy (PT) and speech-language pathology (SLP) services do not receive separate thresholds under this amendment. However, occupational therapy does receive a separate threshold from PT/SLP. The current proposal is commended for its exclusion of prior authorization, which typically delays patient access to care and imposes administrative burden.

The proposal has not yet been scored by the Congressional Budget Office (CBO); and while the legislation is expected to have an associated cost that would need to be offset, there is currently no agreement on which offsets will be pursued.