In 1997 Congress established per-person Medicare spending limits, or therapy cap for nonhospital outpatient therapy, but responding to concerns that some people with Medicare need extensive services, it has since placed temporary moratoriums on the caps. The therapy cap is a combined $1,810 (USD) Medicare cap for physical therapy and speech language pathology, and a separate $1,810 cap for occupational therapy.[1]
Medicare patients requiring rehabilitation from disabilities, car accidents, hip injuries, stroke, and other ailments would be limited to roughly two months worth of treatments at an outpatient therapy clinic. Any patients that exceed the cap, whether they are healed or not, would have to stop therapy, or pay for the therapy services out of their own pocket.[2]
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The therapy cap was originally passed with the Balanced Budget Act of 1997. Its purpose and effective result was to reduce Medicare spending by limiting outpatient therapy payments.
The original cap was $1,500 (USD). The effective date of the original $1,500 cap was January 1, 1999; however, there were several legal challenges to the therapy cap that temporarily halted its implementation.[3] The moratorium was further extended by the passage of Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 and Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000.[4]
In December 2006, Congress passed the Tax Relief and Health Care Act of 2006 which provided exemptions for the therapy cap and allowed patients with medically necessary rehabilitation needsParkinson's disease and muscuskeletal disorders to continue treatments until the end of 2007.
Patients are able to receive a waiver (exception) to cover services above the capped amount if their treatment is medically necessary. This waiver program expires June 30, 2008, however it is likely Congress will extend the program, as it has done in the past. Congress provided one year extensions to the exceptions process and the current exceptions process is set to expire on December 31, 2011. The law that extended the exceptions process was the Medicare and Medicaid Extenders Act of 2010.
UPDATE: The Medicare Therapy Cap is $1870 for 2011 and $1880 for 2012. Additional timely information is available at The Stop the Medicare Therapy Cap page on Facebook. Congress has proposed a further extension of the exceptions process with enhanced review of medical necessity as part of the pending Middle Class Tax Relief and Job Creation Act of 2011. A reliable source of timely information regarding updates related to the therapy cap is the Facebook page titled- Stop the Medicare Therapy Cap.
Several medical associations and organizations including the American Physical Therapy Association and American Occupational Therapy Association have lobbied against therapy caps because the bill restricted disabled seniors, stroke patients, and other severe cases from receiving therapy treatments.[5]
Another controversy is the original bill combined physical therapy and speech therapy together allowing only a shared $1810 per calendar year for both therapy services. This error has yet to be corrected by congress, further limiting therapy services to outpatients.
The Government Accountability Office have concluded through an independent study that the therapy caps are not meeting the needs of patients.[6]
The Study and Report on Outpatient Therapy Utilization by the Centers for Medicare and Medicaid Services (CMS) released on September 2002 concluded that older patients require more therapy than what the cap allowed: “patients who are female, older, minorities, live in certain geographic regions, require the services of institutional providers and suffer from complex medical conditions are more likely to require more costly outpatient therapy services than the general outpatient therapy population.”
The American Heart Association concluded that the Medicare caps are costing the government more money in the long run, especially to stroke patients. According to their study, arbitrary caps on rehabilitation therapies punish stroke patients who often undergo needed extensive rehabilitation programs. More than 5.4 million Americans, including 4.4 million people with Medicare, are living with the consequences of stroke. The failure to properly treat and rehabilitate stroke patients costs $21.8 billion annually in lost productivity and disability expenses.[7]