Could therapy cap wreak havoc on private practice?

Some patients already reaching $1,590

If you’ve been holding out hope that something would happen to stop the $1,590 cap on outpatient therapy for 2003, it’s time to buckle down and put plans in place to help your patients who are likely to hit the cap before the end of December. The last ray of hope for relief in 2003 vanished in October, when U.S. District Judge Emmet Sullivan ruled that the Centers for Medicare & Medicaid Services (CMS) could continue to enforce the cap. Despite Sullivan’s sympathetic comments at earlier hearings in the case against CMS (American Parkinson Disease Association, et al. v. Tommy G. Thompson, No. 03-1378), he was unable to find any violation of the partial settlement agreement. The plaintiffs had argued in September that CMS had not adequately notified Medicare beneficiaries about the implementation of the cap.

Christina Metzler, director of federal affairs for the American Occupational Therapy Association (AOTA) in Bethesda, MD, says rehab providers were disappointed but not totally surprised by the ruling. "I think the judge is sympathetic on the substantive issues, but he didn’t have any legal basis to stop the implementation of the cap," she says. The AOTA and other rehab groups still are working for passage of the Medicare prescription drug bill that includes a one-year moratorium on the cap for 2004. "We are encouraging our members to re-contact all of the bill supporters to remind them the cap is already in place and so their support is even more important right now," Metzler says. "And we want them to contact those who haven’t signed on yet to encourage them to take a position."

Metzler says patients already are hitting the cap and that the potential loss of those patients’ business could have a significant impact on therapists in private practice. Some may even be forced out of business, depending on their patient profile. "I suggest that you call your senators every time you have a patient who reaches the cap," she says. "This has been a political issue from the beginning, and it only can be solved through politics."

On its web site (, AOTA advises therapists to realize they will be the main sources of information for beneficiaries on the rules regarding the caps. They also should use a Notice of Exclusions from Medicare Benefits, not an Advance Beneficiary Notice, to inform patients of the $1,590 cap. Clients may continue treatment at an outpatient hospital department or stay as private pay patients. AOTA has developed a sample form for occupational therapy practices available on the web site.

Metzler says AOTA will be looking into the efficacy of the (800) MEDICARE number that patients can call to get up-to-date benefits information. Patients are responsible for tracking their utilization and for paying for any services more than the $1,590 limit. "Beneficiaries are not going to be able to track this themselves," she says. "Therapists, because of the type of people they are, will want to help them. It’s going to come down to a lot of activity and monitoring by providers."

Tom Howell, PT, says if the cap becomes permanent, it could devastate his small private practice of two physical therapists at the Physical Therapy Clinic of Boise (Idaho). "It may prevent us from growing as a clinic because our long-range plans may have to eliminate the hope of treating many Medicare patients," he says. "All in all, this cap hurts our ability to compete in the market against the hospital outpatient department. The cap regulation is unfair and discriminatory against private practice PT clinics. It is a rationing of health care and a restraint of free trade."

Howell says that because it will take between 24 and 26 visits for patients to hit the cap, the clinic still will be able to treat a large portion of its Medicare clients this year. But starting in January, if patients hit the cap early and then have another problem later in the year, they may have to be referred elsewhere. "Chances are in the next calendar year, they won’t come back," he says. "We thrive on repeat business, and family, friends, and community referrals. This cap would hurt that part of our business."

By mid-October, the practice already had a few patients nearing the cap, so a plan was put into place:

  • At the initial visit, a Medicare beneficiary is informed verbally of the cap and of options under the cap. These options include being referred immediately to a hospital outpatient department.
  • Patients are given a written handout spelling out their options. "We chose to make up our own handout because the one available from CMS was not as simple to follow," Howell says.
  • Patients are asked at the first visit if they are receiving other therapy services or if they have had any therapy since Sept. 1 at another clinic. "We track the cap as best we can. We are using number of visits, since our population is not as diverse and we have a good idea of the average cost per visit," Howell says.
  • At 17 visits, the available options are discussed again. The clinic will work with patients financially if they choose to stay and pay for it themselves.
  • If beneficiaries choose to stay at the clinic, they are asked to sign a Notice of Exclusionary Medical Benefits form. At that point, those patients are treated as private pay clients.

The clinic has chosen to apply a private pay flat rate of $45 per treatment rather than the Medicare fee schedule rates, Howell says. The clinic bills an average of $93 per visit with an average of $60 to $65 in Medicare reimbursement. "We feel this private pay arrangement is at a level that a number of beneficiaries, if given the choice, will decide to stay. If we made our costs too high, very few would consider staying with us. Now we feel most will seriously consider staying with us and paying out of pocket."

Because Idaho is a rural state, Howell fears that many patients will choose to end therapy rather than travel to a distant hospital. In Boise, where there are some more convenient hospital choices, patients so far have indicated they would rather not leave. "The cap is most unfair to beneficiaries who have been seen off and on for many years by the same therapist," he says. "Now they are put in the unenviable situation of having to consider seeing another PT who they don’t know and don’t yet trust."

Need more information?

Tom Howell, PT, Physical Therapy Clinic of Boise, 4167 W. Blue Creek Drive, Meridian, ID 83642. E-mail:

Christina Metzler, Director of Federal Affairs, American Occupational Therapy Association, 4720 Montgomery Lane, P.O. Box 31220, Bethesda, MD 20824-1220. Telephone: (301) 652-2682.