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Physical and Occupational Therapy Reimbursement Cuts Go Into Effect

Polaris Group Profile
Polaris Group
February 22, 2022
March 14, 2023
Polaris Group Profile
Polaris Group
March 14, 2023

Understand the January 1st, 2022 reduction in reimbursement for services provided by therapy assistants.

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When Congress repealed the outpatient Medicare Part B therapy cap in 2018, CMS proposed decreasing therapy assistant rates to help maintain a balanced budget. In 2019, CMS announced its intention to move ahead with these cuts by reducing reimbursement rates by 15% for all services provided “in part or in full” by a PT assistant or OT assistant. At the same time, CMS created new payment modifiers to be affixed to claim lines whenever a PT assistant or OT assistant provides more than 10% of a service.

On January 1st 2022, the reduction in reimbursement for services provided by therapy assistants took effect. Importantly, this reduction is only applied to the 80% Medicare allowable portion and not applied to the 20% patient co-payment.

Skilled nursing facilities (SNFs) who contract with therapy services should understand these cuts mean that the cost for an assistant to provide services may be more than the amount of reimbursement for the facility.

Traditionally, a skilled nursing facility will reimburse their therapy provider for Medicare Part B services at a percentage of the current Medicare Part B Physician Fee Schedule. By design, therapy contract terms are set up to accommodate for changes in the Medicare Part B Physician Fee Schedule, but therapy contracts do not customarily accommodate for changes in reimbursement.

The therapy assistant cuts have the potential to have a dramatic impact on nursing homes. Without adjustments to contracts, contract therapy company will continue to bill a nursing home using the same full Medicare Part B Physician Fee Schedule rates while the Medicare reimbursement for those same services has decreased by 15% when the services are provided by an assistant.

Skilled nursing facilities should work with their contract therapy provider to identify cost saving measures and terms so that the impact of the cuts is shared jointly by both the SNF and contract therapy company.

Skilled nursing facilities with in-house therapy services can also expect to feel the impact of the assistant cuts. Internal therapy costs per resident easily could exceed average Medicare Part B reimbursement per resident if staff wages and patient care time are not scrutinized and carefully managed.

An accounting system to accurately track and report the cost effectiveness of in-house therapy services is crucial. Otherwise, nursing facilities with in-house services could be paying more for Medicare Part B services than they are reimbursed. In-house therapy services can leverage assistants to increase caseloads and patient care time by dividing work by scope of practice and paying close attention to scheduling.

Therapy assistants play a crucial role in a SNF regardless of whether the therapy program is in-house or contract. Strategies and best practices to lessen the financial consequences of therapy assistant cuts must be developed, while ensuring there is no impact on the quality of services provided to resident.

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