The Centers for Medicare & Medicaid Services (CMS) recently released the Final Rule for the Physician Fee Schedule (PFS), or Medicare Part B Rule, which will take effect on January 1, 2025. This comprehensive blog series outlines significant changes impacting therapy professionals, including Physical Therapists (PTs), Occupational Therapists (OTs), and Speech-Language Pathologists (SLPs).
Rate Information
The rate cuts continue, with a proposed decrease of 2.93% in the average payment rate for Medicare Part B services compared to Fiscal Year (FY) 2024. The new Conversion Factor (CF) will drop to $32.35 from $33.29. The CF is an important number that CMS adjusts every year. It is how much healthcare providers get reimbursed for services rendered through Current Procedural Terminology (CPT) codes. The CF reduction affects all CPT codes, meaning lower reimbursement rates across the board unless specific codes are adjusted enough to offset this decrease.
Understanding the Conversion Factor (CF)
Consider the CF as a multiplier that converts Relative Value Units (RVUs) into dollar amounts. RVUs measure the value of a service based on three main factors:
Work involved: How much effort the provider puts in.
Practice expenses: The costs of running the practice (like rent, equipment, etc.).
Malpractice insurance: The costs associated with liability insurance.
Example:
- Calculate RVUs: Each CPT code is assigned a certain number of RVUs.
- A treatment (CPT) might have 2.0 RVUs.
- Multiply by the CF: To determine how the provider will be paid, multiply the RVUs by the CF, which is $32.35.
- For the treatment (CPT) that has 2.0 RVUs
- Provider will be paid $64.70 = 2.0 RVUs × $32.35
You can stay informed about specific reimbursement rates by checking out the CMS website, which allows you to look up any CPT code and its corresponding rate (https://www.cms.gov/medicare/physician-fee-schedule/search).
Modifiers and Manual Medical Reviews
KX Modifier Threshold
The KX Modifier, a code used by healthcare providers, comes into play when therapy services exceed a specific monetary threshold set by CMS. This threshold, previously known as the therapy cap, was designed to allow providers to continue therapy services beyond the limit, provided those services are medically necessary.
By attaching the KX Modifier to the claim, providers are telling Medicare that:
- The services are medically necessary beyond the set cap amount.
- The proper documentation justifying the need for additional therapy is in place.
For Fiscal Year (FY) 2025, the threshold for the KX Modifier will increase from $2,330 to $2,410. This increase means that if a patient’s therapy services exceed this amount, providers must attach the KX Modifier to the CPT codes as an attestation that these services are medically necessary over the CMS determined threshold amount. Understanding this change will ensure you are prepared to apply the KX Modifier appropriately and effectively manage your patients’ therapy services.
Example:
A patient who has received therapy services up to the $2,400 mark by mid-year. In this case, the provider would need to use the KX Modifier for any additional services rendered to ensure that Medicare will continue to reimburse for the extra therapy. However, this is not as simple as just adding the modifier; detailed documentation must be provided to demonstrate the medical necessity of the additional services.
This documentation might include:
- Clinical documentation that outlines why the patient requires further therapy.
- Progress reports show that the patient is improving with therapy but needs more to reach their goals.
- A treatment plan that specifies the goals and expected outcomes of the continued therapy.
Thorough documentation is the key to ensuring that services beyond the therapy cap threshold are reimbursed. Medicare does not approve claims simply because a modifier is attached; CMS requires detailed evidence that additional therapy is reasonable and necessary and that the skills of the therapist are required. Failure to provide proper documentation could lead to denials.
KX modifier – Poor vs. Good documentation:
- Poor Documentation: The therapist notes, “The patient continues therapy past the cap limit.” There is no explanation of why additional therapy is necessary or how it contributes to the patient’s progress.
- Good Documentation: The therapist notes, “The patient has shown measurable progress post-surgery, with a 10-degree increase in range of motion (ROM) in the right knee over the past four weeks. The current right knee ROM is 95° (flexion), compared to 85° at the initial evaluation, which indicates improvement. However, the patient continues to demonstrate significant functional limitations, including difficulty with climbing stairs (unable to ascend more than one flight of stairs without assistance), which is critical for achieving full functional mobility. The Timed Up and Go indicates a completion time of 14 seconds, outside the normal range of 10 seconds an indicator of fall risk. These objective measures reflect ongoing deficits in mobility and endurance. Given these findings, additional therapy is necessary to restore full function and prevent complications such as joint stiffness, falls, and further loss of muscle strength. The treatment plan includes targeted exercises for knee flexion and extension, strengthening exercises for quadriceps and hamstrings, and modalities such as ultrasound to improve circulation and reduce pain. The patient is expected to benefit from an additional 6 weeks of therapy, with a re-evaluation scheduled in 4 weeks to assess progress and adjust the treatment plan as needed. The use of the KX modifier is supported, as the patient requires skilled therapy to address the ongoing functional deficits, modify the treatment plan, and decrease fall risk, especially when going up and down stairs in his home.”
Manual Medical Review
Medicare uses the manual medical review to ensure that therapy services are being provided appropriately and that claims for those services meet Medicare’s requirements. The threshold for manual reviews remains at $3,000, meaning that Medicare may flag the claim for review once a patient’s therapy services exceed this amount.
Providers identified as ‘outliers’ in their billing practices may be subject to a Targeted Probe and Educate (TPE) review process. The primary goal of this review is to enhance compliance and reduce billing errors, ensuring that therapy services are provided appropriately and meet Medicare’s requirements.
Manual Medical Process
When a claim is flagged for a Manual Medical Review, the provider must submit supporting documentation to Medicare to justify the therapy services rendered. This documentation might include:
- Patient progress notes (to show how the patient is responding to therapy)
- Treatment plans (outlining goals and expected outcomes of therapy)
- Progress reports (showing how the patient’s condition is improving)
- Detailed clinical notes that show the medical necessity of continuing therapy
If the review finds that the documentation is sufficient and the therapy is medically necessary, the claim will be approved, and payment will be made. However, if the documentation is lacking or the therapy services aren’t deemed medically necessary, the claim may be denied, and the provider may not be reimbursed.
Plan of Care Requirements
CMS has removed the requirement for a physician to sign off on therapy POC within 30 days of the initial evaluation if there is a physician order or referral documented in the medical record. With the signed order, this will count toward the physician signature requirement on the POC. However, it will only count if the therapist has documented one important thing. The evaluating therapist must document that they delivered the completed POC to the physician within 30 days of the initial evaluation. This is a significant change, as it reduces the need for back-and-forth with physicians just for a signature.
“The order or referral must be written, dated and signed by the ordering or referring physician/NPP and include the type of therapy—physical therapy, occupational therapy, or speech-language pathology—the patient requires. We are clarifying here that we would also expect the order or referral to include information to identify the beneficiary and ordering/referring physician/NPP.”
Before this change, therapists had to get a physician’s signature on the POC to meet Medicare Part B requirements. This has been a source of frustration, as it could often take time and effort to track down the physician for their signature.
While the new rule allows a signed order or referral to count as a physician’s signature, some exceptions remain. CMS has made it clear that this change does not apply to:
- Recertifications of the POC—A physician’s signature is still required when you recertify the plan of care.
- Direct access patients—If the patient was seen without a physician referral (direct access), there is still a need for the physician’s signature on the POC.
Stay Tuned for Part 2 that features New Rules for Therapy Practice, Telehealth Updates, and more!
LW Consulting, Inc. (LWCI) offers a comprehensive range of services that can assist your organization in maintaining compliance, identifying trends, providing education and training, or conducting documentation and coding audits. For more information, contact LWCI to connect with one of our experts!
