Dark Clouds on the Horizon for Home Health Agencies: Therapy Caps May Cease to Exist

Last month, groups in both the Senate and House agreed to endorse a plan to get rid of the therapy caps once and for all.

As stated by McNight’s, “The annual caps are currently $1,980 for occupational therapy, and $1,980 for speech and physical therapy together. Claims above those levels are marked with a modifier, a variation of which would still remain, according to House lawmakers. Under the proposal, targeted manual medical reviews for claims over $3,000 would take place. The current threshold is $3,700.”

Why have caps?

The goal of therapy caps was to limit the amount of money that can be spent on outpatient therapy.  Medicare is trying to shift the focus of post-acute care away from rehabilitation with the implementation of RS-1 in skilled nursing facilities and HHGM in home health.  Most new reimbursement methodologies de-emphasize the value of therapy cases.  However, patients’ conditions do not change and so when you press on the balloon, it shows up somewhere, such as outpatient therapy, which is the lowest cost setting for care.  Removing the caps is a critical step in making sure patients return to optimal functionality via the lowest cost setting.

What happens when they go?

So why do we say dark clouds for home health? Well, one reason to keep patients in home health was to avoid them reaching the therapy thresholds. When therapy caps are removed, the incentive to utilize home health agencies for certain cases is also removed, thereby leading to a potential reduction in home health days on service.  Under the current HHRG system, fewer visits means less revenue.  Some patients may skip home health entirely and go directly to outpatient therapy.

It is a delicate balancing act.  Removing the caps could lead to abuse because of “unnecessary” therapy sessions, compared to removing a barrier to drive care to the lowest cost setting.  We will have to wait and see how it all plays out.