What is changing for Medicare Part B services in the skilled nursing facility setting effective January 1st, 2018?

On Wednesday, November 2, 2017, the Centers for Medicare & Medicaid Services (CMS) issued a final rule that updates payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2018.

Just in case you haven’t had a chance to read the 1250 page document yet, we have summarized the changes for you below:

What Will Change on January 1st?

1- Therapy Cap:

The Therapy cap for 2018 will increase from $1980 to $2010 for 2018….but…*

*There may be some light at the end of this 20+ year tunnel….and we are very close to learning the outcome. The Therapy Cap may be gone for good! We are currently in limbo… Read the MLN Matters update here.

In October, lawmakers from the House Energy and Commerce Committee, the House Ways and Means Committee, and the Senate Finance Committee announced a bipartisan agreement to end the therapy cap. On November 15th, a press release from the Ways and Means Committee announced a “Medicare Extenders Package,” citing a permanent extension of exceptions process for Medicare with the repeal of the therapy caps.

So..the Therapy Cap was going to increase to $2010 per year and now may remain at $1980 with a permanent exceptions process [so it won’t really be a hard cap] meaning the KX modifier can and will need to be used above the $1980 threshold [likely for tracking purposes]. Stay tuned…

2- Therapy Exceptions Process:

The current exceptions process expires as of December 31, 2017, unless congressional action extends it or otherwise revises the law. This means that the Cap would be firm and any overage would be the patient’s responsibility…no KX modifiers!

As stated above, legislation is pending for a permanent exceptions process, meaning the KX modifier will still need to be used above the current $1980 threshold. It is possible that this will become a reality for therapists after 20 years of the back and forth legislation!

As a reminder…the KX Modifier on the billing claim indicates services above the cap are reasonable and necessary and that there is documentation of medical necessity for the extended services. By using the KX modifier, the therapist is attesting that the services above the therapy caps are reasonable and necessary and that there is documentation of medical necessity for the services in the beneficiary’s medical record.

{Do you know when your residents are over the cap? Did you know that the billing person applying the KX code is doing so on your behalf, indicating that you attest to the necessity of these services?}

3- Manual Medical Review Process:

The current exceptions process, which includes the Manual Medical Review, expires as of December 31, 2017, unless congressional action extends it or otherwise revises the law. This would put an end to the Manual Medical Review process, though this is not likely going to happen.

The pending legislation discussed above will also impact the Manual Medical Review Process. If passed, as of January 1, 2018, claims above the $3,000 threshold will be targeted for medical review, a decrease from the current $3,700 threshold. This would be in effect for 10 years, through 2027.

However, not all claims exceeding the therapy threshold will be reviewed. In 2017, targeted reviews occurred for therapy providers with a high claims denial rate and/or those with aberrant billing practices as compared to peers. This will continue in 2018 as no changes have been made to this process, and it is impossible to review all claims above $3000.

{Do you know when your resident hits the $3700 mark in a calendar year? Do you know if your billing department is getting denials? Do you think your billing practices (# of units billed per session, days per week, etc. ) match your peers? Or are you an outlier?}

4- New Therapy CPT Codes:

We don’t see CPT code changes every year that pertain to PT, OT and Speech. Last year, PT and OT were graced with the new Evaluation and Re-Evaluation Codes. [How’s that going?]

For 2018, therapy will ~again ~ see a few CPT code changes.

Orthotics / Prosthetics : What’s Different?

For CY 2018, the Current Procedural Terminology (CPT) Editorial Panel revised the set of codes physical and occupational therapists use to report orthotic and prosthetic management and training services by differentiating between initial and subsequent encounters. [Bold words identify new words added to descriptions below]

  • 97760: Orthotic(s) management and training (including assessment and fitting when not otherwise reported), upper extremity(ies), lower extremity(ies) and/or trunk, initial orthotic(s) encounter, each 15 minutes
  • 97761: Prosthetic(s) training, upper and/or lower extremity(ies), initial prosthetic(s) encounter, each 15 minutes
  • 97762: Code has been DELETED for 2018. This code was used for “Checkout for orthotic/prosthetic use, established patient, each 15 minutes”
  • 97763: NEW Code: Orthotic(s)/prosthetic(s) management and/or training, upper extremity(ies), lower extremity(ies), and/or trunk, subsequent orthotic(s)/prosthetic(s) encounter, each 15 minutes; This “always therapy” code replaces CPT code 97762.

Cognitive Skills Development: What’s Different?

We will see changes to the Cognitive Skills Development code for 2018. There was some flip-flopping with the coding, but the final outcome is this:

97532: The current CPT code used by PT, OT and SLP to report “Development of cognitive skills to improve attention, memory, problem solving (includes compensatory training), direct (one-on-one) patient contact, each 15 minutes” will be DELETED

G0515: This NEW code has been added to the therapy code list and is designated as a “sometimes therapy” code [meaning it is not used exclusively by therapists]. This code will REPLACE 97532. The official descriptor for G0515 is:  Development of cognitive skills to improve attention, memory, problem solving (includes compensatory training), direct (one-on-one) patient contact, each 15 minutes

Initially, the code 97127 was set to replace 97532; however, the end result for the replacement code was G0515, and 97127 has been made inactive.

In Summary

Change and anticipation of more change is the new normal.

We will be on the edge of our seats to see the final outcome of the Therapy Cap and Exceptions Process. Stay tuned…

In the meantime, we can prepare for the upcoming CPT Code deletions and additions as noted above.

If you need help or have any questions about the above, please visit our Just Ask Q&A Forum – and get your questions answered!

In Your Corner,




  1. Hi Dolores,

    Any updated info coming along on the therapy exceptions process. I see that it was not extended. So this means we won’t be using the kx modifier right?


    1. Hi Jen- As of today, we do not have any movement in this area. So yes, you are correct. The Exceptions Process which allows use of the KX Modifier to continue medically necessary therapy services beyond the current cap, can’t be used (claims will not accept it) for dates of service after 12/31/17. Each patient will have the hard cap and if the therapist and patient determine services are necessary beyond the cap, the patient is 100% liable for the cost. Keep in mind that legislation could still be passed early in 2018 to restore the KX / exceptions process – this is what happened in past years. However, as of 1/1/18, we have a cap!!

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