Medicare's therapy squeeze: A new barrier to care

In the realm of physical therapy, $1,740 doesn't get a severely injured patient very far, says Robert B. Goldberg, DO. A patient who has had a major stroke could blaze through that in a matter of weeks.

But that is exactly the amount of money Medicare will pay for outpatient rehabilitation each year under a policy change that went into effect in January.

Dr. Goldberg's office-based group practice in New York, where he specializes in physical medicine and rehabilitation, is one of many dealing with a recent policy change that could imperil the care of some of the most debilitated patients. Federal officials are hoping to squeeze tens of millions of dollars out of the system each year by limiting payments for outpatient therapy services.

Seniors and disabled beneficiaries who receive more than $1,740 worth of combined physical and speech therapy in nonhospital outpatient settings will not receive any coverage for the services that exceed that amount. Occupational therapy is subject to a separate $1,740 cap.

Medicare has implemented a temporary process doctors can go through to secure coverage above the limit for patients who need it, and program officials say this will prevent problems. But some physicians worry that at best, this will place an unnecessary administrative burden on their practices. At worst, the relatively unknown process could spawn confusion that makes the caps a true barrier to needed care.

At some point during the year, beneficiaries with some of the most serious injuries and disorders will be at risk for losing access to essential therapy services that help treat their conditions, said Dr. Goldberg, who is also vice president of the Medical Society of the State of New York. Some patients, especially those with low incomes, will avoid care for which they might have to fork over significant out-of-pocket payments.

"Medicare has picked on the absolute weakest, poorest link it could find," he said. "This population literally can't fight back because they won't even get the therapy to be able to stick up for themselves."

The medical repercussions for some patients who receive their therapy in a physician's office or a stand-alone rehab center could be severe. If concerns about losing Medicare coverage prompt a stroke patient to forego necessary services, for example, permanent rather than transient loss of his or her function could occur, Dr. Goldberg said. Even a less-severe condition, such as rheumatoid arthritis, could easily turn into permanent numbness, deformity and disuse if a patient decides to suspend therapy. These concerns are not only on the minds of physiatrists such as Dr. Goldberg. Primary care physicians who refer these Medicare beneficiaries to physical therapists and other nonphysicians are also worried about the dollar limits' effects.

Mark J. Alberts, MD, professor of neurology and director of the stroke program at Northwestern University in Chicago, said that restoring speech, motor skills and memory following an injury in an older patient often requires therapy services that can run thousands of dollars per year, if not tens of thousands, above the cap.

CMS offers a way out

Although Congress first approved the annual caps in 1997, several subsequent rounds of congressional and administrative postponements meant that they were only in effect in 1999 and for a few months toward the close of 2003. The latest legislative delay finally expired at the end of last year, opening the door for the current limits to take effect.

But using a deficit-reduction bill signed into law in February, Congress implemented an escape hatch designed to protect patients who need more therapy services. If a physician can demonstrate to his or her Medicare carrier that a beneficiary's continued therapy regimen is medically necessary, the Centers for Medicare & Medicaid Services will grant an exception that enables the government to pay for services above the $1,740 caps.

The exceptions process, which is only in place through the end of the year, follows two routes. Patients who qualify for one of more than 100 Medicare diagnosis codes will receive automatic exceptions if the codes are on the claims for therapy services and if the carrier agrees with the assessment. Included in this category are codes for hip joint replacements, chronic obstructive pulmonary disease and walking difficulties. A physician whose patient doesn't fit into one of these categories can apply for a "manual" exception and submit additional information supporting the medical necessity of the services.

CMS said that beneficiaries can also avoid the therapy ceiling altogether by getting their care in hospital outpatient departments, which are exempt from the restrictions. Some physicians warned, however, that the hospital is not the most accessible source of care for many patients.

The system will ensure that Medicare finds a happy medium between allowing coverage for needed services and reining in spending on medically unnecessary procedures, said John Warren, director of the CMS Division of Medical Review and Education. "The team that put this together had to balance the intent of what Congress was looking for, our desire to maintain access to care, and quite frankly, prudent program management," he said.

During a recent conference call, CMS announced that it already had processed roughly 4,000 automatic exceptions in the first three months of the year and a few hundred manual exceptions.

A "toothless tiger"

CMS identified therapy services as an area of concern when it found surges in Medicare Part B spending in recent years. But neither the program officials paying the bills nor the Congressional Budget Office believe that the Medicare therapy caps will save the government all that much money.

CMS estimates that only about 20% of Medicare therapy patients will hit the cap, and very few of that group will fail to qualify for an exception. The budget office projects that the limits would save the federal government $530 million in 2006 but that the exceptions process will put $500 million back into the system -- allowing CMS to reduce spending by a relatively paltry $30 million this year.

This frustrates some physicians who believe that doctors are prescribing too much therapy and diverting precious funding away from more necessary medical services. These critics complain that nearly every physician with a patient who hits the cap will easily be able to fit the beneficiary into one of the more open-ended diagnosis codes that would trigger an automatic exception.

"This is a toothless tiger," said Steven Levenson, MD, president of the American Medical Directors Assn. and an expert in geriatric care. "This is a classic example of why we can't control health care costs in this country."

Supporters of therapy caps say that if properly implemented, they have the potential not only to preserve Medicare funding but also to ensure that the care physicians prescribe is necessary. Too many physicians fail to notice when there is a lack of proof that these therapies work any better than medical interventions applied by doctors, Dr. Levenson said.

"For fractured hips in the elderly, for example, there is not a lot of good data to say that more physical therapy is better for them," he said.

But many physicians who believe the opposite is true worry that the exceptions process will be more of a curse than a blessing -- and that patients will be the ones who find out the hard way.

Falling through the cracks

No matter how the exceptions process is structured, it will have little impact if few physicians know about it or the therapy caps in general.

Some physiatrists, orthopedic surgeons, rheumatologists and neurologists said that they were not aware that the therapy limits went into effect in January. Several of those who did know were unclear about how physicians could seek exceptions for patients who need more care.

The American Academy of Orthopaedic Surgeons and the American Medical Association have not weighed in on the issue. They are focused on broader Medicare payment inequities for physicians.

Dr. Goldberg worries that the only significant money CMS will be able to save on outpatient therapy services could be the result of care being missed because of the confusing array of steps that doctors and patients will need to take to ensure coverage.

In addition, the entire process simply demonstrates that Medicare is attempting to base coverage of care on medical necessity, a standard that is already built into the system and that the vast majority of physicians are already following, Dr. Alberts said.

"Under any circumstance, rehabilitation should only be done if it's medically necessary and appropriate," he said. "If there is this new rule on top of that, it's just going to be redundant."

The debate over this issue is unlikely to go away any time soon. Groups including the American Academy of Physical Medicine and Rehabilitation, as well as the American Physical Therapy Assn., are urging Congress to repeal the caps before the exceptions process expires at year's end. Several lawmakers are already on their side.

More work for little gain

Although it's unclear how many patients ultimately will fall through the cracks, it is clear that society will end up paying the price for them, some physicians said.

"The caps are short-sighted because they're looking for short-term savings and ignoring the long-term costs," Dr. Alberts said. "They're counterproductive because by limiting the amount of intense rehab patients get up front, they are really extending the time period that these folks are out of work and not generating taxes, and it increases the time that patients need additional people to take care of them."

Physicians also will end up paying the price for CMS adding another hoop for them and their patients to jump through, Dr. Goldberg said.

Under this system, physicians are expected to keep tabs on how much spending beneficiaries have already incurred on therapy services during the year -- relying heavily on patients to provide them with accurate information about how much rehab they have received. This record-keeping becomes much more difficult for physicians treating people who regularly see multiple doctors and other health professionals. If either doctors or their patients get it wrong, physicians may end up being stuck with the bill for services already rendered.

Dr. Goldberg's practice already has had to reassign staff to keep track of all of this spending, he said. The strong possibility that Medicare carriers will end up rejecting claims for some therapy services has also prompted him to seek signed waivers from patients indemnifying the practice for expenses that the government decides not to pay after the fact.

For physicians who have not planned ahead in such a way, the outcomes for their practices and their patients remain less predictable.