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NJPTAid Newservice Item: Medicare Cap

Medlearn Matters. . .Information for Medicare Providers
(Issued by the Centers for Medicare & Medicaid Services)

Note: This article was revised on January 12, 2006, to clarify that the limits do not apply to services provided in outpatient hospitals.

Provider Types Affected

Therapists and providers who bill Medicare carriers or fiscal intermediaries (FIs) for therapy services for their patients.

Provider Action Needed

Impact to You

Beginning January 1, 2006, financial limitation of therapy services (therapy caps) will be implemented. The dollar amount for the 2006 limitation on physical therapy and speech language pathology services from January 1, 2006, through December 31, 2006, will be $1,740. The limitation on occupational therapy services is also $1,740. The limits do not apply to outpatient Part B therapy services in outpatient hospital or hospital emergency room settings.

What You Need to Know

Please be aware of the January 1, 2006, therapy services caps.

What You Need to Do

Remember that services must meet the Medicare policies in the Medicare Benefit Policy Manual (publication 100-02), Chapter 15, Sections 220and 230. This manual is available at on the CMS Web site.


Financial limitations on therapy services (therapy caps) are currently described in the Medicare Claims Processing Manual (Pub. 100-04), chapter 5, section 10.2, which is available at on the CMS Web site. The dollar amount for the limitations in 2006 is based on the Medicare Economic Index that is published in the final rule for the Medicare Physician Fee Schedule in November 2005.

Section 4541(a)(2) of the Balanced Budget Act (BBA) (P.L. 105-33) of 1997, required payment under a prospective payment system for outpatient rehabilitation services (physical therapy, including outpatient speech-language pathology, and occupational therapy). Section 4541(c) of the BBA required the application of a financial limitation to all outpatient rehabilitation services (except outpatient departments of hospitals). These limits were in effect in 1999, but were removed by law in 2000-2002. The statutory limits went back into effect September 1, 2003. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 reenacted the moratorium and extended it until December 31, 2005.

Additional Information
There is additional information located on the Rehabilitation Therapy Information

Resource for Medicare Web site located at on the CMS Web site.
The official instruction issued to your FI or carrier regarding this change may be found by going to on the CMS Web site.

Please refer to your local FI or carrier if you have any questions. To find the toll-free phone number, go to on the CMS Web site.

This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents.

Medlearn Matters Number: MM4115 Revised
Related Change Request (CR) #: 4115
Related CR Release Date: November 18, 2005
Effective Date: January 1, 2006
Related CR Transmittal #: 759
Implementation Date: January 3, 2006
Posted: 01/26/2006

CPT codes, descriptions, and other data only are copyright 2005 American Medical Association (or such other date of publication of CPT). All Rights Reserved. Applicable FARS/DFARS Apply.