Medicare Lifts Annual Limits on Therapy

Under a new law, physical, occupational and speech therapy have been set free from Medicare's coverage limits.

February 2018

Among the measures packed into Congress’ February budget agreement was a lift on the annual coverage limits for Medicare patients receiving physical, occupational or speech therapy.

Congress eliminates coverage limits for certain therapy services

Previously, Medicare had a limit on how much of these services would be covered. In 2017, that cap was $1,980 per year for physical therapy and speech-language therapy combined, and $1,980 for occupational therapy alone. Medicare Part B would cover 80 percent of the cost, while the patient would be responsible for the remaining 20 percent. Once the total amount paid by both parties reached either one of the cap limits, coverage would end and any further expenses would become the responsibility of the individual alone. A Medicare Supplement Insurance plan could be used to cover the 20 percent coinsurance.

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But the new two-year budget deal removes those annual caps for physical, occupational and speech therapy services for patients with Medicare or Medicare Advantage plans. Patients now remain eligible for coverage as long as a medical professional confirms a need for the therapy and the patient meets additional requirements. Supplementing the new law is a 2013 decision that protects the coverage of patients with chronic diseases whose conditions are not improving.

Medically necessary therapy services

While there is no longer an annual limit for therapy coverage, once the costs for a Medicare beneficiary’s therapy reaches $2,010 for physical and speech-language therapy combined, or $2,010 for occupational therapy by itself, a therapist must declare in the patient’s medical records that continuing the services are reasonable and necessary.

If the costs for therapy services reach $3,000 for either category, a Medicare contractor may perform a review of the patient’s medical records to confirm that the services were indeed medically necessary.

In addition, a therapist is required to provide a written notice before providing any services that aren’t medically necessary.