A budget agreement has been met which cuts the deficit by about $300 million from FY 2014 – 2023, through a reduction of other healthcare spending.  Approximately $28 billion of the savings would come from a two year extension of a 2 percent cut to Medicare providers included in the sequester.

Key provisions of this agreement include:

1. A three month extension of current physician rates and bills, permanently repealing the SGR, and ready for final action before the extension runs out
2. An increase in the therapy 2014 caps amount to $1,920 PT/ST and $1,920 OT
3. Extension of the therapy cap exceptions process through March 31, 2014. (Current law regarding therapy Part B exceptions process is in effect through 3/31/14)- 3 month extension
   1. KX modifier at $1,920 PT/ST, and at $1,920 for OT
   2. Submission of manual medical review requests at $3,700 threshold for PT/ST, and at $3,700 for OT 

The President has indicated he will sign the budget agreement bill into law after return from holiday recess January 6, 2014. Congress will need to compromise their reforms into one bill with a deadline of 3/31/14.

While this is good news for the long-term care industry and physicians, it does not come without danger. To eliminate the SGR, lawmakers will need to find ways to offset the cost, and the nursing home industry is bracing for potential attack.

The three-month extension will give lawmakers time to hash out a permanent doc fix and permanent lifting of the therapy caps. This will continue to make the case, that random and arbitrary cuts to skilled nursing to pay for SGR reform, is unwise.

Legislation, approved by the Senate Finance Committee, would require the Centers for Medicare & Medicaid Services (CMS) to replace the therapy caps by 2015 with a system of prior authorization medical review (PAMR), designed around such factors as setting, services, provider practices and dollar thresholds. The legislation makes no changes to the current Manual Medical Review (MMR) process for 2014, but repeals it at the end of 2014, so the new PAMR process can begin.

Additionally, CMS would be required to develop a new standardized data element collection process, presumably to replace the current claims-based functional limitations data collection (g-codes) process. This would sunset when the new system begins. Beginning January 1, 2015, each claim would need to indicate if a therapy assistant provided the therapy service.  Also, CMS would need to design a new outpatient therapy system.

The House Ways & Means Committee’s bill, which was approved by the House Energy & Commerce Committee, does not contain therapy provisions. So early in 2014, those issues will need to be resolved by Congress when it reaches its final decisions on ending the SGR and, perhaps, the Medicare therapy caps as well.

Go ahead and enjoy that New Year’s Eve party, but be ready come January 1, to continue working to educate lawmakers so they have a solid understanding of the issues at stake when all of this comes before them next year.