August 20, 2020 | Net Health

3 Minute Read

Understanding the Proposed CMS Cuts to Medicare Therapy Reimbursements

In early August, the Centers for Medicare & Medicaid Services (CMS) announced proposed changes to the Physician Fee Schedule (PFS) and some aspects of Medicare Part B that could end up lowering reimbursement for physical and occupational therapy. The exhaustive 1,355-page document1 outlined reimbursement, structural, and procedural changes proposed to begin January 1, 2021. While the proposed changes are not yet final, therapy providers, skilled nursing facilities (SNFs), and other long-term care providers have voiced concerns during the proposed rule comment period, which expires on (Oct. 5, 2020). We encourage our clients to take action and advocate for change to this policy if you have not done so already.

Details of the Proposed CMS Cuts – What We Know Now

The federal government requires that the PFS remain budget neutral, or within $20 million of that mark every year. What this means is that when there’s an increase in reimbursement somewhere within the PFS, there must be a decrease somewhere else to offset the higher costs.

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Calendar Year 2021’s proposal slates a dramatic increase in reimbursement for Evaluation and Management (E/M) services. Drawing one of the short straws to offset these increases are physical and occupational therapists. According to the proposal, the sector will see a 5% reduction in Work Relative Value Units (RVUs) and a 5% reduction in Malpractice Expense RVUs, for a combined cut of around 9%2. This isn’t even the whole story. Beginning Jan. 1, 2022, CMS will cut an additional 15% from therapy assistant fees with the use of the CO/CQ modifier.3

The Potential Implications For SNFs and the Long-Term Care Market

CMS and the industry appear to have some differing views on the gravity of the changes. CMS followed the above findings by stating, “The payment impact for an individual practitioner could vary from the average and would depend on the mix of services he or she furnishes. The average percentage change in total revenues will be less than the impact displayed here because practitioners and other entities generally furnish services to both Medicare and non-Medicare patients1.”

While it’s true that Medicare Part B payments don’t make up 100% of a company’s patient mix, it’s still more substantial than this comment seems to allude. Across Net Health’s customer base, between 30% and 40% of therapy activities for all customers fall under Medicare Part B.

Again, CMS is correct that it’s not 100%, but nearly 1/3 of reimbursements facing reductions is a cause for concern.

The Value of Therapy In the Quality of Medicare Patient Care

Cuts to reimbursement for therapy providers servicing Medicare patients doesn’t just hurt the company’s bottom line; it hurts patients too. Physical and occupational therapy has been proven time and time again to be an effective means of treatment that increases the efficiency of care and lowers hospital readmission rates. By limiting long-term care companies’ ability to stay in business, the availability of PT/OT treatment options could be in jeopardy.

SNFs may see their nursing facility and profitability margins go down, while they struggle to compensate their staff competitively compared to other fields. With therapy assistant reductions already finalized, cuts could impact the therapist-to-assistant ratio down the road. Lower salaries for PTs and OTs, and even lower salaries for therapy assistants with the second cut in 2022, could lead to fewer people choosing rehab therapy as a career, which could further reduce access to these services.

How You Can Get Involved

It’s important to reiterate that these changes are still proposals and have not been finalized as of yet. An opportunity exists for our clients and members of the community to voice their concerns and stop these reductions from moving forward. Comments can be submitted in these ways:

  • Electronically at Follow the instructions under the “submit a comment” tab.
  • Regular mail or overnight mail. View the instructions and list of addresses.

Additionally, the National Association for the Support of Long Term Care (NASL) recommends contacting local representatives and senators in Congress to voice concerns. NASL has set up a streamlined submission portal with a prewritten form letter that can be automatically forwarded to your local congressional leader.

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1. CMS, Medicare Program; CY 2021 Revisions to Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment Policies

2. CMS, Proposed Policy, Payment, and Quality Provisions Changes to the Medicare Physician Fee Schedule for Calendar Year 2021 Fact Sheet.

3. CMS, Medicare Program; CY 2020 Revisions to Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment Policies

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