Looming 8% Cut to Therapy Payments Could Have ‘Major Impact’ on Residents, Operators

There’s been significant attention focused on the potential for therapy reductions and reimbursement shifts amid the transition to the Patient Driven Payment Model (PDPM) on October 1, but concerns may soon be shifting to another looming therapy change — this time under Medicare Part B.

The Centers for Medicare and Medicaid Services (CMS) has proposed an 8% cut in physical therapy rates in the final Physician Fee Schedule (PFS) for calendar 2020 — with some therapy teams already planning to fight the therapy decrease to help Medicare B recipients receive full benefits in January 2021, when the reduction is slated to take effect.

“We are not going to just sit back and do nothing. We’re going to be very active to see a different outcome in the 2020 rule,” Kara Gainer, director of regulatory affairs at the American Physical Therapy Association, said. “We don’t want to see this 8% cut be realized, and we are looking to see what actions we can take to make this cut either be smaller or go away altogether.”


Medicare Part B patients make up 70% of the average nursing home’s resident population, some of whom receive therapy, according to Cynthia Morton, executive vice president of the National Association for the Support of Long-Term Care (NASL). These particular patients are long-stay individuals who typically remain in the care of nursing homes — and in need of constant around-the-clock attention — until they most likely pass away, Morton said.

“While a Medicare A patient might get rehab in a nursing home because they broke a hip, Medicare B patients stay longer than 100 days, and are not under the PDPM model,” Morton explained.

For long-stay residents, Medicaid generally covers the nursing home stay, with ancillary services such as doctor visits and rehab therapy billed through Medicare Part B. These patients are known as “dual” residents, or patients with both Medicaid and Medicare B coverage.


At the same time as the 8% therapy cut, the rule increases payments to doctors who see Medicare patients in their offices under 14 codes for office and outpatient visits — a classification known as “E&M,” or evaluation and management.

As with PDPM, CMS considers the physician fee schedule to be budget-neutral — so that when CMS increases one category of payment, they must decrease other codes to neutralize the spike. In this case, CMS made the E&M slice bigger by about 40%, Morton said, with therapy among multiple specialty services suffering pay cuts to offset the gains.

In addition to therapy, some other proposed decreases under this rule include: ophthalmology by 10%, audiology by 6%, and clinical social workers by 6%. Some examples of reimbursement increases are endocrinology at 16%, radiology by 15%, rheumatology at 15%, and family practice at 12%.

“Therapy is one of the victims to offset those increases,” she said. “Our patients can’t take this cut. There’s no reason why rehab therapy for these frail patients should sustain a cut.”

Suggesting that no one is clear about how CMS arrived at the most recent categories of what would be cut versus increased, Morton questioned the federal government’s strategy.

“There’s not a lot of detail, and we don’t know why you’d pick one over the other. This is concerning because providers with 8% potential cuts are already dealing with other cuts as well,” Morton added, explaining that CMS already cuts therapy codes when more than one code is billed per day by the rehab therapist.

“If a patient goes to a therapy gym, they also may get two or three therapy services in one day. When there’s more than one, CMS cuts it, and it won’t be reimbursed,” Morton said. “I understand that CMS wants to increase E&M codes for physicians, but tough when it’s at the expense of these patients.”

Madhu Krish, chief operating officer of Paragon Rehabilitation — the therapy arm of the Louisville, Ky-based Trilogy Health Services — has worked diligently with his team to avoid therapy layoffs post-PDPM, a fate that has affected multiple operators of both skilled nursing facilities and therapy companies.

But Krish also voiced concern about more proposed therapy cuts under Part B.

“The skilled nursing and rehab provider side of margins are thin, and an 8% cut will be a major impact — a major hit to resident care and the whole rehabilitation industry itself,” Krish said.

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