Reimbursement for Medicare Part B therapy services continues to dry up despite government cash infusions, a concerning trend for rehabilitation providers, operators and the associations that represent them.
The Centers for Medicare & Medicaid Services (CMS) has suggested about 2% in cuts to Part B physical and occupational therapy rates as part of its 2022 Medicare Physician Fee Schedule Proposed Rule, effective Jan. 1.
These cuts follow a devastating 2021 calendar year, which included 9% in cuts to Part B before the Consolidated Appropriations Act of 2021 reduced reimbursement slashes to about 3%.
Providers are still looking to Congress to pass another spending bill further offsetting cuts to net zero for 2022.
“We’re in an industry where we really should be seeing small increases on a year-over-year basis, not small decreases,” said Michael Capstick, president of Glenview, Ill.-based Select Rehabilitation. “That’s really the message that Congress needs to hear. We help people stay out of the acute healthcare system to the best of our abilities, but yet we continue to receive a small cut here or there.”
Capstick expects Congress to make an announcement later this summer or in the fall regarding additional funds similar to last year’s spending bill.
A coalition of organizations, including the National Association for the Support of Long-Term Care Support (NASL), are working on behalf of therapy providers to have Congress commit to more funding, or work with CMS to “delay, stay or mitigate” the proposed fee schedule for next year.
“Providers are already experiencing high costs as a result of COVID-19’s detrimental impact on the long-term care settings we serve,” NASL said in a statement. “These cuts join a current cascade of compounding reimbursement reductions that are detrimental to patient care.”
Primary Care Initiative
Part B therapy providers are seeing cuts now as a result of the previous administration’s evaluation and management (E&M) initiative, NASL Executive Vice President Cynthia Morton told Skilled Nursing News.
The move headed by former CMS administrator Seema Verma aims to boost pay to primary care doctors through coding restructure and revaluation. Because of budget neutrality requirements, NASL said, an increase in these areas forces offsetting cuts to therapy specialties.
Two new E&M codes were added to bill complex and extended visits; work values of existing codes increased, meaning a higher reimbursement for the same code.
“It was a good idea by CMS, increasing the E&M codes for physicians, no argument. However, Congress needs to be able to continue to support the rest of the fee schedule,” added Capstick.
Cuts are expected to bounce back up to 3.8, 3.9% once the CMS conversion factor adjustment accounts for the E&M initiative, Capstick noted.
“It’s a meaningful difference,” Capstick said. “It makes it really challenging, especially for the smaller companies … there was an approximate 3% reduction for therapy services last year, going into 2021, and then you’re looking at this additional reduction.”
Cuts pose a challenge to rural therapy providers too, according to Aegis Therapies President and CEO Martha Schram, pointing to an imbalance in supply and demand for labor in rural markets further exacerbated by the reimbursement changes. Texas-based Aegis Therapies offers services in rural areas; Schram is also president of NASL.
“In order to mitigate some of these changes, the staffing model becomes even more difficult in already compromised staffing parts of service,” Schram told SNN. “This is a sweeping approach in a clinically and financially fatigued health care sector, and to be implementing this now … it exacerbates potential problems.”
For perspective, Aegis has twice the number of open positions in rural areas compared to a year ago — the therapy provider has more than 1,000 points of service across the country.
The graph below, provided by Aegis, shows rural staff openings across four states between 2020 and 2021.
Capstick, who started Select Rehab more than 20 years ago, considers the E&M code changes “outside the norm,” comparing the adjustment to Congress removing therapy caps in 2018. The rule placed a $2,010 cap on therapy services for Medicare recipients.
Effects on Providers
Smaller providers and those in rural areas don’t have the efficiencies and scale to try to mitigate fee schedule cuts, Capstick added.
Mark Besch, chief clinical officer at Aegis, used therapy assistants as an example — the proposed fee schedule drops the differential for therapy assistants by 15% for rehab therapy providers. Rural therapy groups tend to hire assistants rather than registered therapists because it’s easier to recruit and retain them.
The Aegis team added that it remains very difficult to staff anyone — assistants or registered therapists — in many, if not most, rural areas. Local associate degree programs help keep assistant graduates in town, though.
That percentage might be offset by a geography adjustment, Besch said, which increases reimbursement for a therapy assistant based on location, but he said it’s “pennies” compared to the 15% cut.
“Any industry, any provider of any sort, even retail, who experiences a 15% reduction in revenue is likely to have to make some modifications to the way they do practice,” said Besch. “That’s the number of people you employ, the frequency with which you can have them present in different locations. That’s where it becomes a beneficiary issue, (issues with) access to the care that they need. (It) could and likely will be diminished as a result of these cuts.”
Morton said those in the skilled nursing space need to have a multi-year perspective to make better, more informed decisions concerning therapy.
“You can’t just look at 2022 in a silo, you have to look at what CMS wants to do in 2022 in context with what they’re doing to us in 2021, and then what’s on the horizon, in a couple of years,” noted Morton.
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