When CMS finalized a 15% reduction in reimbursement for services provided by therapy assistants, most SNF operators assumed this cut would primarily impact their therapy providers and have little impact on their own bottom lines. Pay attention when you open the first 2022 therapy invoice — you may be surprised. The assistant cut that began on January 1 is not automatically deducted from the therapy invoice.

That means SNFs may receive less reimbursement while being billed the same amount by the therapy provider unless the SNF and therapy provider agreed in advance that the billing adjustment would reflect the adjusted assistant rates.

Otherwise, SNFs may get billed by the therapy company at full fee schedule rates with no Part B Assistant adjustment, yet get paid at Medicare’s reduced rates.

What’s really happening with the 15% cut

Many SNF operators will be forced to make up the difference of reimbursement rate, but a question remains about what is really happening, as there have been conflicting reports about the actual impact of the 15% reduction in therapy assistant reimbursement.

To clarify, therapy rates are billed 80% to CMS and 20% directly to the patient. The 15% reduction impacts the CMS-billed portion only, so the net reduction to the overall rate is 12%:

By passing the entirety of the rate reduction impact to the SNF, the therapy provider has increased the rates SNFs pay for these assistant services by 10 percentage points.

The therapy cost reduction is not automatic

Most therapy contracts do not accommodate fluctuations in reimbursement changes from CMS. Traditional therapy contracts bill for a percentage of the currently published Medicare Part B Physician Fee Schedule. If the reimbursement change is directly related to the actual fee schedule — which is often the case — the therapy invoice will match the reimbursement change.

This is not the case with the 2022 assistant cut.

A modifier is added to the billing code to document that an assistant performed the service. This modifier triggers CMS to adjust the reimbursement for that code. Additionally, the therapy provider must manually adjust their billing systems to account for these reductions.

In short, the process is not automatic. SNF operators must check invoices carefully by both code and therapist to ensure the bill reflects the reductions.

In-house therapy expenses are becoming an even bigger enigma

Therapy assistants provide skilled care according to the evaluating clinician’s plan of care. In many markets, there are not enough evaluators to meet the needs of all patients, and without assistants, care would be compromised. SNF operators and their therapy partners need to work together to find ways to retain valuable therapy assistants and continue to achieve strong therapy outcomes while navigating the budget cuts.

Managing therapy in-house may seem like insulation against the impact of the therapy assistant cuts. However, many in-house therapy programs lack an accurate accounting for the actual cost of their therapy program.

Stated otherwise, internal therapy costs per patient can easily exceed average Part B revenue per patient if recruiting costs, staff wages and productivity are not monitored and managed carefully. With increased staffing concerns and rising costs of clinicians, this Part B reduction could swing an in-house program from black to red.

The new 15% therapy assistant reimbursement reduction gives in-house therapy operations another reason to look critically at their current operations and evaluate the need for a strong external therapy partner who is willing to share risk. Lacking transparency and a complete understanding of how you are being reimbursed and charged for therapy services can have a negative financial impact on your bottom line.

As a SNF operator, you know that with razor-thin margins, expense control is critical to the success of your business. Therapy services should not cost more than you are reimbursed. 

This article is sponsored by Reliant Rehabilitation. If you would like assistance reviewing your therapy expenses or any additional information, please reach out to us at www.reliant-rehab.com.