Dec. 31—President Barack Obama signed a new law that prevents a scheduled payment reduction for physicians and other practitioners who treat Medicare patients from taking effect on Jan. 1, 2014.

The law, known as the Pathway for SGR (Sustainable Growth Rate) Reform, provides a three-month patch to the SGR formula, with a 0.5 percent payment update for Medicare services through March 31, 2014, for claims with dates of service on or after Jan. 1, 2014, through March 31, 2014. Repealing and replacing the SGR remains a goal shared by both parties, and the Obama administration will work with Congress to achieve this goal, according to a Centers for Medicare & Medicaid Services (CMS) release.

The law also includes a number of “payment extenders,” such as the following.

Medicare physician payment update. In addition to the 0.5 percent payment update for claims with dates of service on or after January 1, 2014, through March 31, 2014, CMS is currently revising the 2014 Medicare Physician Fee Schedule (MPFS) to reflect the new law’s requirements as well as technical corrections identified since publication of the final rule in November. The 2014 conversion factor is $35.8228.

Extension of Medicare physician work geographic adjustment floor. The existing 1.0 floor on the physician work geographic practice cost index has been extended through March 31, 2014. As with the physician payment update, this extension will be reflected in the revised 2014 MPFS.

Extension related to payments for Medicare outpatient therapy services. The law extends the exceptions process for outpatient therapy caps through March 31, 2014. Providers of outpatient therapy services are required to submit the KX modifier on their therapy claims when an exception to the cap is requested for medically necessary services furnished through March 31, 2014. In addition, the new law extends the application of the cap and threshold to therapy services furnished in a hospital outpatient department. 

The therapy caps are determined for beneficiaries on a calendar-year basis, so all beneficiaries begin a new cap for outpatient therapy services received on Jan. 1, 2014. For physical therapy and speech language pathology services combined, the 2014 limit for a beneficiary on incurred expenses is $1,920. There is a separate cap for occupational therapy services, which totals $1,920 for 2014. Deductible and coinsurance amounts applied to therapy services count toward the amount accrued before a cap is reached, and also apply to services above the cap where the KX modifier is used. 

The law also extends the mandate that Medicare perform manual medical review of therapy services furnished Jan. 1, 2014, through March 31, 2014, for which an exception was requested when the beneficiary has reached a dollar aggregate threshold amount of $3,700 for therapy services, including outpatient department therapy services, for a year. There are two separate $3,700 aggregate annual thresholds: physical therapy and speech-language pathology services, and occupational therapy services. 

Extension of Medicare inpatient hospital payment adjustment for low-volume hospitals. The Affordable Care Act allowed qualifying low-volume hospitals to receive add-on payments based on the number of Medicare discharges from the hospital. To qualify, the hospital must have less than 1,600 Medicare discharges and be 15 miles or greater from the nearest like hospital. This provision extends the payment adjustment through March 31, 2014, retroactive to October 1, 2013. More information about implementation of this provision will be available soon. 

Extension of the Medicare-Dependent Hospital (MDH) Program. The MDH program provides enhanced payment to support small rural hospitals for which Medicare patients make up a significant percentage of inpatient days or discharges. This provision extends the MDH program until March 31, 2014, and is retroactive to October 1, 2013. More information about implementation of this provision will be available soon.


Publication Date: Tuesday, December 31, 2013