Does Physical Therapy Cost Too Much?

Some physical therapists over-treat their patients.

The most expensive Medicare physical therapy patient in America received $114,799 in services in 2004.

By 2006, the most expensive Medicare physical therapy patient in America only cost $37,543.

The difference in 2006 vs. 2004 was the implementation of the 'per beneficiary caps' on outpatient rehabilitative services.

The chart header below reads 'Annual Per Beneficiary Payment Threshold Change Per Percentile' and it shows the amount of physical therapy received, in dollars, broken down by percentile.
The next chart is the same data set, with the 100th percentile removed.

Notice how the chart scale shifts and the differences between 2006 vs. 2004 are made apparent.
These two charts are taken from data provided by the Outpatient Therapy Alternative Payment Study 2 (OTAPS 2)

The data for these charts is available in the OTAPS 2 report as Table 3.

I extracted and re-formatted the data as two separate charts to illustrate the impact of the 100th percentile cost outliers.

If these charts are too hard to read I have put them as PDF files at www.BulletproofPT.com.

Falling Costs

Note how costs for physical therapy have fallen across the board.

The exceptions to falling costs are those patients whose costs are below the 50th percentile (median).

Their costs are rising.

At the 50% percentile costs increased at about the same rate of growth as the overall Medicare population (3.5%).

At the 25% percentile costs increased at double the rate of growth of the overall Medicare population.

Why?

Who cares?

At $227 per beneficiary per year Medicare can afford lots and and lots of physical therapy for these people.

At $37,543 per beneficiary per year Medicare can't afford much physical therapy.

The problem is this:

How can Medicare get physical therapy to those patients who need it most while preventing egregious cost outliers like in the first chart?

What to do?

Current legislation has the caps (and their exceptions process) in place until December 31st, 2009.

An alternative payment system is expected to replace the Medicare therapy cap within the next five years.

A pilot study will get underway in May 2009.

Current patients are facing hardships when their $1,810 physical therapy dollar limit is met.

Many physical therapists are uncomfortable appending the -kx modifier if they believe it raises the risk of a Medicare audit (it does).

Do the right thing

If your patient needs therapy and you can show they get better in a timely manner, do it.

If you are unsure or scared about how to document your findings then check out some of the free resources at www.BulletproofPT.com, your source for outpatient Medicare documentation and compliance knowledge.

Can Physical Therapists go over the PT Cap with an X-Ray?

Does an X-ray demonstrate medical necessity for physical therapy?


...or does an axial CT myelogram?


These images are examples that have in common a clear pathology that many patients and physical therapists confuse with medical necessity for physical therapy.

Right now (November 17th 2008) I have several physical therapy patients who have exceeded their $1,810 Medicare benefit and are asking me for continued physical therapy services in my outpatient clinic.

Many of these patients have chronic conditions such as the following:

• degenerative spinal stenosis
  
• massive rotator cuff tears
  
• knee osteoarthritis

These conditions show up well on sophisticated imaging scans such as X-ray, CT scans and MRI.

These conditions often require extended courses of physical therapy or multiple episodes of physical therapy in the course of a calendar year.

In my clinic, the $1,810 Medicare cap is usually reached by 16-18 visits.

It would not be unusual for degenerative spinal stenosis to take 20 visits. I'm pretty sure my experience is typical.

Who needs PT?

For an exception to the Medicare cap the physical therapist would have to show three criteria:

• Need
  
• Progress
  
• Skill

Need is often shown with physical findings.

The above X-ray and CT myelogram show physical findings based on anatomy.

Physical therapists should show physical findings based on function.

Diagnosis: Process or Label?

An epiphany in own my practice has been the use of disablement models: most recently the International Classification of Function (ICF Model) that describes the link between Body Structure and Function and Activity Limitations.

The ICF classification framework is to physical therapists what the ICD-9 diagnostic labels are to physicians.

Note the ICF model describes any health condition - for instance, your patient with degenerative spinal stenosis who has 'run out' of Medicare physical therapy benefits but asks you to append the -KX modifier to continue their care.

What do you do?

Do you ask the doctor for another script?

Perhaps you consider using another diagnosis from the old 'diagnosis list' from 2006.

Don't.

The Therapy Cap

The purpose of the therapy cap is to cut costs without limiting patient access to necessary care.

There is a large POPTs in my town that automatically cuts off therapy to every patient approaching the $1,810 Medicare Cap - regardless of need or progress.

They perceive that, as a POPTs, they are in the Medicare audit crosshairs and they refuse to add 'risk' to their caseload by appending the -KX modifier.

They are limiting care to their patients.

The Caps Work

Data for this table comes from the Outpatient Therapy Alternative Payment Study 2 (OTAPS 2) Task Order - Utilization Report.

Outpatient Physical Therapy
	2004	2006	Per cent change
Mean dollars paid per user	$864	$788.06	-8.8%
Mean dollars paid per episode	$748	$682	-8.9%
Standard deviation paid per episode	$1,047	$782	-25.4%

"The Balanced Budget Act of 1997 enacted financial limitations (therapy caps) on outpatient physical therapy (PT) and speech-language pathology (SLP) combined... In 2006 the Automatic Exceptions Process to the caps began, enacted by the Deficit Reduction Act of 2005." (OTAPS 2)

The result of the caps has been the observed decrease in per user and per episode dollars paid.

Read the full blog entry here.

Note that cost reductions occurred from 2004 to 2006.

There was no cap in 2004. The cap exceptions process began in 2006.

The Caps work - so, work with the Caps

Get better at showing need.

Show that your patients have Activity Limitations using a functional scale.

I recommend the OPTIMAL scale (free) or the AM-PAC (small $$).

Show Progress.

I've designed a neat pen-and-paper graph that easily and quickly shows functional progress over 1, 2 or 3 months.

No more discharges after 20 visits whether the patient is better or not.

Now, patients come back to me because they know I can 'go to bat' for them.

If they are getting better I can prove it.

Get a copy of the Functional Progress Graph here.

Make skilled decisions.

Use the ICF model to link impairments in Body Structure and Function with the measured Activity Limitations.

The link is your Physical Therapist's Diagnosis.

What do YOU need to go to bat for your patients?

Not fancy x-rays or 'alphabet soup' imaging.

Get better at describing your own skills using simple tools.

Get the free tools I've described in this post.

Also, get a free tutorial called Bulletproof PT to learn more.

Older physical therapy patients are worried

Every day I answer questions from older Americans about their physical therapy.

"Will I run out of Medicare physical therapy benefits?"

"What will happen to me - will I have to go into a nursing home?"

Medicare provides physical therapy treatment up to $1,810 in billed charges for the purpose of preventing a loss of independance in older Americans.

Americans living at home, cared for by their loved ones, consume fewer healthcare dollars than Americans living in institutions.

Medicare pays for much of the institutional care in the United States.

Sarah

Today, I treated Sarah, an 86-year old lady with arthritis.  

Sarah is legally blind and cannot walk far because of pain in her back and legs due to a condition called spinal stenosis.

Sarah's husband died a few years ago and now she is alone. 

Sarah can clean her home and care for herself with minor accomodations - she rides the handy bus to church, groceries and physical therapy.  

She doesn't go out much but she lives in a trailer park where neighbors are close by.

But, Sarah is not far from needing more help.

She has been in physical therapy for her spinal stenosis for a month now and we have gotten her back to walking and single-stair climbing (we live in Florida). 

Sarah is much more comfortablenow moving around and doing light lifting.

Friday, November 7th is Sarah's projected discharge date and she is worried that physical therapy will not continue.

She is afraid that she will decline without therapy and require more help to live alone.

Soon, she believes, she will need to move out of her trailer and into a nursing home.

Sarah believes physical therapy can help prevent this decline.

So do I.

Medicare depends on me to prevent Sarah from losing her independance and going to live in a nursing home.  But, for that, I have to make decisions that expose me to the threat of a Medicare audit if it is determined that I gave Sarah 'too much' physical therapy.

What do I do?

I must show that I can help Sarah, that Sarah needs my help and that only a physical therapist, such as I, could help Sarah.

For that I need help.  I need two tools.  Both are free tools.

The first tool is the OPTIMAL.

I use the OPTIMAL to show that Sarah needs physical therapy.

The OPTIMAL also shows that Sarah can now walk further and move around better than she did one month ago.  It shows she makes progress in physcal therapy.

But, I also need one more tool.  I need to append a '-kx modifier' to my physical therapy charges that I send to Medicare.  

I want to show any Medicare auditor that my decision to append that modifier is based on results, not just a one-time event or measurement.

So, I graph my OPTIMAL scores.

Here is the graph template.

What happens to Sarah?

Friday I take my follow-up measurements.  

Sarah's need and progress is evident.

My skill and decisions are well-documented with the graph template.

This time, I think she will qualify for the extra month of physical therapy.

Dororthy got kicked out of Physical Therapy today

Dorothy got kicked out of physical therapy today.

Dorothy is one of my patients.

She is almost 80-years old, still lives at home with her husband and tries to walk every day.

She lives year-round here in Florida in the same town she grew up in.

Dorothy has a condition, called degenerative spinal stenosis, that causes her back to hurt when she walks more than one city block.

Dorothy has been to my physical therapy clinic for treatment of her stenosis three times in 2008: January, May and now in October.

Each time she has come to see me we have been able to help her walk better and maintain her independence.

Only now she has used up her Medicare physical therapy benefit.

I say she got 'kicked out' because that's how I felt when I told Dorothy that Medicare would likely no longer pay for her care.

Sure, Dorothy had the option to pay cash but, at $100 per treatment session, that is not much of an option.

I felt like crap when I walked her to the door and gave her a hug and said goodbye.

She was much kinder to me than I was to myself.

Dorothy said she understood the situation and that she would do her exercises at home.

What will happen to Dorothy?

The reality is that that Dorothy will begin a functional decline without skilled physical therapy.

How do I know?

I measured it.

In January, May and October I took functional measurements of Dorothy with a Medicare-recommended tool called the OPTIMAL scale.

Each time Dorothy came to therapy we re-measured her performance on the scale. Each session of physical therapy showed improved performance on the OPTIMAL.

Each time Dorothy stopped physical therapy her performance declined. The treatment effect was not persistent.

Dorothy's muscles around her spine were too weak to support her aged bones and discs.

Dorothy stopped walking because walking hurt.

She couldn't clean her house because vacuuming hurt her back and her husband had to do it.

She had to depend on her husband more and more and soon his back began to hurt.

At one point, I had both Dorothy and her husband in therapy.

The husband soon got better but Dorothy noticed that she was unable to push herself at home sufficiently to exercise her muscles. Also, she didn't have the specialized equipment, like spinal traction and exercise equipment, that we had in therapy.

Because of her age and her aptitude she was not safe working out in a self-pay gym setting.

Even a personal trainer was not a safe option for Dorothy.

What will I do?

If Dorothy calls me again in 2008, asking for help, I will see her for an evaluation.

Physical therapy evaluations are not subject to the cap.

Technically, you should not even have to append the -kx modifier to a 97001 CPT code for a patient over the cap since you need to evaluate them first to see if they qualify for the automatic exceptions to the cap.

In your evaluation you should measure impairments in body structure and function as well as activity limitations.

Link the impairments to activity limitations with your physical therapy diagnosis.

I measure activity limitations with the OPTIMAL scale.

Dorothy's OPTIMAL scale was graphed for 2008.

Here is what the graph looked like and how it provided the justification for going over her annual $1,810 per beneficiary, 'Uniform Dollar Limitation' (cap).



If you need to learn about 'justification statements' or 'the exceptions process' or even 'medical necessity for physical therapy' you can get free information at Bulletproof Physical Therapy Charts.

Give your patients all the physical therapy they need.

Unless they're ready, don't kick them out.

Are you physical therapy 'Audit Bait'?

Are you physical therapy audit bait?

How can you tell?

Well, are you an 'outlier' - that is, a high cost user of Medicare physical therapy services?

Physical therapists in private practice should look at their physical therapy patients to see how many have exceeded the physical therapy caps and by how much.

Also, see how many patients have gone over the average payment for a Medicare physical therapy episode.

Data Drilling

Medicare auditors will look first at billing outliers - those episode charges that exceed some threshold, say two standard deviations above the average (mean).

What is the mean and what is one standard deviation?

Data for this table comes from the Outpatient Therapy Alternative Payment Study 2 (OTAPS 2) Task Order - Utilization Report.

Outpatient Physical Therapy
	2004	2006	Per cent change
Mean dollars paid per user	$864	$788.06	-8.8%
Mean dollars paid per episode	$748	$682	-8.9%
Standard deviation paid per episode	$1,047	$782	-25.4%

"The Balanced Budget Act of 1997 enacted financial limitations (therapy caps) on outpatient physical therapy (PT) and speech-language pathology (SLP) combined... In 2006 the Automatic Exceptions Process to the caps began, enacted by the Deficit Reduction Act of 2005."

The result of the caps has been the observed decrease in per user and per episode dollars paid.

Note that the standard deviation also decreased - substantially.

One of the take home messages from this chart is that the caps work for cost savings.

From the OTAPS 2 report...

"... the payment reductions were incurred by providers tapering services for higher cost users that tended to skew mean payments upwards."

Do the caps restrict access to physical therapy services by Medicare beneficiaries?

Beneficiary Access

"The utilization analysis in this report clearly demonstrates that the outpatient therapy caps, as implemented in CY 1996 with the exceptions process had little or no impact on beneficiary access to outpatient therapy services. This is in sharp contrast to CY 1999 when the caps were implemented without an exceptions process."

So, the caps decrease costs by decreasing therapy services to 'higher cost users' - that is outliers.

Finally, the exceptions process seems to work to preserve access for those beneficiaries (patients) who need physical therapy the most.

What do you do if you are an outlier?

Some physical therapists may be legitimate outliers.

In other words, their patients need physical therapy services more intensively or more frequently than the general population.

In my area of the country, I could be a geographic outlier because some local health care providers (doctors and physical therapists) have told their patients that the Medicare cap is a 'hard cap' that cannot be exceeded.

If I apply the cap based on medical necessity then my average charges will be higher than my local peers.

Some physical therapists are afraid to append the -kx modifier and exceed the cap.

What do you do?

Show your work

Remember in high school you could get partial credit on a math test if you showed how you got to the final answer? Well, Medicare is like that.

You can be an outlier on costs if you show your work.

Show that your patients need physical therapy and that they qualify for the -kx modifier on your charge slip (medical necessity).

Show that you are getting your patient better (expected improvement in a reasonable time frame).

Show that your services are skilled (physical therapist decisions and physical therapist assistant judgments).

If you are not sure how do some or all of these Medicare criteria go and download some of the free resources at www.BulletproofPT.com.