MEDICARE CAP ON REHABILITATION SERVICES
This research paper explores the reasons why Congress imposed in 1997 caps on reimbursement under the Medicare program of charges for various types of outpatient rehabilitation services, the specific content of such caps, proposals for removing such caps and the rationales therefor.
Caps Imposed by the Balanced Budget Act of 1997
Under Part B of the Medicare program, full reimbursement was available, subject to a 20 percent coinsurance payment by the beneficiary and a $100 annual deductible, for rehabilitation services provided to eligible patients on an outpatient patient by qualified medical service providers. To be eligible for home health care generally under Medicare, the beneficiary would have to show that they were homebound and needed intermittent care. While there were limits to the number of hours of reimbursable nursing and home aide assistance per week, no limits beyond the coinsurance and deductible provisions were applicable to services provided by care providers which constituted physical therapy, speech therapy or occupational therapy.
Section 4541 of the Balanced Budget Act of 1997 (the Act), which was passed by the Congress on July 30-31, 1997 and signed into law by President Bill Clinton on August 5, 1997 for the first time placed a dollar limit (of $1500) per annum per Medicare beneficiary (patient) on the reimbursability of rehabilitation services, beginning with services provided as of January 1, 1999, except for outpatient services provided by hospital clinics. The agency responsible for administering Medicare and its companion state medical insurance program, Medicaid, the Health Care Financing Administration (HFCA) of the Department of Health and Human Services (HHS), subsequently interpreted section 4541 to impose two separate annual $1500 limits, one on combined physical therapy and speech-language pathology services and the other on occupational therap...