4 Ways Your Therapy Operation Could Help You Mitigate Medicare Cuts in 2021

In early December, Centers for Medicare & Medicaid Services (CMS) finalized the Medicare Physician Fee Schedule for 2021, reflecting significant cuts to a variety of providers. Physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP) were initially going to be impacted by a reimbursement reduction of approximately 9%. In late December, in response to intense advocacy by organizations representing the 37 professions affected by the cuts, Congress approved a new omnibus and COVID-19 relief package that reduced the planned cuts to approximately 3% and put the 2% sequestration reduction on hold. The omnibus bill sets the payment rate for CY2021, but the sequestration hold expires on March 31, 2021. At that point, the 2% sequestration reduction will return for all Medicare claims. While this is certainly an improvement over the proposed 9% cut, the new cuts will still prove to be unsustainable for many providers.

So how can you mitigate these reductions in your Part B therapy billings? A key aspect of mitigating these losses is the overall management of your therapy operation. There are some obvious and some not-so-obvious areas where mitigation may be possible. In this article, we will discuss four of them: Multiple Procedure Payment Reduction (MPPR) Policy, the Medicare 8-Minute Rule, Productivity, and Staff Education.

Let’s get started...

1. MPPR Policy

In 2011, CMS implemented the MPPR policy, which impacts the way in which Medicare Part B services are paid. In a nutshell, when your therapist bills more than one CPT code for a therapy treatment session (which is normal), the highest paying code is paid at the full rate, while subsequent code payments are reduced, some by 9-11% depending on the code. This policy applies to a single treatment day and applies across disciplines. So when your PT bills for therapeutic exercise and then gait training, the lesser charge is reimbursed at only ~90% of the full charge. Meanwhile, should the patient be treated by OT that day as well, every code charged will be subject to the 9-11%% cut. If it is clinically appropriate, then not having multiple disciplines treat on the same day is preferable. Also, because the evaluation charges are reimbursed at a much higher rate than the treatment codes, not having multiple disciplines evaluate on the same day would also be preferable, if clinically appropriate for the individual patient. Careful management of the patient’s schedule is required to mitigate the effects of these cuts - as long as it is clinically appropriate to do so.

2. The Medicare 8-Minute Rule

The 8-Minute Rule is what many call a Medicare billing guideline for determining how many billable units may be charged in rehabilitation based on time spent with the patient. Billable units are based on 15-minute increments, after the initial 8 minutes have been met, which is how the name “8-Minute Rule” began. For example, for any single time-based CPT code, providers bill a single unit for treatment that is greater than or equal to 8 minutes through and including 22 minutes (≥ 8 minutes to 22 minutes = 1 unit). If the duration of a single modality or procedure in a day is greater than or equal to 23 minutes through and including 37 minutes, then 2 units should be billed (≥ 23 minutes to 37 minutes = 2 units). This same methodology is used perpetually to determine the total number of units to be billed. So next would be ≥ 37 minutes to 52 minutes = 3 units, and so on.

When a therapist charges 37 minutes, the facility bills 2 units, but that is 60 seconds away from the next unit of charge. Would the patient have benefited from some additional therapy that day? Maybe or maybe not, that is a decision that your therapists must make based on clinical necessity, which is case dependent for each individual patient. As long as your therapists are managing their time and they understand the 8-Minute Rule, further efficiency could be created (when clinically appropriately), which may mitigate some of the ~3% payment reduction.

3. Productivity and the Use of Therapy Staff

Understand that, in most facilities, your therapists are some of the most expensive staff in the facility except for a few administrative staff members and/or staff physicians. Knowing this means that we should always be sure that therapists are focusing their time on activities that the administration deems necessary. Also understand that therapy is the only department (aside from the physician if they are on-staff) with the ability to generate additional income for the facility from Medicare and third-party payors. This means that the decisions that your therapist makes on a day-to-day basis can have a real impact on your facility’s revenue. This use of time is usually measured in what we call productivity (often calculated by billable time divided by time on-site).

The overall productivity of the therapy department should be managed in order to reduce non-revenue generating time due to inefficiency. What is the productivity expectation for your therapists and assistants? Are they meeting expectations, and who is holding them accountable to meet expectations? Who in the therapy department is attending meetings and how much time are they spending there? Are your highly paid staff spending time doing tasks that should be delegated to another department? For example, when a therapist spends time making simple adjustments to a wheelchair that could be done by the maintenance department, you are underutilizing the billable time of the therapists when other staff could more efficiently handle the task at a lesser cost. This also means that the time that your therapist is adjusting the wheelchair is time that they are NOT generating revenue by treating a Part B patient. Managing your therapists’ time inefficiently erodes the facility’s bottom line and provides less skilled time and less revenue to care for the residents who are under the facility’s charge.

An additional example could be if staff are issuing wheelchair cushions without first evaluating the patient and billing for the time. Therapists are highly trained and licensed individuals and their actions are regulated by both the state board and Federal government (CMS). CMS requires that anything a therapist does and bills Medicare for should be an activity that is of a level of complexity and medical necessity that it requires the skills of a therapist. Therapy associations define a “Therapy Screen'' (or a screen) as a hands-off evaluatory process from which a therapist can determine if a patient needs therapy or if they do not need therapy. Thus a screen is very different from a billable evaluation. A recommendation for any piece of equipment or the recommendation that a patient needs a particular level of assistance is not an acceptable result of a screen. The screen merely determines the need (or not) for therapy, and it is the evaluation which results in recommendations and a plan of care. Lastly, if the therapists are providing recommendations without having performed an evaluation, then they may be acting outside the scope of their respective practice acts for each discipline. It is standard operating procedure that most liability insurance policies cover your facility and your therapists for services performed that meet the requirements of all federal and state guidelines. Therefore, by having a therapist merely screen a patient and make a recommendation for equipment (or prescribe a needed level of assistance) as part of the screen (and not an evaluation), the facility is potentially voiding its liability insurance coverage for those services and putting the licenses of the therapists at risk in the process.

I have heard some administrators say, “Productivity is not my concern because I have a contractor for whom I only pay for billable time. So, if the therapists are not productive, then it doesn’t cost me more, it costs the contractor.” At face value this is true on the invoice you receive at the end of the month. However, when it comes time to renegotiate that contract, the contractor may have to raise your rates because the therapists in your facility haven't been as productive as anticipated and the contractor’s bottom line has been eroded.

As reimbursement has stayed flat or fallen over the years, we have seen the pressure on therapists increase exponentially through higher and higher productivity expectations. Just prior to implementation of the Patient-Driven Payment Model (PDPM), we heard of some facilities who have expectations of their assistants to be over 100% productive. This is concerning, and potentially unethical and fraudulent depending on how the productivity percentage is calculated in that facility. And just this week, we saw a Facebook post (in a group forum for therapists who work in long-term care) where a therapy assistant was expected to be at 95% productivity and the therapist at 90% - and that’s during the COVID-19 pandemic. Again, this is concerning and potentially fraudulent. Understand that your therapists are well-educated individuals who know their options. If you take a look at the vast majority of the Medicare Whistleblower lawsuits over the last decade, their therapy department is usually involved. Also know that the government usually seeks restitution from the provider of record first before they look to the contract therapy company. So, if your contractor is pushing your therapists too hard, this may be putting you, as the provider, at undue risk if a therapist is being asked to do something outside the norm and decides to pick up the phone and reach out to the Department of Justice.

All that to say, as the administrator/manager of your facility, you need to know what the productivity expectation is of your therapists, how it is calculated, and if they are meeting that expectation, regardless of whether they are contract or facility employees.

4. Staff Education
Throughout our career, we have taken the approach that a more educated team is a more valuable team. Here we don’t mean formal education, rather training surrounding how the payment system works. Do your therapists understand the MPPR policy and the 8-Minute Rule? Do they understand productivity, why it is necessary, and how best to achieve the expectations in a clinically appropriate and ethical manner? If they do not, then these cuts will take more than 3% from your bottom line. We encourage you to ensure that someone is routinely educating your staff on principles of best practices and changing regulations.

In Conclusion
Therapy continues to be an integral part of the services that SNFs provide, but with declining reimbursement, everyone is looking for savings. To mitigate the impact of the payment reduction in your facility, it is crucial that you understand how these various therapy components work and how they correspond to your bottom line. In addition, as COVID testing, PPE acquisition, vaccine administration, and now the Part B cuts have severely impacted your bottom line, your therapy operation is one area of where you may find great savings. If you have ever considered an in-house conversion or just want to have a conversation about what those savings may look like, give us a call. We designed the In-House Therapy Alliance to help single facilities and small chains recoup and retain profits to be recycled back into their facility, while having access to the expertise and support needed to safely navigate Medicare’s changing tides. Visit www.seagroverehab.com or contact Mark McDavid (850-532-1334, [email protected]) to learn more today.

Authors:  Mark McDavid, OTR, RAC-CT, CHC and Elizabeth Johnson, PT, CDP, RAC-CT, Seagrove Rehab Partners

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