Medicare:

Little Progress Made in Targeting Outpatient Therapy Payments to Beneficiaries' Needs

GAO-06-59: Published: Nov 10, 2005. Publicly Released: Nov 10, 2005.

Additional Materials:

Contact:

Alan Bruce Steinwald
(202) 512-3000
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

For years, Congress has wrestled with rising Medicare costs and improper payments for outpatient therapy services--physical therapy, occupational therapy, and speech-language pathology. In 1997 Congress established per-person spending limits, or "therapy caps," for nonhospital outpatient therapy but, responding to concerns that some beneficiaries need extensive services, has since placed temporary moratoriums on the caps. The current moratorium is set to expire at the end of 2005. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 required GAO to report on whether available information justifies waiving the caps for particular conditions or diseases. As agreed with the committees of jurisdiction, GAO also assessed the status of the Department of Health and Human Services' (HHS) efforts to develop a needs-based payment policy and whether circumstances leading to the caps have changed.

Data and research available are, for three reasons, insufficient to identify particular conditions or diseases to justify waiving Medicare's outpatient therapy caps. First, Medicare claims data--the most comprehensive data for beneficiaries whose payments would exceed the caps--often do not capture the clinical diagnosis for which therapy is received. Nor do they show particular conditions or diseases as more likely than others to be associated with payments exceeding the caps. Second, even for diagnoses clearly linked to a condition or disease, such as stroke, the length of treatment for patients with the same diagnosis varies widely. Third, because of the complexity of patient factors involved, most studies do not define the amount or mix of therapy services needed for Medicare beneficiaries with specific conditions or diseases. Provider groups remain concerned about adverse effects on beneficiaries needing extensive therapy if the caps are enforced. HHS does not, however, have the authority to provide exceptions to the therapy caps. Despite several related statutory requirements, HHS has made little progress toward developing a payment system for outpatient therapy that considers individual beneficiaries' needs. In particular, HHS has not determined how to standardize and collect information on the health and functioning of patients receiving outpatient therapy services--a key part of developing a system based on individual needs for therapy. The circumstances that led to the therapy caps remain a concern. Medicare payments for outpatient therapy are still rising significantly, and increases in improper payments for outpatient therapy continue. HHS could reduce improper payments and Medicare costs by improving its system of automated processes for rejecting claims likely to be improper.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matter for Congressional Consideration

    Matter: To provide a mechanism after the moratorium expires whereby certain Medicare beneficiaries could have access to appropriate outpatient therapy services and to obtain better data needed to improve the Medicare outpatient therapy payment policy, including data on the conditions and diseases of beneficiaries who have extensive outpatient therapy needs, Congress may wish to consider giving HHS authority to implement an interim process or demonstration project whereby individual beneficiaries could be granted an exception from the therapy caps.

    Status: Closed - Implemented

    Comments: In October 2005, the Senate planned to address concerns about the expiration of a moratorium on Medicare's spending limits, called "therapy caps", for outpatient therapy, by extending the moratorium for another year at an estimated cost of $530 million in FY 2006 and $180 million in FY 2007. After GAO's report was issued in November 2005, the Congress agreed in conference on the original bill to allow the moratorium to expire and the spending limits to take effect, and implemented GAO's recommendation by giving HHS authority to implement an exception process for beneficiaries who exceed the cap but have documented medical needs for therapy. This recommendation will be closed in FY 08.

    Recommendations for Executive Action

    Recommendation: To expedite development of a process for assessing patients' needs for outpatient therapy services and to limit improper payments, the Secretary of Health and Human Services should ensure that outpatient therapy services are added to the effort already under way to develop standard terminology for existing patient assessment instruments, with a goal of developing a means by which to collect such information for outpatient therapy.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: HHS has taken action to implement this recommendation.

    Recommendation: To expedite development of a process for assessing patients' needs for outpatient therapy services and to limit improper payments, the Secretary of Health and Human Services should implement improvements to CMS's automated system for identifying outpatient therapy claims that are likely to be improper.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: The Congress, in passing the Deficit Reduction Act of 2006, and HHS have taken action to implement this recommendation.

    Sep 2, 2014

    Aug 22, 2014

    Aug 13, 2014

    Aug 11, 2014

    Jul 30, 2014

    Jul 29, 2014

    Jul 23, 2014

    Jul 16, 2014

    Looking for more? Browse all our products here