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

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

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.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
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.
Closed – Implemented
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

Agency Affected Recommendation Status
Department of Health and Human Services 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.
Closed – Implemented
HHS has taken action to implement this recommendation.
Department of Health and Human Services 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.
Closed – Implemented
The Congress, in passing the Deficit Reduction Act of 2006, and HHS have taken action to implement this recommendation.

Full Report

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Topics

BeneficiariesErroneous paymentsHealth care cost controlHealth care costsMedicareOutpatient carePatient care servicesReporting requirementsStrokeTherapy