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Clarice Grote, MS, OTR/L

The 9% Medicare Therapy Cut and What You Need to Know

Here to learn about the cuts for 2023? Check out this article

Update (12/23/20) – Advocacy works! As part of the Omnibus Bill, Congress included changes to the E/M cuts. Congress reduced the Medicare therapy cut from 9% to 3% for 2021. Both the House and Senate bills included this language and passed with a strong bipartisan vote. This happened partly due to extensive advocacy from the American Occupational Therapy Association (AOTA) and thousands of practitioners. This legislation was signed into law by President Trump a few days later. This legislation also included the Medicare Home Health Flexibility Act.

Read AOTA’s Update

As you may know, the Centers for Medicare & Medicaid (CMS) has proposed, and recently approved, a 9% cut in reimbursement to occupational therapy (OT) services, amongst others. This reimbursement cut only applies to Medicare Part B billing. So, this will predominately impact outpatient clinics and skilled nursing facilities (SNFs).

Do you want the good news or the bad news?

The Medicare therapy cut will take effect on January 1, 2021, and will apply to all CPT® codes billed by occupational therapy practitioners through Medicare Part B. This payment reduction can be up to 9%. The good news? We aren’t alone, and the reimbursement for OT eval and reassess codes increased (AOTA, 2020). The reduction impacts physical therapy, speech and language pathologists, specialty surgeons, and many others. Additionally, the American Occupational Therapy Association (AOTA) has been hard at work this summer to advocate against this change. The bad news? This comes one year before the occupational therapy assistant (OTA) 15% reimbursement reduction takes effect on January 1, 2022.

Why is the Medicare therapy cut happening?

"These payment increases … support clinicians who manage ongoing care of patients with a host of chronic diseases or patient transition between hospitals, nursing facilities and home," - Seema Verma CMS Administrator

Each year, CMS reevaluates the payment for each CPT® code as part of the Medicare Physician Fee Schedule (MPFS). CMS describes this as “a complete listing of fees used by Medicare to pay doctors or other providers/suppliers. This comprehensive listing of fee maximums is used to reimburse a physician and/or other providers on a fee-for-service basis” (CMS, 2020a).

When the MPFS is adjusted, it must remain budget-neutral. Meaning, if they increase payment in one area, they have to decrease it in another. CMS cannot increase overall spending without approval from Congress.

The rates that received payment increases are for office/outpatient face-to-face evaluation and management (E/M) visits. To justify this change, CMS explains the rate increase as a way to appropriately reimburse primary care physicians for the management of beneficiaries’ chronic conditions (CMS, 2020b).

What does the Medicare reduction mean for me?

Most importantly, it can impact your job. If a clinic is unable to manage such reductions, it may be forced to close or downsize. When therapy providers are already struggling to make ends meet due to decreased caseloads and increased costs from PPE, a 9% reimbursement reduction can amplify these challenges. These changes may include a hiring freeze, increased productivity expectations, decreased hours, etc.

“In the past, the system has rewarded interventions and procedures over time spent with patients – time taken preventing disease and managing chronic illnesses.” - seema verma cms administrator

Unfortunately, these changes may also mean a reduction in access for Medicare beneficiaries. Therapy providers may be forced to reevaluate how many Medicare patients they can have on caseload, often referred to as a “case mix.” While the change intends to reward the physician’s time spent with patients managing their cares, these changes will impact the practitioners responsible for providing continuing care management.

Additionally, OTs, PTs, and SLPs can review and verify, rather than re-document, medical information entered into a chart by other clinicians. This change aims to allow practitioners improved flexibility to delegate care and reduce repetitive documentation (CMS, 2020b).

Ultimately, this is another opportunity to ensure you are providing high-quality and high-value care is of the utmost importance. We must continue to be good stewards of care for our patients and our employers.

What has AOTA done?

When the MPFS changes were originally announced, AOTA, APTA, ASHA, and other associations urged Congress and CMS to waive the budget-neutral requirement. However, little had changed when the final rule came out, except the new cut for therapy services was 9%. Most recently, AOTA successfully advocates for the introduction of H.R. 8702, Holding Provider Harmless for Medicare Cuts During COVID-19 Act of 2020. If enacted, this legislation would delay the implementation of these cuts for 2 years.

On the regulatory side, AOTA provided comments along with nearly 6,000 others requesting CMS change the proposed rule. On the congressional side, AOTA advocated for 229 Members of the House of Representatives to sign a letter to leadership expressing concerns for this reimbursement reduction. Senator Susan Collins (R-ME) and Steve Daines (R-MT) wrote a letter to the Senate leadership expressing similar concerns and recommending action.

AOTA has been advocating against this cut since its introduction this past summer and successfully educated members on the issue. Practitioners and students need to follow up on their hard work and take action by being an AOTA member, calling, and writing to our Legislators.

So, what can you do about the Medicare therapy cut?

Stay informed! First, the best way to stay informed is to be an AOTA member and regularly check their Congressional Affairs and Regulatory Affairs news area. You can also follow them on Twitter.

AOTA Take Action Page With An Editable Letter

Secondly, you can take action at and send a letter to your legislators on the importance of supporting legislation to stop the 9% reimbursement reduction.

AOTA has made it so easy that you only have to fill in your address, edit the letter, and hit submit. It’s important to make this letter as personal as possible. Exercise your right to petition your representatives!

Third, share this article with your friends and co-workers and get them involved. Have a virtual letter-writing campaign. This change impacts them too.

Medicare OTA Payment Modifier & Reduction

If you’re concerned about the OTA payment change, subscribe to our email list as we will be writing an article about that soon. Until then, below are some resources:

Other Resources

Clarice standing in a light room smiling wearing black pants and a light green puff sleeve shirt

hi there,

I’m  Clarice

Occupational therapist & medicare specialist helping practitioners understand policy, engage in advocacy, and own their value!

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