Examining Variation in Occupational Therapy Costs and Potential Decreases in Service Use Due to a Reduced Therapy Cap

RESEARCH QUESTION: The study objectives were to (1) examine the use and cost of common treatments by outpatient occupational therapists; (2) describe state variation in service charges; and (3) estimate the impact of reducing the Medicare therapy spending cap from $1,880 to $1,270 on the potential number of visits received and patient out-of-pocket liability.

BACKGROUND: There are limited data on outpatient occupational therapy services use and costs among Medicare beneficiaries. Because of rising costs and use of postacute care services, recommendations have been made to significantly reduce occupational therapy spending on Medicare, reducing the annual therapy cap, removing automatic extensions, and adding a mandatory manual review. The potential impact of the current and proposed therapy cap remains unclear.

DESIGN: This retrospective, population-based study used the Medicare Provider Utilization and Payment Data: Physician and Other Supplier Public Use File, released in April 2014 by the Centers for Medicare and Medicaid Services (CMS). This file is aggregated at the provider/billing code level and includes information on the use, cost, and geographic location of outpatient services delivered in fee-for-service Medicare.

PARTICIPANTS: For the current study, we included services delivered by occupational therapists during 2012. We excluded services delivered outside the continental United States.

METHOD: The data used are publicly available and were downloaded from the CMS website.

ANALYSIS: First, we examined the variations in service charges, geographic location, and use of occupational therapy service codes. Next, we estimated the impact of the therapy cap on the number of visits that could be obtained under the current and proposed spending levels and calculated the additional out-of-pocket liability for patients assuming they need ongoing care.

RESULTS: A total of 3,663 occupational therapists were included. The most common treatments provided were therapeutic exercise, manual therapy, therapeutic activities, self-care management, and ultrasound, charging on average $54, $51, $52, $48, and $32 per unit. Wisconsin, Illinois, Tennessee, and Texas had the highest charges relative to average amount allowed by Medicare for occupational therapy services. Using a standard set of services, we estimated that Medicare beneficiaries would receive 12 visits and one evaluation under the 2012 therapy cap ($1,880). This would be reduced to 7 visits under the proposed therapy cap reduction (to $1,270). If the recommended manual review or automatic extension was not in place, a patient’s potential additional financial liability would be $1,168.

DISCUSSION: Current calls for cost-saving measures and value-based quality care warrant future research on the effectiveness of commonly utilized occupational therapy treatments, such as physical agent modalities. Recommended and actual Medicare therapy caps place a limit on therapy services covered per year and could potentially provoke substantial financial risk to those with higher therapy needs.

IMPACT STATEMENT: This is the first step in understanding the use and cost of outpatient occupational therapy services. Underscoring the need for this research is the battle over the therapy cap. If the MedPAC recommendation is enacted as is, it will potentially restrict or slow access to occupational therapy.