On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012. Among other things, the new law extends several provisions of the Middle Class Tax Relief and Job Creation Act of 2012 (Job Creation Act) as well as provisions of the Affordable Care Act. Section 603 extends the exceptions process for outpatient therapy caps through December 31, 2013. Providers of outpatient therapy services are required to submit the KX modifier on their therapy claims, when an exception to the cap is requested for medically necessary services furnished through December 31, 2013. In addition, the new law extends the application of the cap and threshold to therapy services furnished in a hospital outpatient department (OPD), and counts outpatient therapy services furnished in a critical access hospital towards the cap and threshold. Additional information about the exception process for therapy services may be found in the Medicare Claims Processing Manual, Pub 100-04, Chapter 5, Section 10.3: http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c05.pdf . The therapy caps are determined for a beneficiary on a calendar year basis, so all beneficiaries began a new cap for outpatient therapy services received on January 1, 2013. For physical therapy and speech language pathology services combined, the 2013 limit for a beneficiary on incurred expenses is 1,900. There is a separate cap for occupational therapy services which is 1,900 for 2013. Deductible and coinsurance amounts applied to therapy services count toward the amount accrued before a cap is reached, and also apply for services above the cap where the KX modifier is used. Section 603 also extends the mandate that Medicare perform manual medical review of therapy services furnished January 1, 2013, through December 31, 2013, for which an exception was requested when the beneficiary has reached a dollar aggregate threshold amount of 3,700 for therapy services, including OPD therapy services, for a year. There are two separate 3,700 aggregate annual thresholds: (1) physical therapy and speech-language pathology services, and (2) occupational therapy services. As you can see the Preauthorization (if a patient will reach 3,700) no longer applies. Basically, claims over the 3,700 threshold will automatically be pulled for prepayment medical review. Please make adjustment in your practices.