Newly imposed dollar limits on physical, speech and occupational therapy covered under Part B of Medicare were enacted in 1997, but had been suspended by Congress. The most recent suspension ended Dec. 31. Beginning in 2006, all outpatient physical and speech therapy has a combined annual dollar "therapy cap" under Part B of $1,740. Occupational therapy has its own annual limit of $1,740. Therapy performed in the outpatient department of a hospital is excluded from the limitation.

Those who have received physical, occupational, or speech therapy know how quickly costs of these services can add up to $1,740. Many have already exceeded limits this year. Now there's some relief from these severe new limits: Congress included an exceptions process to therapy caps as part of the Deficit Reduction Act of 2005. The exceptions process is retroactive to Jan. 1, 2006, and affects claims that have already been denied as exceeding the cap. Previously denied claims will be reviewed for payment under the exceptions process if your provider of service requests a review.

There are two broad categories of exceptions under which therapy services may qualify for payment beyond the $1,740 cap. The first is an automatic exception for certain conditions or complexities for which no special written request is required. Services will be automatically paid as if there was no cap if the provider submits claims correctly. Examples of the many conditions warranting automatic exceptions to therapy caps include hip replacements, strokes and aphasia.

Complex situations that affect a main condition being treated can also justify an automatic exception. Examples include circumstances such as having had a course of therapy for a different condition earlier in the year, or having another physical or psychological condition that complicates the condition being treated.

The second broad category of exception under which therapy services may qualify for payment beyond the $1,740 annual cap is called a "manual exception." It includes a written request by the patient or the provider to explain why the provider believes that additional treatment is medically necessary. The request may ask for up to 15 treatment days of service beyond the $1,740 limit. If the Medicare claims processor does not make a decision within 10 days, the additional 15 treatment days of service are automatically considered to be approved.

If you have had 2006 services denied due to being over the $1,740 caps, ask your provider to request that claims for services be re-evaluated by the Medicare claims processor under the new exceptions process. If you have had to pay for amounts over the caps and requests for exception are approved (or the Medicare claims processor doesn't make a decision in ten days), you will likely receive a refund of some or all of your payment.