What was a key effect of the Balanced Budget Act of 1997 on physical therapy services?

• A. A cap of $1,500 on PT and SLP services.
• B. Elimination of PT licensure.
• C. Expansion of direct access.
• D. Coverage for alternative therapies.

Answer: (A)

Medicare outpatient therapy spending controls were set by the Balanced Budget Act of 1997, creating a $1,500 annual cap on combined physical therapy and speech-language pathology services per beneficiary. This was the key effect because it directly limited how much therapy a patient could receive and be reimbursed for in a year, unless an exceptions process was used to continue therapy when medically necessary. The change pushed clinicians to plan treatment intensity more carefully and document medical necessity to obtain approvals for exceeding the cap. It did not involve eliminating licensure, expanding direct access, or guaranteeing coverage for alternative therapies.