CMS Pub. 100-04, ch. 5, § 10.3.1

The following policies concerning exceptions to caps due to medical necessity apply only

when the exceptions process is in effect. Except for the requirement to use the KX

modifier, the guidance in this section concerning medical necessity applies as well to

services provided before caps are reached.

Provider and supplier information concerning exceptions is in this chapter and in Pub.

100-02, Chapter 15, section 220.3. Exceptions shall be identified by a modifier on the

claim and supported by documentation.

The beneficiary may qualify for use of the cap exceptions process at any time during the

episode when documented medically necessary services exceed caps. All covered and

medically necessary services qualify for exceptions to caps. All requests for exception

are in the form of a KX modifier added to claim lines. (See subsection D. for use of the

KX modifier.)

Use of the exception process does not exempt services from manual or other medical

review processes as described in Pub. 100-08. Rather, atypical use of the exception

process may invite contractor scrutiny, for example, when the KX modifier is applied to

all services on claims that are below the therapy caps or when the KX modifier is used

for all beneficiaries of a therapy provider. To substantiate the medical necessity of the

therapy services, document in the medical record (see Pub. 100-02, chapter 15, sections

220.2, 220.3, and 230).

The KX modifier, described in subsection D., is added to claim lines to indicate that the

clinician attests that services at and above the therapy caps are medically necessary and

justification is documented in the medical record.