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Last week the Centers for Medicare & Medicaid Services (CMS) provided members of the therapy cap coalition written guidance on the mandatory review of 2014 therapy claims over the $3,700 threshold. As a result of the Protecting Access to Medicare Act of 2014 signed into law by President Obama on April 1, 2014, the therapy caps exceptions process for outpatient therapy caps was extended through March 31, 2015. The Act contained a number of Medicare provisions affecting the outpatient therapy caps as well as manual medical review of therapy claims over the $3,700 threshold.

When the Recovery Auditor (RAC) program paused at the end of February 2014, CMS indicated to the therapy provider community that all claims over the $3,700 threshold would be paid, including those in prepayment review states. Per CMS, all claims would be reviewed, as mandated by law, when the new RAC contracts were awarded. With a bid protest pending in federal court, CMS received congressional approval in August 2014 for limited reviews to resume pending the awarding of the new contracts. Outpatient therapy review was listed among the four specific items approved for scrutiny during the limited restart.

The new CMS update provides guidance on manual medical review (MMR) for Part A claims that processed through Medicare Administrative Contractors’ (MACs’) system edits as paid from March 1, 2014 through Dec. 31, 2014. The guidance provides information on a review process that involves the sequencing of a series of up to five additional documentation request (ADR) cycles in order to clear the 2014 backlog following the aforementioned February pause of the RAC program. According to CMS, claims will be reviewed in chronological order, based on the month in which they were paid. An example is cited in which “all eligible claims paid in March would be reviewed prior to the claims paid in April, and claims paid in April would be reviewed prior to claims paid in May.” CMS also pointed out that for a provider with a low number of claims paid per month, “more than one month’s worth of claims can be requested in the same ADR following the ADR guidelines for therapy reviews.”

The ADR limits will follow current established RAC 45-day cycles and have been identified as follows:

  1. The first ADR sent to each provider for manual medical review will only cite the documentation for one claim. Any provider with one or more claims meeting the criteria noted above can receive an ADR.
  2. The second ADR can request up to 10 percent of the total number of eligible claims.
  3. The third ADR can request up to 25 percent of the remaining eligible claims.
  4. The fourth ADR can request up to 50 percent of the remaining eligible claims.
  5. The fifth ADR sent to a provider can request up to 100 percent of the remaining eligible claims.

CMS has not provided guidance on claims submitted by therapists in private practices or physician offices, who all bill on the CMS 1500 form. It is expected that CMS will provide further guidance on this matter. Providers should monitor their RAC’s website for further information. As of the date of this article, information has not been posted to any of the RAC websites, but all websites have the approved CMS issue of manual medical review originally posted in 2013.

Background Information on Therapy Caps and Threshold

This is an annual per-beneficiary therapy cap amount determined for each calendar year. Exceptions to the therapy cap are allowed for reasonable and necessary therapy services. Services costing more than $3,700 for PT and SLP services (combined) and/or $3,700 for OT services are subject to manual medical review, which CMS assigned to the Recovery Auditors effective April 1, 2013.

Per CMS, the therapy cap applies to all Part B outpatient therapy settings and providers, including:

  • Therapists’ private practices
  • Offices of physicians and certain non-physician practitioners
  • Part B skilled nursing facilities
  • Home health agencies (type of bill: 34X)
  • Rehabilitation agencies (also known as outpatient rehabilitation facilities, or ORFs)
  • Comprehensive outpatient rehabilitation facilities (CORFs)
  • Hospital outpatient departments (HOPDs)
  • Critical access hospitals (CAHs)

In addition, the therapy cap will apply to outpatient hospitals as detected by:

  • Type of bill (12X, 13X, or 085X)
  • Revenue code (042X, 043X, or 044X)
  • Modifier (GN, GO, or GP); and
  • Dates of service on or after Jan. 1, 2014

A CMS 2013 presentation provided an overview of manual medical review of claims over the $3,700 threshold, and it can be found on the CMS website.

About the Author

Nancy Beckley is president and CEO of Nancy Beckley and Associates

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Nancy J. Beckley, MB, MBA, CHC

Nancy Beckley is founder and president of Nancy Beckley & Associates LLC, providing compliance planning and outsourced compliance services to rehab providers in hospitals, rehab agencies, and private practices. Nancy is certified in healthcare compliance by the Healthcare Compliance Certification Board. She is on the board of the National Association of Rehabilitation Providers and Agencies. She previously served on the CMS Professional Expert Technical Panel for Comprehensive Outpatient Rehabilitation Facilities. Nancy is a familiar voice on Monitor Mondays, where she serves as a senior national correspondent.

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