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Therapy Providers Face Manual Review of Outpatient Therapy Claims, CMS Releases FAQ

As mandated by the American Taxpayer Relief Act of 2012, Medicare Part B outpatient therapy providers now face manual medical review of claims at or above a $3700 statutory cap. Due to some confusion in the provider community, the Centers for Medicare and Medicaid Services (CMS) published a Frequently Asked Questions to clarify the new therapy manual medical review process.

In the FAQ, CMS explains that the manual medical review process is triggered when a beneficiary’s services for that year exceed one of two threshold caps dictated in Section 603 of the Act. The cap for Occupational Therapy (OT) services is $3700 per year, per beneficiary. Separately, the combined cap for Physical Therapy (PT) and Speech Language Pathology (SLP) is $3700 per year, per beneficiary. CMS also points out that although physical therapy and speech language pathology services are combined to trigger the cap, the medical review of those claims will be conducted separately.

The FAQ states that the cap and manual medical review process applies to all Part B Outpatient Therapy settings and providers, including private practices, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), outpatient rehabilitation facilities, rehabilitation agencies and hospital outpatient departments.

Therapy providers will continue to submit claims to their Medicare Administrative Contractor (MAC) but the manual medical review process will be completed by CMS’ Recovery Auditors, who began processing manual medical review of PT claims on April 1st, 2013.

A distinction in the manual medical review process exists, however, depending on whether the provider is in a Recovery Auditor Prepayment Review Demonstration state or not. Therapy providers in the demonstration states – Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri – will receive their Additional Documentation Request (ADR) from the MAC but will send that additional documentation to the Recovery Auditor. The prepayment review then must, by law, be completed by the Recovery Auditor within 10 days of receiving the additional documentation. Providers in other states will face “immediate post-payment review.” Their MAC will pay the claim once received and any ADR will come directly from the Recovery Auditor, who will again complete the manual medical review and notify the MAC of the payment decision within 10 days.

The CMS FAQ also acknowledged the existing $1900 therapy cap and made clear that “no Recovery Auditor is approved for therapy review between $1900 and $3700.” CMS noted that such a review could occur in the future but that it is currently outside this mandate.

The outpatient therapy manual medical reviews and ADRs will be per claim. The Recovery Auditors will be paid a contingency fee and operate under existing policy guidelines. Of note, they are required to use Registered Nurses and/or therapists when conducting medical necessity and coverage decisions, and certified coders in coding determinations. Importantly, in CMS FAQ answer 19, CMS states that additional documentation limits will not apply to therapy pre and post payment reviews.

Therapy providers may appeal their adverse manual medical review determinations through their MAC, and the Medicare administrative appeals process remains unchanged. Providers must prepare for inevitable documentation requests and account for manual medical reviews in their Medicare audit compliance systems.

Wachler & Associates’ healthcare attorneys regularly counsel therapy providers in a variety of matters. If you or your healthcare entity has any questions regarding CMS’ new outpatient therapy manual medical review process, or otherwise need assistance with a Medicare audit or RAC compliance plan, please contact our healthcare attorneys at 248-544-0888.