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Manual Medical Review of Therapy Claims Above $3,700 Threshold

The American Taxpayer Relief Act of 2012 (ATRA) was signed into law by President Obama on January 2, 2013. This law extends the Medicare Part B Outpatient Therapy Cap Exceptions Process through December 31, 2013. Section 603 of this Act contains a number of Medicare provisions affecting the outpatient therapy caps and manual medical review (MR) threshold.

cms_gov_logo_2012.jpgThe statutory Medicare Part B outpatient therapy cap for Occupational Therapy (OT) is $1,900 for 2013, and the combined cap for Physical Therapy (PT) and Speech-Language Pathology Services (SLP) is also $1,900 for 2013. 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. Per beneficiary, services above $3,700 for PT and SLP services combined and/or $3,700 for OT services are subject to manual medical review. CMS is not precluded from reviewing therapy services below these thresholds.

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 (TOB) 34X)

• Rehabilitation agencies (also known as Outpatient Rehabilitation Facilities-ORFs)

• Comprehensive Outpatient Rehabilitation Facilities (CORFs)

• Hospital outpatient departments (HOPDs)

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

• TOB 12X (excluding CAHs) or 13X;

• Revenue code 042X, 043X, or 044X;

• Modifier GN, GO, or GP; and

• Date of service on or after January 1, 2013

Visual_May_2010.jpgMedicare Administrative Contractors (MACs) will conduct prepayment review on claims reaching the $3,700 threshold with dates of service January 1, 2013 to March 31, 2013. CMS requested MACs conduct these manual medical reviews within 10 days. At this time, there is no advance request for an exception process. Effective April 1, 2013, the Recovery Auditors will conduct prepayment review for all claims processed on or after April 1, 2013. Recovery Auditors will complete two types of review.

Prepayment Review:

• Claims submitted in the Recovery Audit Prepayment Review Demonstration states will be reviewed on a prepayment basis. These states are Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.

• In these states, the MAC will send an ADR to the provider requesting the additional documentation be sent to the Recovery Auditor (unless another process is used by the MAC and the Recovery Auditor).

• The Recovery Auditor will conduct prepayment review within 10 business days of receiving the additional documentation and will notify the MAC of the payment decision.

Post-payment Review:

• In the remaining states, the Recovery Auditors will conduct immediate post-payment review.

• In these states, the MAC will flag the claims that meet the criteria, request additional documentation and pay the claim. The MAC will send ADR to the provider requesting the additional documentation be sent to the Recovery Auditor. The Recovery Auditor will conduct post-payment review and will notify the MAC of the payment decision.

Section 603 (b) of the American Tax Relief Act counts outpatient therapy services furnished in a Critical Access Hospital (CAH) toward a beneficiary’s annual cap and threshold amount using the Medicare Physician Fee Schedule rate. CAHs are not subject to the therapy cap, the manual medical review process, or the use of the KX modifier.

Please contact CMS with questions about the therapy cap review process at therapycapreview@cms.hhs.gov.