The May 23 edition of CMS eNews has an important update for therapy providers regarding the change of liability for outpatient therapy denied as a result of exceeding the therapy caps ($1,900 for PT and SLP combined, and a separate $1,900 for OT) for 2013. Currently, remittance advice (RA) indicates beneficiary liability for denials resulting from therapy over the caps, when in fact, since Jan. 1, 2013, such denials are now provider liability. According to the CMS eNews:

 “Section 603(c) of the American Taxpayer Relief Act of 2012 (ATRA) changed the payment liability for denials resulting from the outpatient therapy caps from beneficiaries to providers effective January 1, 2013. Medicare systems were not updated in time to accurately represent this change on provider remittance advices (RAs). Medicare contractors may have already processed therapy cap denials for services provided in 2013. These denials incorrectly report on RAs beneficiary liability (Group Code “PR”) when liability legally rests with the provider (Group Code ‘CO’).”

In “You Can’t Have Your Cake and Eat it Too,” we reviewed the only way that therapy providers can shift liability for therapy denied due to the caps in 2013: to have a mandatory advanced beneficiary notice of non-coverage (ABN) in place prior to services being provided. Many therapy providers had been using 2012 CMS guidance advising the use of the voluntary form of the ABN to notify beneficiaries of liability for therapy services over the therapy caps if they were deemed not medically necessary.

CMS has indicated that, due to the different claims processing system constraints, this inaccurate remittance advice (RA) reporting will not be able to be corrected immediately. For institutional claims billed on the UB04 (hospitals, SNFs, CORFs, rehab agencies), the correct liability will be reported beginning on June 24. Unfortunately, for private-practice therapy offices billing on the CMS 1500, the correct liability will not be able to be reported until Jan. 1, 2014, according to the CMS eNews.

CMS also has indicated that, since the payment amount on the claims is correct (only the RA is wrong), the MACs (Medicare Administrative Contractors) “will not adjust claims processed before these dates to correct the group code. To do so could create disruptions for providers’ accounts receivable.” CMS has opted in this update to advise therapy providers to review any therapy cap denials for dates of service on or after Jan. 1, 2013, and to ”determine whether any payments have been collected from beneficiaries.”

According to CMS, “providers should refund any beneficiary payments they find for these services. Additionally, providers should cease to collect payments for therapy cap denials unless the beneficiary was appropriately notified via an Advanced Beneficiary Notice of Noncoverage (ABN).” 

What CMS noticeably did not address in this update was the important element of duty to repay overpayments in 60 days in order to prevent a possible False Claims Act action. A perfect storm has seemed to confuse many providers: CMS was late in clarifying notification on the shift in beneficiary liability for therapy provided over the cap in 2013 as a result of ATRA, and the agency contributed to the continued confusion by having inaccurate information on the remittance advice for the first five months of 2013. Providers that have collected beneficiary payment for denied therapy provided over the cap now will need to step into “compliance mode” and determine any potential paybacks. Providers should consult with their compliance officers/committees and initiate a review of accounts in which potential overpayments have been received.

Actionable advice for therapy providers includes the following:

  1. Voluntary ABNs (which were recommended by CMS in 2012) no longer should be issued for therapy over the $1,900 caps. They are no longer valid, due to the change in ATRA.
  2. For therapy that is not medically necessary, the provider should issue a mandatory ABN if the patient wishes to continue therapy.
  3. Therapy provided under a mandatory ABN with the GA modifier (not medically necessary) cannot be billed with the KX modifier (medically necessary).
  4. Audit 2013 accounts to determine if beneficiary payments have been received as a result of errors on the CMS remittance advice incorrectly noting “beneficiary” liability.
  5. Return all funds received from beneficiaries within 60 days of your discovery of overpayments, as noted in the CMS eNews.

Author’s Note: This article is not intended to offer legal or compliance advice, but rather to bring attention to the overpayment potential resulting from the change of beneficiary liability under ATRA. Providers should consult with their internal or external compliance resources in reviewing this information and taking action.

About the Author

Nancy Beckley, president of Nancy Beckley & Associates LLC, is certified in healthcare compliance and has extensive experience specializing in rehabilitation and compliance. Her work includes establishing auditing and monitoring protocols for outpatient providers; conducting pre-acquisition compliance risk audits; strategic market-based planning and analysis; operational analysis, including benchmarking, coding and staffing; CORF development and implementation; managed care analysis; facilitation of credentialing, and managed care contract technical review.

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