The Centers for Medicare & Medicaid Services (CMS) today announced that, as mandated by the Taxpayer Relief Act of 2012 (ATRA), recovery auditors will review therapy claims exceeding $3,700 manually beginning April 1.

The law, which was signed by President Obama on Jan. 2, extends the Medicare Part B Outpatient Therapy Cap Exceptions Process through Dec. 31. CMS officials said the therapy cap would apply to all Part B outpatient settings and providers.

The statutory Medicare Part B outpatient therapy cap for occupational therapy is $1,900 for 2013. The combined cap for both physical therapy and speech-language pathology services is also $1,900. Exceptions to the therapy cap are allowed for “reasonable and necessary services,” according to a CMS memorandum. Individual beneficiary services totaling more than $3,700 for outpatient therapy or both services combined now will be subject to manual medical reviews.

Providers in the CMS prepayment review demonstration will have their claims flagged for review by their regional recovery auditor contractors (RACs). Providers in other states are expected to have their claims paid but “flagged” by Medicare Administrative Contractors (MACs) for post-payment review by the RACs.

“This is a game-changer for the therapy industry, as the only other item under review for outpatient therapy was the issue of untimed codes, one of the first posted RAC issues,” said Nancy Beckley, president of Nancy Beckley & Associates and a rehabilitation industry expert. “That (untimed codes) was an automated review when the (RAC) program started.”

During startup of the RAC program, there were problems with some RACs failing to make accurate programming edits, Beckley recalled, and many demand letters were issued in error. A panelist on “Monitor Monday,” the live RACmonitor Internet radio program, for the past four years, Beckley said she would discuss this issue with other providers on the air.

“Some of the RACs were inappropriately programming the edit,” Beckley said. “We effected a change in that through our constant vigilance of discussing the error on Monitor Monday. We had several guests … discuss the error, and one of the RACs attributed their rectification to comments heard on Monitor Monday as a listener.”

States in the RAC prepayment review demonstration include Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina, and Missouri. Claims in these states will be reviewed on a prepayment basis. According to CMS, Medicare Administrative Contractors (MACs) will send additional documentation requests (ADR) to providers requesting that additional documents be sent to their respective RACs.

Critical-access hospitals (CAHs) are not subject to the therapy cap, the manual review processor or the use of the KX modifier, according to CMS.

“It is important for therapy providers to have a process in place to track RAC requests and monitor the flow through their system in order to stay on top of the deadlines,” Beckley warned.  “Additionally, beginning today, an effective monitoring and auditing process should be in place to identify internal compliance risk associated with medical documentation and the medical necessity of therapy, with a focus on medical necessity over the $1,900 therapy cap.”

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Chuck Buck is the publisher of RACmonitor

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