Manual Medical Review Process for Therapy Claims extended through 2017

On April 16, 2015, the President signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (see the entire bill by clicking on the link), which temporarily extends the therapy cap exceptions process and modifies the manual medical review process for therapy services through December 31, 2017.

In the meantime, providers should continue to apply the KX modifier on claims above the therapy cap.

The manual medical review process for Medicare Part B therapy services that exceed a $3,700 threshold was mandated in 2012 and requires reauthorization annually. Under the mandate, claims above $3,700 for physical therapy and speech language pathology services combined, and above $3,700 for occupational therapy services, are subject to manual medical review by recovery audit contractors (RACs). The caps are calculated per beneficiary, per year.
Manual medical reviews of outpatient therapy claims above the cap were put on hold last year, but existing RACs received approval on January 16, 2015 to resume sending additional documentation requests (ADRs) to Part B providers.

Review Process
Under a new post-payment review system introduced by the Centers for Medicare and Medicaid Services, RACs are required to review outpatient therapy claims using a tiered approach to ADRs. The new process, which went into effect in January 2015, permits RACs to review 100% of a provider's eligible claims using a 5-step approach to ADRs:
•    A RAC's first ADR may only review one claim, but …
•    The second ADR may review up to 10% of eligible claims,
•    The third ADR may review up to 25% of eligible claims,
•    Tthe fourth ADR may review up to 50% of eligible claims, and  
•    Finally, a RAC's fifth ADR to a particular provider may review 100% of the provider's total eligible claims. The new tiered approach retains the RAC's cycle of 45 days between ADRs.
The process allows for 100% review of provider claims above the $3,700 therapy caps ("eligible claims"), but prevents the RACs from requesting large and potentially unmanageable amounts of records at one time.

CMS believes the new manual review process meets the congressional mandate of a 100% review rate for outpatient therapy claims above the outpatient therapy cap, but will do so in a more equitable manner.

For now, the review process is limited to claims reviewed by existing RACs for claims made from March 1, 2014 through December 31, 2014. CMS has not yet finalized the process for claims made in 2015. The manual medical review process is also limited to claims made by Part B outpatient therapy providers, including but not limited to therapists' private offices, offices of physicians, Part B skilled nursing facilities, home health agencies, and hospital outpatient departments.

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Wachler & Associates Health Care law firm