Manual Medical Review Process for Therapy Claims

Medicare Part B Services

Note: On April 16, 2015, the President signed into law the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), 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. Additional information on handling claims approaching and exceeding the $3,700 threshold will be posted on this webpage. Please continue to monitor this site or sign up for ASHA Headlines for updates on changes to the manual medical review process.

A manual medical review process for Medicare Part B therapy services that exceed a $3,700 threshold was mandated by the "Middle Class Tax Relief and Job Creation Act of 2012" and requires reauthorization annually. It was extended until March 31, 2014, by the "Protecting Access to Medicare Act of 2014."

The mandate requires any therapy claims for combined speech-language pathology and physical therapy that reach $3,700 to be reviewed for medical necessity. The $3,700 threshold includes the total allowed charges for services furnished by independent practitioners and all institutional services under Medicare Part B (i.e., hospital outpatient departments, skilled nursing facilities, critical access hospitals).

The manual medical review applies to all Part B outpatient therapy settings, including:

  • Private practice—therapy and/or physician offices
  • Part B skilled nursing facility care
  • Home Health agencies (Type of Bill 34X)
  • Outpatient Rehabilitation Facilities
  • Comprehensive Outpatient Rehabilitation Facilities
  • Hospital Outpatient Departments, excluding all Critical Access Hospitals, but including:
    • Type of Bill 12X or 13 X
    • Revenue codes 042X, 043X, or 044X
    • Services with the modifiers –GN, -GO, and –GP

New Developments

On February 9, 2016, the Centers for Medicare & Medicaid Services (CMS) released information regarding a new manual medical review process for therapy services provided through December 31, 2017. However, very little detail regarding implementation was provided. ASHA will continue to work with CMS and stakeholders to obtain further details. All new information will be posted on this webpage and announced via ASHA Headlines.

In the meantime, claims for services rendered in 2014 will continue to be processed as outlined below.

Review Process

For services rendered on or after February 28, 2014, Medicare Recovery Audit Contractors (RACs) will conduct the medical reviews through post-payment review. Post-payment review occurs when the services have been rendered, claims are submitted, the claim is adjudicated for payment, and the claim is paid. Following are the steps taken in the review process.

  • The MAC will flag the claims that meet $3,700 threshold and then send an Additional Document Request (ADR) to the provider requesting that the documentation be sent to the Recovery Auditor. The process for submitting the documentation is to be determined by the MAC and the Recovery Auditor.
  • The Recovery Auditor will conduct post-payment review and will notify the MAC of the payment decision. CMS did not indicate a timeframe for notification to the provider.
  • Post-payment may result in no change to the initial payment to the provider or may result in a "revised determination" that would require the provider to pay back monies for services determined to be "not reasonable or necessary." The provider will be notified of any payment determination, and if necessary, be given the options of
    • paying back funds by check,
    • recoupment from future payments,
    • applying for an extended payment plan, or
    • appealing the decision.

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