May 1, 2013 Departments

Policy Analysis: Medicare Clarifies Manual Medical Review

Speech-language pathology Medicare claims for patients in 11 states whose therapy claims exceed $3,700 for the calendar year will automatically undergo prepayment review, according to recently released federal rules. Claims from the remaining states will undergo an immediate postpayment review.

Under the American Taxpayer Relief Act of 2012, claims for combined speech-language and physical therapy services for a Medicare Part B patient that exceed $3,700 must undergo a manual medical review. The Centers for Medicare and Medicaid Services released rules for this mandated process in late March. The preapproval process in effect in 2012 no longer applies.

The rules include different processes for services provided in the first three months of 2013 and those provided the rest of the year:

  • Medicare Administrative Contractors will conduct prepayment review on claims that have reached the $3,700 threshold for services rendered Jan. 1–March 31, 2013. MACs must conduct these reviews within 10 days of receiving the claims.
  • Medicare Recovery Audit Contractors will conduct the reviews for services rendered on or after April 1. Claims may be reviewed before or after payment, depending on the state in which the claim originated.

Prepayment review

  • Claims submitted from California, Florida, Illinois, Louisiana, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania and Texas will be classified under the Recovery Audit Prepayment Review Demonstration and automatically undergo prepayment review. Under prepayment review, services have been rendered and claims submitted, but the claim is stopped prior to adjudication for review.
  • When a MAC receives a claim that extends beyond $3,700, it notifies the provider to submit documentation for the claim to the RAC. The process for submitting the documentation is to be determined by the MAC and the RAC.
  • The RAC will conduct prepayment review within 10 business days of receiving the additional documentation to determine whether or not the services were reasonable and necessary, and notifies the MAC of the payment decision.

Postpayment review

  • Claims submitted from the remaining states (not listed above) will undergo an immediate postpayment review by the recovery auditors. Under postpayment review, services have been provided and claims submitted and paid.
  • The MAC will flag claims that meet the $3,700 threshold and request the provider send documentation to the RAC. The process for submitting the documentation is to be determined by the MAC and the RAC.
  • Within 10 days of receiving the medical records, the RAC will review the claim and notify the MAC of the payment decision.
  • The review may result in no change to the initial payment to the provider. It may, however, result in a revised determination that services are not reasonable or necessary, requiring the provider to return the initial reimbursement. The provider may repay funds by check, have funds deducted from future payments, apply for an extended payment plan or appeal the decision.

Who must participate

The manual medical review applies to outpatient therapy services provided after Jan. 1, 2013, in all Part B claims, including:

  • Private practice therapy and/or physician offices.
  • Part B skilled nursing facility care.
  • Home health agencies.
  • Outpatient rehabilitation facilities.
  • Comprehensive outpatient rehabilitation facilities.
  • Hospital outpatient departments, excluding all critical access hospitals.

ASHA offers several therapy cap-related resources, including an explanation of the manual medical review process and links to relevant CMS documents. For questions about the therapy cap review process, contact

Lisa Satterfield, MS, CCC-A, is ASHA director of health care regulatory advocacy.

cite as: Satterfield, L. (2013, May 01). Policy Analysis: Medicare Clarifies Manual Medical Review. The ASHA Leader.


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