Medicare Delays Auditor Contracts and Therapy Manual Medical Review

July 2, 2014

The Centers for Medicare & Medicaid Services (CMS) has agreed to postpone the new Recovery Auditor Contractor (RAC) contracts until August 15, 2014, because of pending litigation. One of the current RACs has filed a lawsuit in federal court to protest terms of CMS's proposed RAC contracts. While the court moves forward with proceedings in the case, CMS agreed to delay the awarding of new contracts.

Current RACs are no longer processing manual medical review of Medicare outpatient (Part B) therapy claims. However, CMS officials have suggested that all claims will be processed and documentation requests held for post-payment review by new contractors once contracts have been implemented. Due to the contract delay, it is likely that therapists will receive the requests for review several months after payment has been received. Should review determine skilled services were not needed or provided, payment will be recouped.

ASHA and other therapy organizations are meeting with CMS to discuss concerns related to manual medical review, the RAC delay, and the administrative law judge's (ALJ) appeals delay. The average processing time for manual medical review appeals is 367 days, and it takes 22–24 weeks for the appeals to be logged into the case processing system.

Speech-language pathologists should continue to be vigilant in their documentation for Medicare services and remain mindful of their patients' total therapy dollars through their Medicare Administrative Contractor. Claims that reach the $3,700 threshold for combined speech-language pathology and physical therapy services will eventually be reviewed. SLPs should also be aware that limiting medically necessary services due to a cap or a threshold is a metric analyzed by the Office of the Inspector General and questionable in ethical practice.


In 2012, 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 was extended until March 31, 2015. The mandate requires review, for medical necessity, of any therapy claims for combined speech-language pathology and physical therapy services that reach $3,700. In February 2014, CMS announced that it would perform post-payment manual medical review only for therapy services provided on or after February 28, 2014, that reach the mandated $3,700 threshold after the new RAC contracts were in place. At that time, it was anticipated contracts would be implemented June 1, 2014.


For more information, contact Lisa Satterfield, ASHA's director of health care regulatory advocacy, at

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