Transition of Medicare Therapy Review Contractors

March 5, 2014

The Centers for Medicare & Medicaid Services (CMS) announced transition dates for Recovery Audit Contractors (RACs) due to the issuance of new contracts. The transition dates affect the manual medical review process for therapy claims, though it is unclear if or when providers will see changes in the additional documentation requests (ADRs) for therapy services provided over $3,700.

Current RACs are instructed to stop processing initial ADR requests in February. Because there is a delay in process and notification, it is highly likely that speech-language pathologists (SLPs) will continue to receive ADR requests, and they should continue to respond as directed on the ADR. The last date for the RACs to send payment adjustment recommendations to the Medicare Administrative Contractors (MACs) is June 1.

Changes SLPs can expect in the new RAC contracts include the following.

  • RACs must wait 30 days to allow a discussion period prior to sending the claim to the MAC for adjustment.
  • RACs must confirm receipt of the discussion request within 3 days.
  • RAC will not get paid their contingency fee until the second level of appeal is finalized.
  • ADR limits will be revised to consider claim types (inpatient and outpatient).
  • ADR limits will be adjusted according to provider compliance (this is not directly related to the manual medical review, which requires every claim over $3,700 to undergo the review process).

SLPs should watch for updates and notices from their regional RACs and MACs for information regarding transition dates and process changes.


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, 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. After some difficulty with the MAC reviews, CMS determined that the RACs were better equipped for the review process and, beginning April 1, 2013, initiated pre- and post-payment review processes implemented by state.

The current exceptions process, including manual medical review, is set to expire on March 31, 2014, unless Congress takes action to extend the exceptions process or repeal the therapy caps. Absent Congressional action, the therapy cap of $1,920 on physical therapy and speech-language pathology services combined would be applied on April 1, 2014.

The CMS Recovery Audit program is a permanent, mandated audit program to recoup overpayments for Part A and Part B services. Four regional RACs are responsible for identifying overpayments and underpayments across the country, and one national contractor is assigned to Durable Medical Equipment and Home Health Services. The announcement for the changes in the RAC review came through the procurement process for new RAC contracts. CMS is transitioning out of the current contracts to issue new ones, which include program changes to address some of the provider issues regarding the process for ADRs and communication between RACs and providers. Though the new effective dates have not been announced, CMS extended the current contracts to offer a transition period.


  • CMS Recovery Audit Program
  • ASHA's Manual Medical Review Process for Therapy Claims
  • ASHA's Medicare Audits and Program Integrity

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