Corporate Compliance

Note from the instructor: Outpatient therapy manual medical reviews begin October 1 for hospitals

Medicare Insider, September 11, 2012

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Editor’s note: Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc., is the author of this week’s note from the instructor.


Each year on October 1, the inpatient prospective payment system (IPPS) changes go into effect along with a few other changes and updates in the outpatient arena. This year, hospitals will fall under the outpatient therapy cap exceptions regulation, something they have not had to deal with in the past. Under the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA), these caps will now be implemented for dates of service October 1 – December 31, 2012 for outpatient physical therapy, occupational therapy, and speech-language pathology services provided in a hospital outpatient department, as well as Part B SNF, comprehensive outpatient rehabilitation facilities (CORFs), rehabilitation agencies (ORFs), private practices, and HHAs (TOB 34X). Several transmittals that were released last week explain how this process will work – R2537CP and R1117OTN. There was also a CMS Special Open Door Forum call held last week called Manual Medical Review of Therapy Claims and the slides can be downloaded at: Unfortunately, in my opinion, the slides and the call did little to explain how the process will work for hospitals.

In 2012, the cap on incurred expenses is $1,880 for physical therapy and speech-language pathology services combined. For occupational therapy services, the separate cap is $1,880 as well. Deductible and coinsurance amounts applied to therapy services count toward the amount accrued before a cap is reached. Although claims processing requirements associated with the caps are only applicable to hospitals on/after October 1, 2012, claims paid for hospital outpatient therapy services since January 1, 2012, are included in calculating the cap.

Continue reading Debbie's note at the Medicare Mentor Blog.

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