Health Information Management

Recovery Auditors starting to review outpatient therapy services

APCs Insider, May 10, 2013

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Outpatient therapy services furnished between January 1 and December 31, 2013, are subject to a payment cap for 2013. When services exceed that threshold, Recovery Auditors (RAs) will examine those claims, which could lead to recoupment. Make sure providers are documenting the plan of care and medical necessity for all outpatient therapy services.

The Middle Class Tax Relief and Job Creation Act mandated the therapy caps and the American Taxpayer Relief Act revised those provisions that impacted outpatient therapy services.
For 2013, the annual per beneficiary therapy cap amount is $1900 for physical therapy and speech language pathology services combined. A separate $1900 is allotted for occupational therapy services.
The therapy cap applies to all Part B outpatient therapy settings and providers including:
  • Private therapy practices and physician offices
  • Part B Skilled Nursing Facilities
  • Home Health Agencies
  • Outpatient Rehabilitation Facilitiesand Comprehensive Outpatient Rehabilitation Facilities
  • Hospital outpatient departments 
Critical access hospitals (CAH) are exempt from the cap. However, the therapy visits provided at a CAH will count towards all other providers’ therapy payment caps. For example, a patient is seen at a CAH and receives outpatient physical therapy. CMS pays $900 for those services. The patient transfers to another provider or begins a new episode of care at another facility in 2013. The $900 CMS paid the CAH for outpatient therapy for that beneficiary counts towards the therapy cap at the second facility.
CMS announced that effective April 1, 2013, RAs will review all therapy claims taht have exceeded the $3,700 threshold cap for the year. Although PT and SLP services are combined for triggering the threshold, RAs will conduct the medical review separately for each discipline.
RAs will conduct both prepayment and post payment reviews when services exceed the threshold cap. RAs will conduct prepayment reviews in 11 states:
  • Florida
  • California
  • Michigan
  • Texas
  • New York
  • Louisiana
  • Illinois
  • Pennsylvania
  • Ohio
  • North Carolina
  • Missouri
RAs will review the claims and compare them to the medical record before the claim is processed for payment whenever the $3,700 threshold cap is met.
RAs will conduct post-payment reviews in the remaining states for all therapy claims that reach the $3,700 threshold cap. The request for medical records will occur immediately after the claim has been processed for payment.
CMS did not indicate a separate timeframe for completion of the post payment review outside of the current RA process; however, if the RA determines than an improper payment has been made, a demand letter will be sent to the provider from the MAC who will initiate the take back.
Outpatient hospitals will not be subject to the cap in 2014, unless Congress passes legislation to extend the cap.

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