- Checklist for Outpatient Therapy Discharges
- Checklist for Outpatient Therapy Appeals
- Quick Screen: Medicare Coverage for Outpatient Therapy
- Outpatient Therapy Appeal Details
- Additional Information
- A Brief Summary of Medicare Coverage for Outpatient Therapy and the Improvement Myth
- Medicare Outpatient Therapy Caps and Exceptions
- Federal Regulations – Outpatient Physical Therapy Coverage
- Federal Regulations – Outpatient Occupational Therapy Coverage
- Federal Regulations – Outpatient Speech- language Pathology Coverage
- Federal Regulations – Medicare Appeals
- Centers for Medicare & Medicaid Services (CMS) Manual Provisions
Dear Medicare Patient:
The Center for Medicare Advocacy has produced this packet to help you understand Medicare coverage and how to file an appeal if appropriate.
Medicare is the national health insurance program to which many disabled individuals and most older people are entitled under the Social Security Act. All too often, Medicare claims are erroneously denied. It is your right as a Medicare beneficiary to appeal an unfair denial; we urge you to do so.
For additional assistance, contact your State Health Insurance Assistance Program (SHIP). You can find your state program's information at https://shipnpr.acl.gov/Default.aspx.
Note: Detailed information is available by clicking links included in the checklist below, or scrolling down the page to the detailed description.
Review the “Quick Screen” included in this packet to determine whether the care you need is covered by Medicare.
If your current therapy services are being cut or stopped and you wish them to continue:
1. Determine the reason for the end of services:
- Physician's Orders expired; or
- Therapist says services aren't coverable becasue you won't improve; or
- Therapy Cap reached.
2. Take the appropriate steps:
- If your physician’s orders have expired and you believe you need more therapy, contact your physician and ask him or her to order more care.
- If your therapist thinks that more therapy won’t be covered due to Medicare guidelines on improvement, then see http://www.medicareadvocacy.org/medicare-info/improvement-standard/. Suggest the therapist read CMS publications at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/Jimmo-FactSheet.pdf; www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2013-Transmittals Items/R176BP.html?DLPage=1&DLSortDir=descending; and www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM8458.pdf.
- If you’ve met the therapy cap, then ask your therapist to bill the ongoing care through the “Exceptions Process.” If your therapist is not familiar with the exceptions process, give him or her a copy of Medicare Outpatient Therapy Caps and Exceptions.
There are several levels of appeal. The process begins when you receive the “Medicare Summary Notice.” If you have been held financially responsible, you should certainly appeal. If the provider has been held financially responsible, and you want to get more therapy of a similar kind, you should also appeal.
- You have 120 days to appeal the denial.
- Ask that the physician who ordered the care or your primary care physician write a statement explaining why the therapy was medically necessary.
- Ask your physician to give you copies of published articles or treatment guidelines supporting your argument.
- If possible also include a letter supporting the claim from the treating therapist.
- Send a copy of the letter and any other documentation in support of coverage along with your appeal
2. Receive the Redetermination decision.
3. If the Redetermination decision is unfavorable, request a Reconsideration. Follow the instructions in the decision on how to do this.
- You have 180 days to request the Reconsideration.
- Include in your appeal request that you are a beneficiary appealing the denial because your therapy was medically reasonable and necessary.
- Send copies of any additional documentation in support of coverage along with your request.
4. Receive the Reconsideration decision.
5. If the Reconsideration decision is unfavorable, request an Administrative Law Judge (ALJ) Hearing. Follow the instructions in the decision on how to do this.
- You have 60 days to request an ALJ hearing.
- Write on your appeal request and on the outside of the envelope that you are a “BENEFICIARY-APPELLANT.”
- Write in the appeal that the therapy should be covered because it was medically reasonable and necessary.
- Indicate that you would like the hearing to be held by Video-teleconference.
- Send copies of any documentation in support of coverage along with your request.
6. Receive and respond to the written Notice of Hearing from the Office of Medicare Hearings and Appeals (OMHA). Follow the instructions in the Notice of Hearing on how to respond.
- Be sure the notice states a Video-Teleconference (VTC) is scheduled. If the hearing is not VTC, call OMHA and request VTC.
- In the response letter, request a copy of the exhibit list and case file for your records.
- Be sure to note in the response if you will have someone testify at the hearing on your behalf.
7. Receive the hearing file. Be sure it includes all records you have obtained and submitted during your appeal. If it does not, send the missing records to the ALJ.
8. Attend the hearing and argue your case. Explain in detail to the ALJ why your therapy was erroneously denied by Medicare.
- Be sure the ALJ has the additional records you submitted.
9. Receive the ALJ decision.
10. If the ALJ Decision is unfavorable, follow the instructions in the decision on how to appeal to the Medicare Appeals Council.
Physical, speech, and occupational therapy should be covered by Medicare Part B if the therapy meets the following criteria:
- The patient’s treating physician orders and periodically reviews the patient’s therapy regimen.
- The therapy is “medically necessary.” This means that the ordered therapy is considered a specific and effective treatment for the patient’s condition under accepted standards of medical practice.
- The therapy required can be safely and effectively performed only by, or under the supervision of, a qualified therapist because of the complexity of the therapy or medical condition of the patient.
Other Important Points:
- Many Medicare denials are based on a belief that the patient’s medical condition will not significantly improve within a reasonable and predictable period of time. However, “restoration potential” is not required by law and a maintenance therapy program can be covered if therapy performed by a skilled professional is necessary to prevent further deterioration or to preserve current capabilities.
- Therapy that can ordinarily be performed by a nonskilled person can still be covered by Medicare if the individual patient’s condition is so medically complex that it requires a skilled therapist to perform or supervise the care.
- Since 2006, physical, speech, and occupational therapy performed in an outpatient setting are subject to an annual Medicare payment cap.
- Reaching the Medicare payment cap does not mean the patient’s therapy is no longer medically reasonable and necessary.
- If the patient reaches the annual cap, and therapy is still needed, seek additional coverage, using the therapy “exceptions process.” Therapists should submit medically reasonable and necessary therapy claims above the annual cap using the “KX” modifier.
- The “KX” modifier acts as a therapist’s attestation that the ongoing therapy is medically reasonable and necessary.
Typical Scenario: You are a Medicare beneficiary receiving therapy. Medicare Part B is paying for this care because it is provided by a skilled professional (a physical, occupational or speech therapist). You are told that the care will be discontinued because you have “plateaued,” returned to “baseline,” are “maintenance only,” or require only “custodial care.” You believe you continue to need and will continue to benefit from the provided skilled care.
Action Steps: Medicare is an insurance program; it only pays for care that has been provided, it does not pay for care that should have been provided. In other words, once your care is discontinued, it will be essentially impossible to remedy the problem with a Medicare appeal. So the first step is to keep the care in place. The best way to keep therapy in place is by understanding the rules about when Medicare should cover therapy and enlisting the assistance of your physician.
There are many reasons why a therapist might discharge you. However, the following three are the most common:
- The expiration of physician orders;
- The therapist no longer believes the therapy meets Medicare’s coverage criteria; or
- You have reached the annual financial cap for Medicare coverage.
Often these discharges are inappropriate, done too early, and may endanger your long term health or limit your independence. If you understand the law and advocate for yourself you may be able to keep your medically reasonable and necessary care in place.
Therapists work under the orders of physicians. If the physician ordered three therapy sessions, the therapist will discharge you after three therapy sessions. If you do not think you are ready for the discharge, contact your physician and ask him or her to order more care.
Medicare will only pay for therapy if it is medically reasonable and necessary. Unfortunately, for a long time, many believed that Medicare would only cover therapy if the patient would improve significantly in a short period of time. The use of this illegal standard, known as the “Improvement Standard” caused patients with chronic conditions such as Multiple Sclerosis, Alzheimer's disease, ALS, Parkinson's disease, and paralysis to lose access to reasonable and necessary medical care.
Because of the devastating effect of the improvement standard on the lives of people living with chronic conditions, the lawsuit Jimmo v. Sebelius was brought on behalf of a nationwide class of Medicare beneficiaries. On January 24, 2013, a settlement agreement was filed. In that settlement, all parties agree, Medicare coverage does not require actual or even the possibility of improvement. You can read the agreement on the Center’s webpage at http://www.medicareadvocacy.org/medicare-info/improvement-standard/. If you cannot access the settlement via the web, please call the Center at 860-456-7790 and we will send you a copy.
Since the Settlement was finalized, the Center for Medicare and Medicaid Services (CMS) published the following, clarifying that maintenance therapy is covered by Medicare:
If your therapy is ending because your therapist believes you will not improve or not improve quickly enough, but also thinks that continued care is necessary to maintain your condition or slow determination, give him or her a copy of this settlement. Also encourage the therapist to read the CMS publications listed above. In addition, ask your physician to give your therapist copies of published research or clinical guidelines from professional sources supporting the medical benefit of maintenance therapy for your medical condition. This information, in combination with the Jimmo settlement, should convince your therapist to continue maintenance therapy and bill Medicare.
Your therapist might discharge you from services because you reached the annual Medicare payment cap. However, if you continue to need skilled care, you should ask your therapist to bill the ongoing care through the Exceptions Process. To support your need for ongoing care and in case Medicare denies payment for the care; the therapist should obtain documentation from the medical literature or guidelines from professional sources supporting your need for ongoing therapy. Your physician may be able to help locate this literature.
- Medicare beneficiaries receive Medicare Summary Notices (MSN) in the mail on a quarterly basis.
- It is important to review these notices because they reflect what providers have billed Medicare for the beneficiary’s care.
- If some of that care has been denied coverage, it will be reflected on the Medicare Summary Notice.
- Beneficiaries have only 120 days to appeal these denials.
- If your Medicare Summary Notice (MSN) indicates that your care has been denied coverage, look to see whether you or the provider has been held financially responsible.
- If you have been held financially responsible, you should certainly appeal.
- If the therapy provider has been held financially responsible, and you want to get more therapy of a similar kind, you should also appeal.
- Ask your physician to write a letter explaining why your outpatient therapy was medically reasonable and necessary, including information about possible medical harm that might have occurred had you not received the therapy.
- Ask your physician to give you copies of published articles or treatment guidelines from professional organizations that support the argument that the outpatient therapy you received was medically reasonable and necessary.
- If possible also include a letter supporting the claim from the treating therapist.
- Follow the instructions on the MSN regarding how to request a Redetermination.
- Circle the denial of payment for your outpatient therapy.
- Write that you are appealing the denial because the therapy was medically reasonable and necessary.
- Attach a copy of your physician’s letter of support and other supporting documents.
- You will receive a “Redetermination” in the mail.
- If it is unfavorable, do not feel distressed, you can and should appeal to the next level, called a “Reconsideration.”
- You will have 180 days to request this level of appeal.
- Follow the directions on the “Redetermination” for requesting a “Reconsideration.”
- Indicate that you are appealing the decision because the outpatient therapy was medically reasonable and necessary.
- Attach a copy of your physician’s letter of support and other supporting documents.
- You should receive the “Reconsideration” decision in the mail.
- If this is a denial, again don’t feel distressed, you will have 60 days to appeal.
- Follow the directions on the form for requesting an administrative law judge (ALJ) hearing.
- Write on the request that you are appealing because the outpatient therapy at issue was medically reasonable and necessary and should be covered by Medicare.
- Note on your request and on the outside of the envelope that you are a BENEFICIARY-APPELLANT.
- Indicate that you would like the hearing scheduled via video teleconference (VTC) rather than by telephone.
- Attach a copy of the letter of support from your physician and published articles or treatment guidelines that support your position.
- You will receive a written notice of hearing in the mail.
- Respond to the notice as directed.
- Make sure that the notice states that a video teleconference is scheduled. If it does not, contact the ALJ’s legal assistant and request that the hearing be rescheduled as a video teleconference.
- Also ask the legal assistant to send you a copy of the exhibit list and hearing file.
- When you receive the hearing file, make sure that it contains the provider’s documentation regarding the care you received. If it does not, alert the legal assistant and supplement the file.
- Also make sure that it contains the letter of support from your physician and the supportive medical literature.
- Contact your therapist and see if he or she will testify at the hearing on your behalf. If he or she will, let the ALJ’s legal assistant know.
- Attend the hearing.
- Ask the ALJ to review the letter from your physician and the medical literature supporting your argument that the outpatient therapy you received was medically reasonable and necessary.
- Have the therapist explain to the ALJ why your care was medically reasonable and necessary.
- Ask the ALJ to grant Medicare Part B coverage for the care at issue.
- You will receive the administrative law judge’s decision in the mail.
- If it is favorable, send a copy to the provider.
- If it is unfavorable, follow the directions on the hearing decision for filing a Medicare Appeals Council request.
The best way to keep Medicare covered outpatient therapy in place is to know your rights and have the support of your physician. You should not lose access to therapy because you will not improve or because you have reached the financial cap. If coverage is denied, with the support of your therapist and your physician, you can win a Medicare appeal.
Medicare is the national health insurance program to which all Social Security recipients who are either at least 65 years old or are permanently disabled are eligible. In addition, individuals receiving Railroad Retirement benefits and individuals with End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS) are eligible to receive Medicare benefits. Medicare was established in 1965 by Title 18 of the Social Security Act. 42 USC § 1395 et seq.
Private Medicare plans are known as “Medicare Advantage” (MA) plans. Although the Medicare Advantage system is different from the original Medicare program, Medicare Advantage plan benefits are required to be identical to, or more generous than, those in the original program.
The Medicare “Improvement Myth”
There is a long standing myth that Medicare coverage is not available for beneficiaries who have an underlying condition from which they will not improve. As an overarching principle, the Medicare Act states that no payment will be made except for items and services that are "reasonable and necessary for the diagnosis or treatment of an illness or injury, or to improve the functioning of a malformed body member.” 42 USC §1395y(a)(1)(A). While it is not clear what a "malformed body member" is, clearly this language does not limit Medicare coverage only to services, diagnoses or treatments that will improve illness or injury. Yet, in practice, beneficiaries are often denied coverage on the grounds that they are not likely to improve, or are "stable", or "chronic," or require "maintenance services only." These are not legitimate reasons for Medicare denials.
This issue was finally resolved in federal court in Jimmo vs. Sebelius, (D. VT, 1/24/2013). In Jimmo the judge approved a Settlement stating that Medicare coverage for outpatient therapy does not depend on the individual’s potential for improvement, but rather on his or her need for skilled care – which can be to maintain or slow deterioration of the individual’s condition.
As of December 6, 2013, the Center’s for Medicare and Medicaid Services (CMS) Policy Manuals have been updated to reflect the settlement. The manuals now make it clear that improvement is not necessary for coverage of physical, occupational, and speech therapy.
Medicare Coverage for Outpatient Therapy
Physical therapy, occupational therapy, and speech therapy services can be covered by Medicare Part B for people residing in the community, and for those with continuing hospital or nursing home stays that are not otherwise covered by Medicare, if they meet certain criteria. Medicare limits how much it pays for medically necessary outpatient therapy services on an annual basis. An individual may qualify for an exception to the therapy cap limits. See section 5 for more information on therapy caps and exceptions.
Physical therapy services involve the evaluation and treatment of various diagnoses that change a person’s ability to function. A physical therapist evaluates components of movement such as strength, range of motion, balance, endurance and mobility. Physical therapists also provide a treatment program to help people move, reduce pain, restore function, and prevent disability.
Occupational therapy services involve the evaluation and treatment of various diagnoses that limit a person’s functional independence. An occupational therapist helps a person perform activities of daily living by, for example, teaching people how to use adaptive equipment such as devices to help with bathing, dressing, or eating.
Speech-Language Pathology services involve the evaluation and treatment of speech and language disorders, which result in communication disabilities and for the diagnosis and treatment of swallowing disorders (dysphagia), regardless of the presence of a communication disability.
Medicare covers items and services that are reasonable and necessary under § 1862(a)(1)A of the Social Security Act. In addition to being medically reasonable and necessary, outpatient physical, occupational, and speech-language pathology services must meet the following criteria in order for Medicare to cover the services.
- The therapy services are furnished while the beneficiary is under the care of a physician. 42 CFR §§ 410.59(a)(1), 410.60(a)(1) and 410.62(a)(1).
- The services are furnished under a written plan of care that is established by a physician or a therapist before treatment is begun. 42 CFR §§ 410.59(a)(2), 410.60(a)(2), 410.62(a)(2), and 410.61(b). The written plan of care must prescribe the type, amount, frequency and duration of the therapy services, and must indicate the diagnosis and anticipated goals. 42 CFR § 410.61(c).
- The services must be performed by, or under the direct supervision of, a therapist. All services not performed personally by the physical or occupational therapist must be performed by employees of the practice, supervised by the therapist, and included in the fee for the therapist’s services. 42 CFR §§ 410.59(c)(2) and 410.60(c)(2). Services of speech-language pathology assistants are not recognized for Medicare coverage. Medicare Benefit Policy Manual (CMS Pub 100-02), Chapter 15, § 230.3C.
- The services must be medically reasonable and necessary, which means that the services provided are considered specific and effective treatment for the patient’s condition under accepted standards of medical practice. Medicare Benefit Policy Manual (CMS Pub 100-02), Chapter 15, § 220.2B.
- The services must be sufficiently complex, or the condition of the patient is such, that the services required can be safely and effectively performed only by a therapist, or in the case of physical and occupational therapy by or under the supervision of a therapist.(Services that do not require the performance or supervision of a skilled therapist are not coverable, even if they are in fact performed or supervised by a skilled therapist). Medicare Benefit Policy Manual (CMS Pub 100-02), Chapter 15, § 220.2B.
- The amount, frequency, and duration of the services must be reasonable under accepted standards of practice. Medicare Benefit Policy Manual (CMS Pub 100-02), Chapter 15, § 220.2B.
Important Advocacy Tips
- Each person should get an individualized assessment regarding Medicare coverage based on his/her unique medical condition and need for care.
- Unfortunately, Medicare coverage is often denied to individuals who qualify under the law. In particular, beneficiaries are often denied coverage because they have certain chronic conditions such as multiple sclerosis, traumatic brain injury, Alzheimer’s disease, Parkinson’s disease, or because they need therapy “only” to maintain their condition. These are not legitimate reasons for Medicare denials.
- A beneficiary’s diagnosis or prognosis should never be the sole factor in deciding that a service is or is not skilled. The fact that full or partial recovery is not possible does not necessarily mean that skilled therapy is not needed to improve the patient’s condition. The deciding factors are always whether the services are considered reasonable, effective treatments for the patient’s condition and require the skills of a therapist.
- Medicare recognizes that skilled services can be required to maintain an individual’s condition or functioning, or to slow or prevent deterioration, including therapy to maintain the individual’s condition or function.
- Services that can ordinarily be performed by non-skilled personnel should be considered skilled services if, because of medical complications, a skilled therapist is required to perform or supervise the services.
- The doctor is the patient’s most important ally. Ask the doctor to help demonstrate that the standards described above are met. In particular, ask the individual’s doctor to state in writing why the skilled care and other services are required. If possible, also get a supportive statement from the physical therapist.
The question to ask is does the patient meet the qualifying criteria listed above and need skilled therapy – not does the patient have a particular disease or will she or he improve.
For many Medicare beneficiaries who need physical, speech and occupational therapy, the yearly dollar cap Medicare imposes on therapy services can be a significant barrier to receiving care. Fortunately, there is an exceptions process allowing beneficiaries to receive therapy above the cap. This section describes the steps you, your doctor and therapist can take to secure Medicare payment for therapy services above the cap.
Therapy cap amounts can be found at http://www.medicare.gov/coverage/pt-and-ot-and-speech-language-pathology.html. Medicare allows an exception to these caps for reasonable and necessary therapy services. In addition to these initial level caps, Medicare subjects therapy services that exceed $3,700 per year for occupational therapy and $3,700 for physical therapy and speech-language pathology services to the manual medical review process. Both are discussed in more detail below.
In 1997, Congress created annual dollar caps limiting Medicare’s payment for outpatient physical therapy, speech language pathology and occupational therapy. In 2006, Congress created an exceptions process that allows beneficiaries who need therapy above and beyond the caps to receive that therapy with special authorization. Exceptions are granted based on the continuing medical necessity of the service. The therapy caps exception process is not a permanent feature; Congress must renew this process legislatively every year. As a result, the ability of Medicare beneficiaries to receive therapy above the cap is at risk every year. Most recently, it was extended through to March 31, 2015 via the Pathway for SGR Reform act of 2013.
How the Caps Work
The annual caps include both Medicare incurred expenses and beneficiary out of pocket expenses like deductibles and coinsurances. For example, if Medicare pays $80 for your therapy and you pay $20 out of pocket, $100 would be applied toward your cap. The caps are applied per calendar year beginning January 1. You can find out how much has been paid towards your therapy cap by going online at “my.medicare.gov.” In addition, your Medicare Summary Notice (MSN), which is typically sent out every three months, lists all the services you have received and the amount your therapy provider has billed Medicare.
The annual financial caps apply only to people in traditional Medicare; they do not apply to Medicare beneficiaries enrolled in Medicare Advantage plans. However, Medicare Advantage plans may choose to apply the caps. If you are enrolled in a Medicare Advantage plan, check with the plan to see whether there is an annual therapy cap and exceptions process.
The dollar cap applies to therapy provided in most Part B settings, including:
- By a therapist in private practice;
- At a physician’s office;
- In a skilled nursing facility and billed to Medicare Part B;
- At an outpatient rehabilitation facility or comprehensive outpatient rehabilitation facility;
- By a home health agency when the agency bills Medicare Part B;
- At a hospital outpatient department.
Unless Congress changes the law, after March 31, 2015, care received at an outpatient hospital department will no longer count towards the annual financial cap.
As of January 1, 2014, therapy caps do apply to ongoing care in a critical access hospital. A critical access hospital is a small facility that provides limited inpatient and outpatient services in a rural area.
Evaluations and reevaluations for therapy do not count towards the annual financial cap.
Types of Review When You Reach the Cap
There are two types of exceptions review: automatic exceptions and manual medical review.
1. Automatic Exceptions Process at the Initital Cap
Currently, Medicare will continue to pay for some therapy services above the cap if those services are medically reasonable and necessary. In determining whether ongoing care is medically reasonable and necessary, Medicare encourages your therapist to consult Medicare manuals, published research, clinical guidelines from professional sources, and/or clinical or “common sense.” Additionally, Medicare directs therapists to consider:
- The patient’s condition, including the diagnosis, complexities, and severity;
- The services provided, including their type, frequency, and duration;
- The interaction of current active conditions and complexities that directly and significantly influence the treatment such that it causes services to exceed the cap.
When billing for an automatic exception, your provider should attach the KX modifier to the therapy HCPCS code. Automatic exceptions should only be used when therapy is medically reasonable and necessary and by attaching the KX modifier, your therapist is attesting that he or she believes your continued therapy is medically reasonable and necessary. If your therapist submits a claim using the KX modifier, he or she may receive an Additional Documentation Request (ADR) from the Medicare claims contractor. When responding to this request, your therapist should include a summary that specifically addresses the justification for the therapy cap exception (why the ongoing therapy is medically reasonable and necessary) and include supporting documents such as published research and clinical guidelines from professional sources.
2. Manual Medical Review at the $3,700 cap
There is a second level of caps for outpatient therapy. For physical therapy and speech-language pathology services the second annual cap is $3,700. The second annual cap for occupational therapy is also $3,700. When beneficiaries exceed this second cap, providers can no longer use the automatic exception process but must instead submit their claims for manual medical review. The manual medical review is done by Recovery Auditors. They are supposed to review the submitted medical records and determine whether the ongoing therapy is medically reasonable and necessary.
Depending on the state, claims are either subject to review before Medicare pays them (pre-payment review) or after Medicare pays them (post-payment review).
- Pre-payment Review:
Recovery auditors review claims submitted in Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri before Medicare pays them. In these states, once a claim is filed after the $3,700 cap has been reached, the Medicare claims processor will send an Additional Documentation Request (ADR) to the provider. The Recovery Auditor conducts the manual medical review within 10 business days of receiving the additional documentation from the provider and will notify the Medicare claims processor whether it should pay the claim. If the Recovery Auditor determines Medicare should not pay the claim, the beneficiary can and should appeal this decision if continued therapy is medically reasonable and necessary. For information about how to file an appeal, please read the section entitled, “How to file a Medicare Appeal for Denied Coverage of Outpatient Therapy.”
- Post-payment Review:
In the remaining 39 states and the District of Columbia, Recovery Auditors conduct immediate post payment review. After the second cap is reached, providers submit claims for payment for therapy that continues to be medically reasonable and necessary. After payment is made by the Medicare claims contractor, the provider receives an Additional Documentation Request (ADR). Once the Recovery Auditory receives the medical records, it performs a manual medical review within 10 business days and then notifies the Medicare claims processor whether payment for the claim was appropriate. If the Auditor’s decision is not favorable, the provider is required to refund the previously paid claim. Either the beneficiary or the provider may appeal the Recovery Auditor’s decision. For more information, please read the section entitled, “How to file a Medicare Appeal for Denied Coverage of Outpatient Therapy.”
Use of Advance Beneficiary Notices
An Advance Beneficiary Notice (ABN), is a written notice that providers are required to give when they offer medical services that they know or have reason to believe Medicare will determine to be medically unnecessary, and therefore, will not pay for. Providers should not issue an ABN to all Medicare patients who receive services that exceed the cap. The ABN is only appropriate in instances when the provider believes such services are not reasonable and necessary.  In the Provider’s claim for payment is denied by Medicare, the provider cannot bill you for the rendered therapy, unless you were given an ABN before you received the care.
The American Physical Therapy Association, Therapy Caps Legislative History, available at http://www.apta.org/FederalIssues/TherapyCap/History/ (site visited Oct. 9, 2013).
 The Deficit Reduction Act of 2005, P.L. 109-171 § 4541.
 MCPM, Chap. 5 Sec. 10.3.
 The Centers for Medicare and Medicaid Services, Therapy Cap, http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medical-Review/TherapyCap.html (site visited Oct. 10, 2013).
 Follow the documentation requirements in Medicare Benefit Policy Manual, chapter 15, section 220.3. available at http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
 The Centers for Medicare and Medicaid Services, “Frequently Asked Questions- Outpatient Therapy Claims ” Apr. 2013, available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medical-Review/Downloads/FAQOutpatientTherapy09032013.pdf (site visited Oct. 10, 2013).
 Recovery auditors are private contractors employed by Medicare to recover improper Medicare payments to providers.
 The Manual Medical Review Process was created by the Middle Class Tax Relief and Job Creation Act of 2012, P.L. 112-96, § 3005.
 MCPM, Chap. 30 Sec. 50.15.5.
 Prior to 2013, a Medicare beneficiary was financially responsible for therapy services above the cap regardless of whether he or she received and Advance Beneficiary Notice. Under these pre-2013 rules, if a provider submitted a claim she believed qualified for a cap exception and that claim was denied because Medicare ultimately determined that the services were not medically reasonable and necessary, the provider could collect from the beneficiary regardless of whether an ABN was issued.
 Therapy Caps and Advance Beneficiary Notice of Non-coverage (ABN), Form CMS-R-131, FAQs April 2013 available at http://www.cms.gov/Medicare/Billing/TherapyServices/Downloads/ABN-Noncoverage-FAQ.pdf (site visited Oct. 10, 2013).
Copyright © Center for Medicare Advocacy, Inc.