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CMS to Therapy Providers: Change to Payment Liability for Therapy Cap Denials

May 24, 2013 4 Comments

Stop! Action RequiredChange to Payment Liability for Therapy Cap Denials 

In this week’s edition of CMS eNews there was an important update for therapy providers regarding the change of liability for therapy denied as exceeding the therapy caps ($1900 for PT and SLP combined, and a separate $1900 for OT) in 2013.  Currently Remittance Advices (RA) are indicating beneficiary liability for denials resulting from denials for therapy over the caps.  According to the CMS eNews:

Section 603(c) of the American Taxpayer Relief Act of 2012 (ATRA) changed the payment liability for denials resulting from the outpatient therapy caps from beneficiaries to providers effective January 1, 2013. Medicare systems were not updated in time to accurately represent this change on provider remittance advices (RAs). Medicare contractors may have already processed therapy cap denials for services provided in 2013. These denials incorrectly report on RAs beneficiary liability (Group Code “PR”) when liability legally rests with the provider (Group Code “CO”).

CMS has indicated that due to the different claims processing system constraints, this inaccurate RA reporting will not be able to be immediately corrected.  For institutional claims billed on the UB04 (hospitals, SNFs, CORFs, Rehab Agencies) the correct liability will be reported beginning on June 24, 2013.  Unfortunately for private practices billing on the CMS 1500, the correct liability will be reported, according to the CMS eNEWS,  beginning on January 1, 2014.

CMS has indicated that since the payment amount on the claims is correct (only the RA is wrong) that the MACs (Medicare Administrative Contractors) “will not adjust claims processed before these dates to correct the Group Code. To do so could create disruptions for providers’ accounts receivable”.   CMS has opted in this update to adivse therapy therapy providers  to review any therapy cap denials for dates of service on or after January 1, 2013, and “determine whether any payments have been collected from beneficiaries”.

According to CMS “Providers should refund any beneficiary payments they find for these services. Additionally, providers should cease to collect payments for therapy cap denials unless the beneficiary was appropriately notified via an Advanced Beneficiary Notice of Noncoverage (ABN).”  Read our previous blog post on the ABN for Therapy Over the Cap in 2013.

What CMS did noticably did not address in this update was the important element of duty to repay overpayments in 60 days in order to prevent a possible False Claims Act action.

Action steps for therapy providers:

  1. Voluntary ABNs (recommend by CMS in 2012) should no longer be issued for therapy over the $1900 caps.  They are not valid, due to the change in ATRA.
  2. For therapy that is not medically necessary, the provider should issue a Mandatory ABN, if the patient wishes to continue in therapy.
  3. Therapy provided under an Mandatory ABN, with the GA modifier (not medically necessary) cannot be billed with the KX modifier (medically necessary).
  4. Audit 2013 accounts to determine if beneficiary payments have been received as a result of the errors on the CMS Remittance Advice, incorrectly noting “beneficiary” liability.
  5. Return all funds received from beneficiaries within 60 days of your discovery of the overpayment as noted in the CMS eNews.


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Nancy Beckley

Nancy J. Beckley MS, MBA, CHC: President-Nancy Beckley & Associates LLC. Compliance outsourcing, risk assessment, compliance plans, compliance training, auditing, due diligence, investigation support for therapy providers.

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Comments (4)

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  1. anamarie says:

    Thank you for the informative article!

  2. Jen says:

    Thank you, Nancy! Definitely clears up the ABN issue for us. Your blog is now in my “favorites”!

  3. anamarie says:

    Frustrating that FI’s are still paying claims submitted with the -GA modifier. Why is this happening? AND is there anything we can do to correct this issue?

  4. Nancy says:

    Unfortunate that the MACs are processing for payment w/ the GA Modifier, in fact the OIG did a report on this earlier this year. Hopefully all providers that receive payment in error from the MACs have a obligation to repay under the 60 day rule, or else the False Claims Act may come into play.

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