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Strategic Health Solutions Reports CMS Therapy Audit Results

May 13, 2014 4 Comments

Strategic Health Solutions just posted CMS Therapy Audit Results of one of their outpatient therapy audits.  Strategic conducted Man painting word on cement texture wall background, Audit Procetwo audits involving outpatient therapy last summer.  The first audit topic was related to therapy stoppage at the end of the year 2012  (or at the cap), and then resumed in the new year (2013).  The second audit had to do with therapy provided during Super Storm Sandy.  Strategic Health Solutions is a CMS Supplemental Medical Review Contractor (SMRC) and conducted this topical audit by requesting records from 357 providers.  The SMRC selected random sample totaled 7,090 claims consisting of 357 unique providers with dates of service August 1, 2012 to March 31, 2013.  Additional Documentation Request (ADR) letters were sent to the billing provider. Despite the fact that providers have 45 days to respond to review contractors with the supporting medical record documentation 2580 claims were denied for no response – a 41% error rate just for not responding.

CMS Therapy Audit Results

SMRC noted that they reviewed the claims based on Medicare coverage and documentation requirements described in statue, regulations, and Medicare policy.  This is the same manner in which other CMS contractors including the Recovery Auditors and the Medicare Administrative Contractors review claims.

SMRC described the reasons for denial:

  1. Forty-one percent (41%) of denials were because providers did not respond to the ADR within the 45 day time frame.
  2. Strategic identified that submitted medical records did not meet documentation requirements for therapy treatment encounter/sessions which are specified in the CMS Internet-Only Manual, Publication 100-02, Medicare Benefit Policy Manual Chapter 15, Section 220.3. This documentation included, but was not limited, to lack of comprehensive evaluation and/or plan of care, identification of specific intervention/modality provided and billed, total timed code treatment minutes, and total time in minutes.
  3. In addition, submitted medical records did not meet documentation requirements for supporting the number of units of therapy services billed which are specified in the CMS Internet-Only Manual, Publication 100-04, Medicare Claims Processing Chapter 5, Section 20.2.

The SMRC report also included the following statistics of claims, approvals and denials:

SMRC Outpatient Therapy Audit Results

Number of ClaimsPaidDeniedError Rate
708030632,580: Denied for No Response
1,437: Denied after Review
4.014: Total Denied57%

The report also included suggestions to providers on how to prevent a denial:

Respond timely to SMRC ADR letters. Submit all documentation related to the services billed which support the medical necessity of the services billed. Report the number of units for outpatient rehabilitation services based on the documented procedure or service. When reporting service units for procedure codes where the procedure is not defined by a specific timeframe (“untimed” procedure), the provider enters “1” in the field labeled units. For untimed codes, units are reported based on the number of times the procedure is performed, as described in the procedure code definition (often once per day). Several procedure codes used for therapy modalities, procedures, and tests and measurements specify that the direct (one on one) time spent in patient contact is 15 minutes. Providers report procedure codes for services delivered on any single calendar day using procedure codes and the appropriate number of 15 minute units of service.

Did you receive an ADR letter from Strategic Health Solutions?  Did you respond to the ADR letter?  Did you receive a denial or approval?  Did you send records timely that were not received and denied?


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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. anna dela cruz says:

    Homecare Agency received a letter from Strategic Solutions saying that our case is forwarded to CMS for non submission of required documents. We claimed that we did not receive any letter from them. They informed us to just wait for CMS letter of denial of payment then we can write an appeal. Will CMS collect back the previous payments once Strategic Solutions submit its report? How soon will CMS recoup the payment? Thanks.

  2. Robin says:

    Same exact thing happen to our Home Health Care Agency. I am filling a complain against them as they haven’t follow the right Audit process it looks like a scam to me. A letter come stating you have been audit by Strategic solution and now the case is with CMS. Strategic solution never approach us regarding any audit before.

  3. Thomas Smith says:

    Our Home Health Agency received the same treatment. We did not receive in initial ADR request. When notified that Strategic Health Solutions informed us they were recommending denial of payment, we immediately responded to them and told them we never received the first request. We were told there was nothing we could do at that point. We had to wait until we received notice from CMS. When I see a 41% denial based on requests not submitted, that suggests something wrong with the SMRC and Robin’s suggestion of a “scam” is spot on. No provider in their right mind and with a view toward remaining financially viable would ignore an ADR! Maybe it’s time CMS investigates the practices of Strategic Solutions!

  4. Hello Thomas, and thank you for your comments. The first thing a provider should do is ensure that their contact address is up to date within CMS. This can be done within the PECOS system, or manually via the appropriate 855 form. Providers often have several addresses: home office, special payments address, facility locations etc. If there has been a change of address for a provider location also keep in mind there is a CMS requirement to report any address change in 90 days. It has been my experience in reading reports from the MACs as well as CERT contractors that it is not unusual to see error rates associated with not complying with an ADR request, and I also wonder why providers do not comply with requests. Concerns regarding SHS can be directed to the CMS official with oversight of their audit activity.

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