New Prepayment Review of and Preapproval Process for “Over-Limit” Outpatient Therapy Services

[NOTE: See the blog of 1-8-13 for how all this works in 2013.]

If you have had outpatient physical, speech language, and / or occupational therapy services covered by Medicare this calendar year, and Medicare has approved $1,700 or more for this type of care by August 31, you may get a notice from Medicare telling you that limits or caps are bring imposed on outpatient therapy for the remainder of the year. (You may get this even if you are no longer actually getting therapy.)

What’s this all about?

Beneficiaries who are or will be receiving outpatient physical, speech language, and / or occupational therapy from October 1 to December 31, 2012 need to be aware of a new requirement being imposed on therapy providers beginning October 1. This new requirement was mandated by a recent statute. Interestingly, the law specifically granted the government, in this case the Centers for Medicare & Medicaid Services (CMS), the authority to enforce the provisions without going through the normal process of publishing regulations and seeking public comment.

Currently there is a statutory limit, or cap, on the dollar amount of outpatient therapy services a beneficiary can receive in a year. This limit has been in place for some years, and although the dollar amount changes each year, in 2012 the limit is $1,880 for physical and speech therapy combined, and a separate limit of $1,880 for occupational therapy. But for several
years Congress has allowed exceptions to these limits, by permitting therapists, when these caps are exceeded, to certify that the additional, over-limit therapy services they are providing are medically necessary for the beneficiary.

The new provision in the law requires Medicare Administrative Contractors (MACs), which are the companies that Centers for Medicare & Medicaid Services contracts with to review and process Medicare claims, to individually review all therapy claims that exceed a limit of $3,700 for a beneficiary. This limit is, as are the statutory limits, imposed on physical and speech therapy services combined, and, separately, on occupational therapy. So there are two, separate $3,700 caps. In addition, this provision requires that the review must be made before the MAC processes and pays the claim.

Because these reviews would hold up payments of appropriate claims, Centers for Medicare & Medicaid Services is also permitting therapy providers to request, from the Medicare Administrative Contractors, preapproval of any therapy services they render to a beneficiary. In this way, when they have actually performed the therapy and submit a claim, the medical necessity of the services had already been approved, and the claim can go right to payment. And rather than preapprove each and every therapy session, therapists must request the preapproval of blocks or chunks of 20 therapy days at a time.

This should concern beneficiaries, but only to a limited extent. These limits do not apply to beneficiaries in Medicare Advantage (Part C), but only to those in Original (fee-for-service) Medicare. And they are only for outpatient therapy, not for therapy you may get in as an inpatient during a Medicare covered hospital or Skilled Nursing Facility (SNF) stay. Nor does it apply to therapy you get under a home health plan of care. And, finally, it does not apply to therapy you get as an outpatient of a so-called “critical care hospital,” typically these are in rural areas; but contrary to what you may have heard, as this is new in 2012, it does apply to outpatient therapy you receive in all other hospitals.

But if these exceptions don’t apply, and you have gotten a lot of therapy this calendar year, you may get a voluntary Advance Beneficiary Notice (ABN) from your therapy provider that your services may not be covered. And whether you get one or not, beneficiaries need to understand that Centers for Medicare & Medicaid Services is taking the position that if you receive therapy over and above the statutory $1,880 limit and it is not medically necessary, you are not protected by the limitation-of-liability provision as the care is statutorily excluded, like eyeglasses or dental care. Normally, if a beneficiary gets a service that is not medically necessary, even when Medicare denies the claim, the beneficiary does not have to pay the provider for the care as it is assumed the beneficiary had no way of knowing that the care was not covered, unless of course they got an Advanced Beneficiary Notice saying that it wasn’t. So that’s why you may get one from your therapist, even if in this case they are not required to give it to you. But if you do get one, or if you think your therapy may exceed the $3,700 cap, you may wish to defer your therapy and ask that your therapist get preapproval from Medicare for your therapy. The Medicare Administrative Contractors have to OK or deny a preapproval request in 10 working days, or it is automatically approved, so the decision should not be too long in coming, and you may prefer waiting a bit to make sure whether or not you’ll be liable for the therapy services.

And there are a few more quirks. One is that as part of its implementation strategy, Medicare will be phasing the new requirement in gradually. So on October 1 not all therapists will come under this, but only about a third, and then the next third on November 1, and the final third on December 1. So it’s possible that this will keep you from falling into it. The other is that this whole thing is scheduled to go away December 31, 2012, so unless Congress passes new legislation concerning this, you can forget about it in 2013!