Medicare Therapy Cap Denials

Effective Jan. 1, 2013, Section 603(c) of the American Taxpayer Relief Act of 2012 (ATRA) mandates that the payment liability for denials resulting from the outpatient therapy caps shift from beneficiaries to providers.  The Centers for Medicare and Medicaid Services (CMS) is now reporting that Medicare systems were not updated in time to accurately reflect this change on provider remittance advices (RAs).  Since some Medicare Administrative Contractors (MACs) may have already processed therapy cap denials for services provided in 2013, these denials may be incorrectly reported on RAs as beneficiary liability (Group Code “PR”) when liability legally rests with the provider (Group Code “CO”).

Due to differing claims processing system constraints, this inaccurate RA reporting will be corrected beginning on different dates for different claim formats. For institutional claims, the correct liability will be reported beginning on June 24, 2013. For professional claims, the correct liability will be reported beginning on Jan. 1, 2014.

Since Medicare’s payment amount for these claims is correct, MACs will not adjust claims processed before these dates to correct the Group Code. To do so could create disruptions for providers’ accounts receivable. Instead, therapy providers should review any therapy cap denials for dates of service on or after Jan. 1, 2013, to determine whether any payments have been collected from beneficiaries. 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).  For complete details on the proper issuance of ABNs, please refer to the CMS Beneficiary Notices Initiative website.

Contact: Patrick Cucinelli, pcucinelli@leadingageny.org, 518-867-8827