How to Survive Therapy Caps and the Manual Medical Review with Physical Therapy and Rehab compliance expert Nancy Beckley and Clinicient, a proven leader in physical therapy EMR and practice Management solutions.

1. How to Survive the Medicare Therapy Caps
and the
Manual Medical Review Process
October 4, 2012
Featuring Guest Presenter:
Nancy J. Beckley, MS, MBA, CHC

2. Welcome
• This session will be recorded
– Link to the recording and
resources will be emailed to all
registrants
• Questions can be asked in the
“Question panel”
– Webinar will be extended an
Jim Plymale additional 1/2 hour for Q & A
CEO
Clinicient

3. Welcome Nancy
• Compliance expert in the Rehab industry;
certified in healthcare compliance
• Specializes in providing compliance program
development for outpatient therapy and
DME providers
• Popular industry speaker and author on
compliance topics related to outpatient
therapy
Nancy Beckley • Serves as a Compliance columnist for
President IMPACT ‐ the magazine of the APTA Private
Nancy Beckley and Associates Practice Section

4. Today’s Objectives
• Why it is important to carefully and accurately monitor the
therapy cap
• How to create documentation that supports medical necessity
• Compliantly converting the therapists time into Medicare billable
units
• Why documentation must support claims, and what to watch for
• How to submit a claim so that it is "pre‐approved" and doesn’t
require a pre‐payment review
• How an EMR and Practice Management system can minimize
your audit risks
4

5. Why Are We Here?
• Balanced Budget Act of 1997
Distribution of Spending
OP Therapy ‐ 2011
• Methodology for bundled
payment issues 4%
2%
– DX codes 11%
Nursing Facility
– Outcomes 37% PT Private Practice
HOPD
16%
ORF, CORF, HHA
Physician NPP PT
• Therapy claims continue an OT, SLP PP
upward trend 30%
• PPACA mandates Source: MedPAC, 9/2012
5

6. Ready, Set, Go…..
Manual Medical Review Manual Medical Review GAO Report on MMRP
Process – Phase I Process – Phase III
Providers identified as Providers identified as Report issued on the
phase 1 begin following the phase 3 begin following the implementation of the
MMRP at the $3700 MMRP at the $3700 MMRP
Therapy Threshold Therapy Threshold
Oct 1, 2012 Nov 1, 2012 Dec 1, 2012 Jan 1, 2013 May 1, 2013 June 15, 2013
Manual Medical Review Claims Based
Process – Phase II Data Collection MedPAC Report
Providers identified as CMS starts collecting
phase 2 begin following the data on patient function Report issued on how to
MMRP at the $3700 during the course of improve the payment
Therapy Threshold therapy services system
6

7. MCTRJCA Section 3005 Provisions
• Modifier – KX indicating “medical necessity”
• Manual medical review ‐ $3700 threshold
• Temporary expansion to hospitals, no later than 10/1
• NPI of physician who reviews therapy plan of care on claim
• MedPAC report on improved therapy benefits
• HHS collection of claims data
• GAO report on manual medical review process
7

8. 2013 Medicare Physician Fee Schedule
• Proposed rule released, comment period open
– 3% uptick in therapy, SGR issue and pending 30%+ reduction if
Congress does not act
• Therapy cap $ ‐ published in final rule
– Therapy caps exceptions process ends 12‐31 unless Congress acts
– Therapy caps for hospitals end 12/31/2012 unless Congress acts
• NEW – claims based functional data collection – series of new
Functional “G” codes
– Associated modifiers – to report severity/complexity
– Every 10 treatment days or 30 days, which is shorter
8

9. G Codes ‐ PROPOSED
Source: CMS‐1590‐P
9

10. Severity Modifiers PROPOSED
• “For each functional G‐code
used on a claim, a modifier
would be required to report
the severity/complexity for
that functional limitation
• We propose to adopt a 12‐
point scale to report the
severity or complexity of the
functional limitation involved.”
Source: CMS‐1590‐P
10

11. Caps: Full Implementation in 2006
Automatic Exception Manual Exception
• Automatic • Manual (2006 only)
– Patients may be “expected” to • Patients not qualifying for
exceed the cap in certain automatic exception may qualify if
circumstances:
PT/OT has case “manually”
• Originally by specified ICD‐9 reviewed
codes and/or Identified
complexities or co‐morbidities • Fax forms and records prior to
hitting the cap, request additional
• Now any code may be used as visits based on medical necessity
long as it is medically
necessary • Contractor approves, modifies or
denies request
• Must be medically necessary
to exceed the cap and so • Back again 10/1/2012
documented – New implementation rules
– “Threshold” level at $3700
11

12. Therapy Cap vs. Threshold
• Therapy caps for PT/SLP (combined) and OT
– $1880 for 2012
• Therapy cap accrues/attaches to the beneficiary
• Therapy cap is calendar year
– Exceptions process in place by legislation (ends 12/31/12)
– All therapy at HOPD (previously exempt) from 1/1/12 counts
• Threshold is set at $3700 for each cap (PT/SLP and OT)
– Manual medical review (pre‐authorization) of claims to exceed $3700
– Threshold is implemented by NPI‐based Phases (10/1, 11/1, 12/1)
• Private practice by individual therapist NPI, not group NPI
• Part A providers by institutional NPI (not individual therapists, even if they have NPI)
12

13. Manual Medical Review Process
Previous Therapy Cap
• $1880 through October, 1 2012
• Included Outpatient care only
$1880
Outpatient Care Only
Jan 1, 2012 Oct 1, 2012
13

14. Manual Medical Review Process
Therapy Cap After Oct 1, 2012, Now!
• $3700 retroactive therapy cap threshold
• Now extends to hospital outpatient depts.
• Manual medical review for services beyond threshold
• Justified by documentation
• Process / Paperwork unique to MAC
• Claims exceeding $3700 threshold will be denied without approved exception
• Cap is applied to first claims received, not by DOS
• Denied services beyond cap are beneficiary liable ~ Approaching $3700
> $1,800 Cap: Apply for Exception
Apply KX Modifier
Shared Cap with Hospital Outpatient Services
(Retroactively applied) $3700
Jan 1, 2012 Dec 31, 2012
14

15. KX & Attestation
15
When the beneficiary qualifies for a therapy cap exception, add
the KX modifier to the therapy procedure code subject to the
cap limits
• The condition or complexity that caused treatment to exceed caps must
be related to the therapy goals
• Must either be the condition that is being treated or a complexity that
directly and significantly impacts the rate of recovery of the condition
being treated such that it is appropriate to exceed the caps
• Documentation for an exception should indicate how the complexity (or
combination of complexities) directly and significantly affects treatment
for a therapy condition
15

16. CMS Letter to Beneficiaries
• All beneficiaries at $1700 therapy per cap this year
• Explains the process – financial responsibility, even years from
now patient may be responsible
• Excerpt from letter…..
16

17. APTA Provides Resource
• 550,000 beneficiary
letters mailed in
August
• Additional letter
mailed: confusing
regarding home
health benefit
• APTA provides notice
letter to supplement
CMS letter
17

18. Voluntary Use of ABN
• When using the ABN form as a voluntary notice, the form requirements
specified for its mandatory use do not apply
– The beneficiary should not be asked to choose an option or sign the form
– Beneficiary’s name and the reason Medicare may not pay should be noted
• After the cap is exceeded, voluntary notice via a provider’s own form or
the ABN is appropriate, even when services are excepted from the cap
– A cost estimate is suggested, but not required
– Insertion of the following reason is suggested:
“Services do not qualify for exception to therapy caps. Medicare will not pay
for physical therapy and speech‐language pathology services over $1880 in
2012 unless the beneficiary qualifies for a cap exception.”
CMS: Advance Beneficiary Notice of Non‐coverage
(Form CMS R‐131 and Instructions)
18

19. Mandatory Use of ABN
• The ABN is also used before the cap is exceeded when notice about non‐
covered services is mandatory
– For example, whenever the treating clinician determines that the services being
provided are no longer expected to be covered because they do not satisfy
Medicare’s medical necessity requirements, an ABN must be issued before the
beneficiary receives that service
1. skilled services are not medically necessary,
2. clinical goals have been met, or
3. no longer potential for the rehabilitation of health and/or function in a reasonable time
– If the beneficiary requests further services, beneficiaries should be informed
that Medicare most likely will not provide additional coverage, and the ABN
should be issued prior to delivering any services
• The ABN informs the beneficiary of his potential financial obligation to the provider and
provides guidance regarding appeal rights
– When the ABN is used as a mandatory notice, providers must adhere to the
form requirements
CMS: Advance Beneficiary Notice of Non‐coverage
(Form CMS R‐131 and Instructions)
19

20. New Therapy? More Therapy?
• Evaluation codes exempt from the cap ($1880) after the cap is
reached
– PT & OT
• 97001, 97002, 97003, 97004
– Speech‐language Pathology
• 92506, 92597, 92607, 92608, 92610, 92611, 92612, 92614, 92616, 96105
• New diagnosis
– Concurrent
– Subsequent
20

21. Codes, Caps & Quirks
• “Always” therapy codes always subject to the cap regardless
of who performs them
• “Sometimes” therapy codes subject to the cap when billed by
a therapist, or other provider under a “therapy plan of care”
– Example
– Rules applicable to hospitals OPPS
• Other Hospital/SNF services subject to the cap
– Observation
– Part A to Part B rebilling demo
– Part A benefits exhausted/Part B only beneficiaries
Reference: CMS 2012 Therapy Code List
Spread Sheet ‐ Attached
21

22. Manual Medical Review Process ‐ Phases
• CMS provider notification letter mailed
• CMS posted database
– https://data.cms.gov/dataset/Therapy‐Provider‐Phase‐
Information/ucun‐6i4t
22

23. Manual Medical Review Process
• “Threshold” of $3700 aligns with PT/SLP cap and OT cap
• Request manual review for up to additional 20 visits
– MACs have posted forms and generally want (verify)
• Order, Plan of Care, Documentation
• MBPM (Ch. 15, Sec. 220+) and LCD will be utilized
– Contractor has 10 business days, if no reply, “approved”, buyer beware!
• WPS will not accept fax requests, but will fax back if you identify request (15‐20 days)
– Can request unlimited number of exceptions
– Some MACs requiring approval code to be entered on the claim
– Approval of request does not guarantee payment
• Records subject to MR process, as is all other claims
• If you do not request review at $3700
– Submit claims and be subject to prepayment review (up to 60 days)
23

24. Manual Medical Review Process ‐ 2
• If not approved:
– Come back with more info or
– Submit claim and be subject to pre‐payment review
• CMS expects detailed response letter by contractor for non‐approved
• Appeal rights are in place
• Options:
– Don’t request manual review, submit claim: subject to prepayment
review (45 ‐ 60 days)
• KX modifier on all claims over $1880 (statutory exclusion)
• CMS: Special Open Door Forums (3)
– Review and explain process, instructions to contractors
– Slide presentation and sample documentation
24

25. MMR Documentation Elements
• Beneficiary Last Name • Provider Number (National Provider
• Beneficiary First Name Identifier (NPI)) of Physician/NPP
• Beneficiary Middle Initial Certifying Plan of Care
• Beneficiary Medicare Claim • Name of Provider Certifying Plan of Care
Number (HICN) • Address of Provider Certifying Plan of
• Beneficiary Date of Birth Care
• Beneficiary Address and Telephone • Telephone and Fax Number of Provider
Number Certifying Plan of Care
• Number of Treatment Days • Name of Performing Provider
Requested • Address of Performing Provider
• Expected Date Range of Services • Performing Provider Number (NPI)
• Date of Submission • Telephone and Fax Number of
Performing Provider
Source: CMS MM 8086
25

26. MMR Cover Sheet Requirements
• Cover Page
• Justification
• Evaluation or reevaluation(s) for Plan(s) of
Care
• Certification(s) of the plan(s) of care, where
available
• Objectives and measurable goals and any
other documentation requirements of the
Local Coverage Determinations (LCDs)
• Progress reports
• Treatment notes
• Any orders, if applicable, for the additional
therapy services and
• Any additional information requested by the
Medicare contractor
Source: CMS MM 8086
26

27. Sample Form for CGS
27

28. Sample Documentation
CMS example of “good documentation”
Source: CMS Open Door Forum Slide Show 9/5/12
28

29. CMS Example – Not Skilled…
Source:
CMS Open Door
Forum Slide Show
9/5/12
29

30. CMS – Documentation Needed
• Previous medical history including diagnosis, premorbid conditions, and
recent hospitalizations impacting functional abilities
• Patient’s prior level of functional abilities, i.e. able to ambulate functional
distance in recent past
• Timely physician certification/involvement with clear frequency/duration
and certification date range parameters on plan of care
• Medical necessity supported ‐ patient would benefit from the development
of an effective home strengthening program to:
– Regain ability to safely ambulate to/from bathroom to ensure appropriate
pericare, etc.
– Facilitate the patient’s ability to maintain strength and prevent further functional
decline with other functional skills, i.e. transfers/bed mobility.
Source: CMS Open Door Forum Slide Show 9/5/12
30

31. Reasonable and Necessary
Treatment should be consistent with • Is this an exacerbation of a
the nature/ severity of illness / condition?
injury – May have to modify treatment,
• Is this a new or acute change assistive devices as the
problem? condition deteriorates
– May need intensive focused care – Are there other conditions (e.g.
medical diagnosis) that are the
– E.g. reduce pain and/or work on underlying problem?
a specific impairment or
functional loss
• Cognitive performance can
• Is this an old or chronic impact care
condition that needs – What is the beneficiary’s ability
to retain newly learned
retraining, or has had a change information (cognitive function)?
in condition? – What is the beneficiary's ability
– May need to update or modify to participate and benefit from
program rehabilitative services?
Source: CMS Open Door Forum Slide Show 9/5/12
31

32. MMR Denial Letters
Examples from Noridian
• There are both
partial approvals:
• And total denials:
• There are categories for the denial:

33. MMR Denial Letters
And specific language justifying the denial (though the responses
are canned.)

34. Reasonable & Necessary
• Assessing Objective Measurable Gains for Rehabilitation Therapy
• Look at:
– Changes in the level of assistance required to perform functional tasks
– Changes in the types of functional activities/ tasks
– Changes in the types of assistive devices
– Improvement in rating of reported pain levels and changes in the ability to
perform tasks given the reduction of pain
• (E.g. ‐ Ability to sit for a duration of time as a result of pain reduction)
Source: CMS Open Door Forum Slide Show 9/5/12
34

35. Reasonable & Necessary
Considerations:
• Did the therapist consider the beneficiary’s goals?
• Were the therapist’s and beneficiary’s goals realistic based on the
beneficiaries condition and,
• For rehabilitation therapy did the therapist change goals/ treatment
plan in response to improvement or lack of improvement in the
beneficiary’s condition?
• Were there objective, measurable changes using standard scales
and assessment tools?
• What was the beneficiary’s response to treatment?
– Did this change over time?
– Was it sustained?
Source: CMS Open Door Forum Slide Show 9/5/12
35

36. Follow Your MAC’s Instructions
• Website Links For MAC Manual Medical Review
– CGS Medicare
– NGS Medicare
– WPS Medicare: J5, J8, Legacy
– Noridian
– Palmetto
– Novitas Solutions
– Cahaba
– First Coast Service Options
– NHIC
36

37. Assessing Therapy Utilization
• 10/1/2012 – System reframed to report therapy utilization
“up” (vs. “down” or “cap amount remaining”)
– System will take until 10/8/2012 to populate with historical data and
hospital utilization
– Information is good only as of the time you look at it
– HIPAA Eligibility Transaction System (HETS)
– Common Working file (CWF) Part A Eligibility System (ELGA)
– IVR system, DDE portal
– Many MACs have their own portals/phone to access
• CMS will not strictly apply sequential billing rule
37

38. Critical Action
• Current patients
– What therapy has a patient received since 1/1/2012?
– Must know prior to your phase
• Find internally for your own patients
• CMS not able to post correct historical until 10/8…..problem
– What is your billing cycle?
• Referred patients
– Identify CY 2012 therapy counting toward the cap received elsewhere
– Evaluation to determine therapy needs?
• If over $1880, eval codes are exempt
• The “Phase” Quagmire in Private Practice
– May have therapists in each Phase
– Impacts coverage for Phase II‐III therapist’s patient by a Phase I therapist
38

39. Medical Review Issues
• CERT reports specific to your contractor
– Paid error rate
– Specific therapy claims “paid in error”
• Comparative Billing Reports (CBR)
– Project awarded to Safeguard Services LLC
– Profiling PT in Private Practice
• High KX modifier utilization
• Reports in 2010, 2011 profiling top 5000 physical therapist on KX
utilization – 5 codes (10,000 total PTs)
• 2012 re‐profiles those identified in 2010
• OIG 2013 Work Plan – physical therapy in private practice
• RAC rumors
39

40. Physical Therapy Practice Risks
• Insufficient documentation
• Coding & Billing
• Licensed/non‐licensed
providers
• Excessive # of visits
• Employee’s understanding
• Patient’s understanding
40

41. Risks & Interdependencies
• Medical Necessity
Therapy
– Treatment Evaluation
Daily
Treatment
– Documentation
Plan of
– Coding Care
Document
– Billing
– KX Modifier Coding ‐
ICD Coding
Procedures
41

42. How an EMR and
Practice Management System
Can Minimize Your Audit Risks

43. Critical Actions
Requirements: How Clinicient Helps:
1 Track the Phase of Treating Therapist, According to NPI# Automated therapist phase tracking and alerts
Automated therapy cap tracking, single form for
2 Re‐Verify the Therapy Cap of Each Patient
all Medicare patients
Automated and accurate tracking of caps with
3 Accurately track the Cap and the Exceptions Threshold
alerts and KX modifier applications
4 Follow the Exceptions Process Alerts for exceptions process and ABNs
Goal tracking, required elements, plan of care
5 Document Defensibly, Demonstrate Medical Necessity
certification tracking, progress note tracking
Therapist time from documentation is accurately
6 Ensure Documentation Always Supports Claim
converted to units following CMS guidelines

44. Critical Action #1:
Track the Phase of Treating Therapist
OCT 1 | NOV 1 | DEC 1 Automated report that shows the
Phase 1 Phase 2 Phase 3 phase of each therapist in your
organization, according to NPI #

45. Critical Action #2:
Re‐Verify the Therapy Cap X (9th)
• Prioritize by patient and therapist
phase
• Track starting amount used
• Record the date you verified the
information
• Automatically tracks toward KX
cap and MMR threshold

46. Critical Action #3:
Track the Cap and MMR Threshold
• Automated front desk alerts
• Therapist alerts
• Management alerts and
reports
• Authorized visit tracking for
MMR exceptions

47. Critical Action #4:
Follow the Exceptions Process
• Alerts when approaching $3700
MMR threshold
• Visit authorization tracking for
exceptions granted
• Task Management for
authorization tracking
• ABN alerts, automated ABN
creation

48. Critical Action #5:
Document Defensibly
• Required fields in documentation
templates
• Tag items as goals to automate
progress tracking
– Time dated
– Initial measure
– Progress ratings/ completion dates
– Track progress on functional goals and
outcomes measures
• Plan of Care and Progress Report
requirement tracking
• System generated reports with all
required elements
• Plan of Care physician certification
tracking

49. Critical Action #6:
Ensure Documentation Supports Claim
• Charges flow from therapist
documentation of procedures
• Time accurately converted to units,
applying CMS rounding rules
– Total treatment minutes and timed
minutes automatically included
– Apply 8 minute rule & unit caps per CMS
– Trim codes per CMS guidelines
• Built‐in CCI edits
• Alert to apply KX modifier when
necessary
– Constant reminder to document medical
necessity
• Fax evals and progress reports
directly to referring physician

50. In Summary
Requirements: How Clinicient Helps:
1 Track the Phase of Treating Therapist, According to NPI# Automated therapist phase tracking and alerts
Automated therapy cap tracking, single form for
2 Re‐Verify the Therapy Cap of Each Patient
all Medicare patients
Automated and accurate tracking of caps with
3 Accurately track the Cap and the Exceptions Threshold
alerts and KX modifier applications
4 Document Defensibly, Demonstrate Medical Necessity Goal tracking, required elements
Therapist time from documentation is accurately
5 Ensure Documentation Always Supports Claim
converted to units following CMS guidelines
Alerts for exceptions process; easy‐to‐produce
6 Follow the Exceptions Process
reporting

51. Resources and Questions
NEW LinkedIn Group: Twitter:
“PT and Rehab Compliance Group” #therapycap
Community group for sharing discussions and @nancybeckley
questions surrounding Medicare and compliance @clinicient
regulations
APTA PPS SHOW:
New Resource Page:
www.Clinicient.com/mmr‐resources/ Clinicient Booth: #226 & 127
Therapy Provider Phase Information Nancy Beckley:
Manual Medical Review Forms “Compliance Hot Topics”
Therapy Codes per CMS Roundtable Session: Friday 8:30 –
LinkedIn Group: PT and Rehab Compliance Group 9:30am
Therapy Cap FAQ from CMS
APTA FAQ: 2012 Medicare Therapy Cap “Profiling Your Organization: Where
CMS Guidelines on Therapy Services and Documentation is Your Risk?”
Saturday, 10:30am – 12:00pm

52. Contact Info
1‐877‐312‐6494
Nancy J. Beckley, MS, MBA, CHC www.Clinicient.com
President
Nancy Beckley & Associates LLC
nancy@nancybeckley.com Visit our website to
414‐748‐4376 • Learn More
• Schedule a Demo
• Get a Price Quote
Visit us at APTA PPS Show: Booth #
@nancybeckley
@clinicient
http://www.linkedin.com/in/nancybeckley
http://www.linkedin.com/company/clinicient