Change to Payment Liability for Therapy Cap Denials

May 26, 2013
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Rick Gawenda
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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”).

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 January 1, 2014.

Since Medicare’s payment amount for these claims is correct, 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. Instead, therapy providers should review any therapy cap denials for dates of service on or after January 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). Click HERE to read it straight from CMS.


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This article is not intended to and does not serve as legal advice or as consultative services, but is for general information purposes only.

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