CMS Partners with StrategicHealthSolutions to Perform Targeted Manual Medical Reviews

30 Jun 2016

The Centers for Medicare & Medicaid Services (CMS) has contracted with StrategicHealthSolutions, a Supplemental Medical Review/Specialty Contractor (SMRC) to assist with lowering improper payment rates and increasing efficiencies of the medical review functions of the Medicare and Medicaid programs, including the manual medical review process for therapy expenditures above the $3,700 therapy thresholds.  As you may recall, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) modified the requirement for manual medical review for services over the $3,700 thresholds.  Previously, the process was automatically triggered when a beneficiary’s therapy expenditures exceeded the $3,700 threshold for physical and speech therapy combined and/or $3,700 threshold for occupational therapy.  MACRA eliminated the requirement for manual medical review of all claims exceeding the thresholds and instead allows for a more targeted review process.


Before we get into we know about the manual medical review process at this point, let’s quickly review some basics regarding the therapy caps, the KX modifier, and the $3,700 thresholds.  For 2016, there is a $1,960 cap for physical and speech therapy combined and a separate $1,960 cap for occupational therapy.  MACRA extended through December, 2017 the therapy cap exceptions process which allows patients to receive medically necessary care beyond those caps.  Providers who feel the patient can benefit from continued, skilled services can submit a KX modifier on the claims to indicate that while the patient has exceeded the cap, the services billed are reasonable and necessary, require the skills of a therapist, and are justified by appropriate documentation.  There is no diagnosis requirement for this automatic exception.

In addition to the therapy caps, there are also separate $3,700 thresholds for physical/speech therapy combined and occupational therapy at which point the claims may be subjected to manual medical review.  If the patient still requires skilled care beyond the threshold, the provider can continue to use the KX modifier on the claims as long as the need for continued services is supported in the documentation.  There is no pre-approval process nor does the provider have to proactively submit documentation for review in order to continue care beyond the threshold.

If the provider feels the patient no longer requires skilled intervention or that additional care cannot be justified in the documentation, the patient should be discharged from care.  If the patient wants to continue to receive therapy services at that point, he/she should be given an Advanced Beneficiary Notice (ABN) explaining why additional care would be denied as not medically necessary.  Therapists must issue a valid ABN to the beneficiary before providing services when the therapist believes that Medicare will deny a service because it is not reasonable and necessary, such as when the patient has exceeded the therapy cap and continued services don’t qualify under the exceptions process.  It is important to remember that providers must not issue the ABN to all beneficiaries who receive services that exceed the cap amount, only to those whose services the provider believes do not meet the Medicare definition of “reasonable or necessary.”  If the provider submits a claim with the KX modifier for an exception to the therapy cap, he or she is attesting that the services are reasonable and necessary and no ABN is necessary.


As stated above, CMS has tasked Strategic Health Solutions as the Supplemental Medical Review Contractor (SMRC) with performing medical reviews on a post-payment basis.  According to CMS, the SMRC will be selecting claims for review based on:

  • Providers with a high percentage of patients receiving therapy beyond the threshold as compared to their peers during the first year of MACRA.
  • Therapy provided in skilled nursing facilities (SNFs), therapists in private practice, and outpatient physical therapy or speech-language pathology providers (OPTs) or other rehabilitation providers

Additionally, CMS has stated that the medical review process will also include the evaluation of the number of units/hours of therapy provided in a day.

The SMRC will request documentation from providers through the mailing of Additional Documentation Request (ADR) letters and will be limited to requesting 40 claims per provider.  The review contractor has 45 days to review the claims and medical records and to issue a determination to the provider.  Once the medical review project is completed, providers will receive a Review Results Letter containing information regarding the claim(s) and the specific review findings associated with these claim(s).


The SMRC does offer an opportunity for a Discussion/Education Period as a result of the medical review findings.  The Discussion/Education Period is intended to allow for the review of specific claim denials, deliver rationale and education for the determination(s), and provide information on how the denial can be avoided in the future.  If the provider determines there is additional information relevant to supporting payment of the denied claim(s), the provider may submit the additional documentation.  The SMRC will allow 30 days from the date on the Review Results Letter for receipt of a Discussion/Education period request and related information and/or documentation.

Upon receipt and review of a provider’s Discussion Period request, the SMRC will determine if a teleconference is required or if a complete and appropriate response can be provided in the Discussion/Education Findings Letter.  If a teleconference is elected, the provider will be contacted by the SMRC to arrange a date and time for the teleconference. Claim determinations may be overturned or upheld as a result of the Discussion/Education Period.  A Findings Letter will be sent to the provider detailing the outcome of each Discussion/Education Period.

Any denials not resolved during the discussion period will be turned over to the applicable Medicare Administrative Contractor (MAC) for recoupment at which time the provider can appeal the SMRC’s determination.


Requests for a Discussion/Education Period must be submitted in writing to the SMRC and should include:

  • Provider name
  • National Provider Identifier (NPI)
  • Provider representative
  • Phone number
  • Fax number
  • Number of claims submitted with request

For each claim submitted with the request, providers should include:

  • Project sample ID
  • Beneficiary’s name
  • Beneficiary’s date of birth
  • Claim number
  • Date(s) of service

(This information can be found in the Review Results Letter.)

Providers should attach a copy of the Review Results Letter for the project in question, indicating which claims the provider would like included in the Discussion Period.  A provider may submit the written request, rationale to support the provider’s position, and accompanying documentation by mail or fax.  Requests for Discussion Periods received after the designated time frames will be considered invalid and will not be scheduled.  Additionally, when additional information and/or documentation is received after the 30-day submission time has passed, providers will be notified in writing that the documentation will not be reviewed, and the submission is invalid.

Going forward, providers should familiarize themselves with the revised process and be on the lookout for ADRs for patients who have exceeded the $3,700 threshold.  An example of a request for a Discussion/Education Period can be found here.  Information on ADRs and instructions for submitting medical records and requested documentation can be found here.

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