On July 10, the United States Government Accountability Office (GAO) released a report to Congress about the implementation of the 2012 manual medical review (MMR) for Medicare outpatient therapy.
According to the report, in 2011, Medicare paid about $5.7 billion to provide outpatient therapy services for 48 million beneficiaries. This report describes the Center for Medicare & Medicaid Services’ (CMS) implementation of the 2012 MMR process, and the number of individuals and claims subject to MMRs and the outcomes of these reviews.
GAO reviewed relevant statutes, CMS policies and guidance, and CMS data on these reviews. GAO also interviewed CMS staff and officials from three Medicare Administrative Contractors (MACs) that accounted for almost 50 percent of the MMR workload and that processed claims for states previously determined to be at a higher risk for outpatient therapy improper payments.
The report found that CMS had implemented two types of MMR — reviews of preapproval requests and reviews of claims submitted without preapproval — for all outpatient therapy services that were above a $3,700 per-beneficiary threshold provided during the last three months of 2012. However, CMS did not issue complete guidance on how to process preapproval requests before the implementation of the MMR process in October 2012, and the MAC that conducted the MMRs were unable to fully automate systems for tracking preapproval requests in the time allotted.
CMS required the MACs to manually review preapproval requests within 10 business days of receipt of all supporting documentation to determine whether the services were medically necessary, and to automatically approve any requests they were unable to review within that time frame. CMS officials told GAO that the purpose of the preapproval process was to protect beneficiaries from being liable for payment for nonaffirmed services by giving the provider and beneficiary guidance as to whether Medicare would pay for the requested services. If a provider delivered services without submitting a preapproval request, the MACs were required to manually review submitted claims above the $3,700 threshold prior to payment within 60 days of receiving the needed documentation. The MACs faced particular challenges with implementing reviews of preapproval requests because CMS continued to issue new guidance on how to manage preapproval requests after the MMR process started. For example, CMS did not inform the MACs how to process incomplete requests or count the 10-day preapproval request review time frame until November 7, 2012, and the MACs initially handled requests differently.