RAC Review of KX Modifier Claims: Answering the ADR

On April 15, 2026, CMS approved RAC topic 0228, a nationwide complex review of therapy claims billed with the KX modifier, covering PT, OT, and SLP codes billed by outpatient hospitals and professional-service providers under all A/B MAC jurisdictions, per the CMS Approved RAC Topics list and the topic 0228 detail page. Complex review means a RAC sends an ADR and a licensed reviewer reads the chart, unlike the older topic 0060 automated review. If you’ve billed KX this year, those claims are inside its scope.

The mechanics run on a clock separate from whether KX was clinically appropriate. You get 45 calendar days to respond to the ADR (42 CFR 405.929), 30 calendar days for a discussion period if the RAC finds an improper payment, and 15 days after the MAC’s demand letter for a rebuttal. Recoupment can start as early as day 41 unless a redetermination is filed by day 30 (42 CFR 405.379). The five appeal levels each carry their own filing deadline, 120, 180, 60, 60, and 60 days, with dollar thresholds at levels 3 and 5.

Current as of September 2026.

What is RAC topic 0228 and which therapy codes does it cover?

CMS describes topic 0228 this way: “Documentation will be reviewed to determine if therapy meets Medicare coverage criteria, meets applicable coding guidelines, and/or is medically reasonable and necessary. Appropriate use of modifier KX will be evaluated. Use of modifier KX indicates that the clinician attests that services at, and above, the therapy threshold are medically necessary and reasonable, with justification for continued therapy documented in the patient’s medical record” (topic 0228 detail page).

Affected codes by discipline:

Topic 0228 is a complex review: a qualified individual reads the record before a determination, unlike an automated review run against the claims system with no record request, such as the topic 0060 edit capping untimed codes at one unit per date (RAC program page).

Five RAC regions split the work: Performant Recovery runs Regions 1 and 2, Cotiviti runs 3 through 5; Regions 1 through 4 handle the Part A/B reviews topic 0228 falls under (RAC program page, above). Selection must be targeted by data analysis, never random or by dollar amount alone, and lookback caps at three years before the ADR letter date, per the RAC SOW, which also permits CMS-approved extrapolation.

RAC complex review vs. targeted medical review vs. TPE: what’s the difference?

The $3,000 MR threshold’s funding is statutorily walled off from the RAC program: it “may not be used by a contractor under section 1395ddd(h)” (the RAC authority) “for medical reviews” (42 U.S.C. 1395l(g)(7)). Nothing bars a provider from sitting in TPE while a RAC issues an ADR the same year; they’re different authorities and can overlap (a MAC can start TPE on RAC referral, and a failed TPE round can lead to RAC referral, per PIM §3.2.5). The one structural protection, the RAC ADR limit, applies only to RAC requests.

How many records can a RAC request? (ADR limits)

For physicians and non-physician practitioners, the limit is per TIN plus servicing-provider ZIP-3, by group size:

CMS can let a RAC exceed the cap, and a group whose billed provider count differs sharply from actual staffing can petition for a modified limit (ADR limits).

Institutional providers work off a percentage: 0.5 percent of paid claims over the prior 12 months, divided by eight per 45-day cycle. After three cycles CMS recalculates by denial rate: 0 to 3 percent means no reviews for three cycles; higher rates scale up to ten times baseline at 91 to 100 percent (institutional ADR limits). CMS-required reviews referred by MACs, UPICs, or investigators sit outside these limits (institutional ADR limits, above; CMS Approved RAC Topics list).

What does the ADR ask for, and how long do you have to respond?

You have 45 calendar days from the ADR date to submit documentation (42 CFR 405.929); the contractor may accept later documentation for good cause (a natural disaster, an interruption in business practices, or similar). The regulation has no extension mechanism; CMS’s only guidance is to “work with your designated MAC if additional time is needed” (CMS ADR page), so ask before day 45 and keep the correspondence. A UPIC ADR runs a shorter 30-day clock.

The letter goes to the practice address on file, so keep the “Medical Review Correspondence Address” current in PECOS. Documentation can go by mail, fax, CD/DVD/USB, esMD, or your MAC’s portal; via esMD, the receipt date is the esMD Cloud receipt date, or the next business day outside normal hours (PIM §3.2.3.2.C). Attach the ADR letter as the first page, and expect to include documentation from before the review period, such as an evaluation and plan of care that predate the dates of service under review (CMS ADR page, above).

What must a KX claim’s record show?

Reviewers weigh the record as a whole, “so that the absence of an individual item of documentation does not negate the medical necessity of a service when the documentation as a whole indicates the service is necessary” (BPM Ch. 15, §220.3.A). Five categories are expected (§220.3.B):

KX itself is an attestation: adding it means the clinician “attests that services are medically necessary and justification is documented in the medical record” (CPM Ch. 5, §10.3.A), though “the clinician’s opinion is not binding on the Medicare contractor” (§10.3.B); an optional ADR summary is allowed. Using KX too early is flagged as “abusive,” for example “for low cost services early in an episode when there is no evidence of a previous episode that might have exceeded” the threshold (§10.3.D; pre-2018 “cap” language, but the attestation carried over). On institutional claims, once one line crosses, KX belongs on every line in that bucket, PT/SLP together or OT (§10.3.D).

Treatment notes must also record total timed-code minutes and treatment time per date of service, a detail our documentation requirements guide covers line by line. Where progress plateaus, document why: reviewers expect “the reasons for lack of progress be noted and the justification for continued treatment be documented” (§220.3.B).

What happens if you miss the 45-day ADR deadline?

Silence produces a denial, not a delay. Missed documentation (absent good cause) gets denied as not reasonable and necessary: group code CO, reason code 50, remark code M127 (PIM §3.2.3.8). Two or more unanswered ADRs is a “pattern” that lets the MAC put all of a provider’s claims on medical record review (PIM §3.7, a MAC rule).

The denial isn’t final. Submit documentation later and request a redetermination, and the MAC must process it as a reopening, not a refusal (42 CFR 405.980(a)(2)). Documentation within about 15 days of denial gives the MAC discretion, not an obligation, to reopen it (PIM §3.2.3.9, a MAC rule). The RAC’s own window is broader: 1 year for any reason, 4 years for good cause, no limit for fraud (405.980(b)).

After the results letter: discussion period, rebuttal, or appeal?

The RAC has 30 calendar days after receiving records to send a results letter, with a possible CMS-approved extension. Every complex review gets one, including no-finding results; an improper-payment letter must cite the specific coverage or coding basis (RAC SOW).

From that letter, you have 30 calendar days to request a discussion period with the RAC, in writing, before the claim moves to the MAC. The RAC confirms receipt within one business day, offers a peer-to-peer on request, and reviews everything submitted, plus the ADR response, in totality. Once the claim has moved to the MAC, a late request is invalid (RAC SOW, above).

If the finding survives, the MAC issues the demand letter and applies the overpayment. From that letter, you have 15 calendar days to submit a rebuttal to the MAC, not the RAC. It’s explicitly “not an appeal”: the MAC’s determination “is not an initial determination and is not appealable,” and it doesn’t delay recoupment past the notice date (42 CFR 405.374; 405.375).

When does Medicare actually take the money back?

This comes from Section 935 of the Medicare Modernization Act of 2003, codified at SSA §1893(f)(2) and implemented at 42 CFR 405.379. If an overpayment is later reversed, the recouped amount is adjusted and the “935 interest” repaid (FMM §200.5). Once recoupment resumes after reconsideration, the alternative is to pay in full or request an Extended Repayment Schedule (FMM §200.4.4).

The five Medicare appeal levels and their deadlines

Deadlines run from receipt of the prior decision (CMS appeals overview; 42 CFR 405.942–405.1136), presumed 5 calendar days after the notice date. At level 2, be deliberate: documentation not filed at reconsideration can be excluded later absent good cause. AIC for an overpayment appeal is the demand-letter amount, or, if extrapolated, the total estimated overpayment (405.1006(d)(4)); claims can be aggregated when they share common issues or similar services (405.1006(e)). Good cause for late filing follows the examples in 405.942(b): serious illness, records destroyed by fire or accident, incorrect filing information from the contractor, or never receiving the notice.

Pre-audit self-check for claims that carried KX this year

1. KX appended only where the claim could reasonably exceed the threshold; early-episode use on low-cost services is “abusive” (CPM §10.3.D).
2. Institutional claims: KX on every line in the same bucket once one line crosses (§10.3.D).
3. All five document types exist per KX episode: eval/plan of care, certification/recertification, progress reports, treatment notes, optional justification statement (BPM §220.3.B).
4. Progress reports and treatment notes entered within a week of the period covered, where required (§220.3.B).
5. Certifications and recertifications signed and on file; they are required for payment whenever records are requested after they were due (§220.3.B).
6. Objective measures support progress; plateaus carry a documented rationale (§220.3.B).
7. Untimed codes at no more than one unit per date of service (topic 0060).
8. PECOS correspondence address current (CMS ADR page).
9. Registered for esMD (PIM §3.2.3.1).
10. Know your TIN/ZIP practitioner count and 45-day ADR cap (ADR limits).
11. Remember the three-year RAC lookback; retain records accordingly.

Check accrued dollars per beneficiary against the threshold in our KX threshold guide. That threshold is about to move: the CY2027 proposed rule sets it at $2,540 for PT/SLP combined and OT, a 2.5 percent MEI increase on the CY2026 $2,480, rounded to the nearest $10 (proposed rule). That’s proposed, not final; CMS sets the final figure in the CY2027 PFS final rule. The $3,000 targeted MR threshold holds through CY2027 either way. See our CY2027 fee schedule guide for what else is proposed.

None of this changes what a reviewer can ask for, but it changes how ready your record is. PrismEHR tracks accrued therapy dollars per beneficiary against the KX threshold as visits are documented, and lets organizations define their own billing rules, including minute and unit restrictions, enforced at documentation and reinforced again at claim creation. Units default to zero on every visit rather than prefilling from the prior one, so a note can’t quietly inherit someone else’s minutes. See how it fits physical therapy practices.