Billing and Coding: Psychiatric Inpatient Hospitalization

This article contains coding and other guidelines that complement the Local Coverage Determination (LCD) for Psychiatric Inpatient Hospitalization. 

National Coverage Provisions:

For services in an IPF (Inpatient Psychiatric Facility) to be designated as "active treatment," they must be:

• provided under an individualized treatment or diagnostic plan;
• reasonably expected to improve the patient's condition or for the purpose of diagnosis; and
• supervised and evaluated by a physician.

Such factors as diagnosis, length of hospitalization, and the degree of functional limitation, while useful as general indicators of the kind of care most likely being furnished in a given situation, are not controlling in deciding whether the care was active treatment. Refer to 42 CFR 482.61 on "Conditions of Participation for Hospitals" for a full description of what constitutes active treatment (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1).

The services must be provided in accordance with an individualized program of treatment or diagnosis developed by a physician in conjunction with staff members of appropriate other disciplines on the basis of a thorough evaluation of the patient's -strengths and disabilities. The plan of treatment must be recorded in the patient's medical record in accordance with 42 CFR 412.27(c)(3) and the Conditions of Participation for Hospitals in 42 CFR 482.61.

The services provided must reasonably be expected to improve the patient's condition or must be for the purpose of diagnostic study. It is not necessary that a course of therapy have as its goal the restoration of the patient to a level which would permit discharge from the institution although the treatment must, at a minimum, be designed both to reduce or control the patient's psychotic or neurotic symptoms that necessitated hospitalization and improve the patient's level of functioning (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.3.2).

The types of services which meet the above requirements would include not only psychotherapy, drug therapy, and electroconvulsive therapy, but also such therapeutic activities as occupational therapy, recreational therapy, and milieu therapy, provided the therapeutic activities are expected to result in improvement (as defined above) in the patient's condition. If the only activities prescribed for the patient are primarily diversional in nature ( i.e., to provide some social or recreational outlet for the patient), it would not be regarded as treatment to improve the patient's condition. In many large hospitals these adjunctive services are present and part of the life experience of every patient. In a case where milieu therapy, (or one of the other adjunctive therapies) is involved, it is particularly important that this therapy be a planned program for the particular patient and not one where life in the hospital is designated as milieu therapy (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.3).

In accordance with the above definition of improvement, the administration of antidepressant or tranquilizing drugs that are expected to significantly alleviate a patient's psychotic or neurotic symptoms would be termed active treatment (assuming that the other elements of the definition are met). However, the administration of a drug or drugs does not necessarily constitute active treatment. 

Physician participation in the services is an essential ingredient of active treatment. The services of qualified individuals other than physicians, e.g., social workers, occupational therapists, group therapists, attendants, etc., must be prescribed and directed by a physician to meet the specific needs of the individual. In short, the physician must serve as a source of information and guidance for all members of the therapeutic team who work directly with the patient in various roles. It is the responsibility of the physician to periodically evaluate the therapeutic program and determine the extent to which treatment goals are being realized and whether changes in direction or emphasis are needed. Such evaluation should be made on the basis of periodic consultations and conferences with therapists, reviews of the patient's medical record, and regularly scheduled patient interviews, at least once a week (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.3). 

When the physician periodically evaluates the therapeutic program to determine the extent to which treatment goals are being realized and whether changes in direction or emphasis are needed (based on consultations and conferences with therapists, review of the patient's progress as recorded on the medical record and the physician's periodic conversations with the patient), active treatment would be indicated. A finding that a patient is not receiving active treatment will not in itself preclude payment for physicians' services under Medicare Part B. As long as the professional services rendered by the physician are reasonable and necessary for the care of the patient, such services would be reimbursable under the medical insurance program. (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.3).

The period of time covered by the physician's certification is referred to a period of active treatment. This period should include all days on which inpatient psychiatric facility services were provided because of the individual's need for active treatment (not just the days on which specific therapeutic or diagnostic services are rendered). For example, a patient's program of treatment may necessitate the discontinuance of therapy for a period of time or it may include a period of observation, either in preparation for or as a follow-up to therapy, while only maintenance or protective services are furnished. If such periods were essential to the overall treatment plan, they would be regarded as part of the period of active treatment (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1).

The fact that a patient is under the supervision of a physician does not necessarily mean the patient is getting active treatment. For example, medical supervision of a patient may be necessary to assure the early detection of significant changes in his/her condition; however, in the absence of a specific program of therapy designed to effect improvement, a finding that the patient is receiving active treatment would be precluded (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1).

The program's definition of active treatment does not automatically exclude from coverage services rendered to patients who have conditions that ordinarily result in progressive physical and/or mental deterioration. Although patients with such diagnosis will most commonly be receiving custodial care, they may also receive services which meet the program's definition of active treatment (e.g., where a patient with Alzheimer's disease or Pick's disease received services designed to alleviate the effects of paralysis, epileptic seizures, or some other neurological symptom, or where a patient in the terminal stages of any disease received life- supportive care). A period of hospitalization during which services of this kind were furnished would be regarded as a period of active treatment. (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1).

Payment may be made for items and services furnished in or by a participating State or local government hospital, including a psychiatric or tuberculosis hospital, which serves the general community. A psychiatric hospital to which patients convicted of crimes are committed involuntarily is considered to be serving the general community if State law provides for voluntary commitment to the institution. However, payment may not be made for services furnished in or by State or local hospitals which serve only a special category of the population, but do not serve the general community, e.g., prison hospitals.

This policy does NOT address the following issues:

1. Life Time Limits and Spell of Illness Limits to psychiatric hospitalization services as defined by the CMS Publication 100-02, Medicare Benefit Policy Manual, Chapters 3 and 4. Nothing in this policy can be used to either expand or contract those limits; however, coverage may be denied for medical necessity reasons even though the beneficiary has not exhausted the life time limit or spell of illness limit for psychiatric hospitalization services.
2. Notice to Beneficiaries as described in CMS Publication 100-04, Medicare Claims Processing Manual, Chapter 1, Sections 60 – 60.1.1.
3. Psychiatric Advance Directives as defined in 42 CFR Section 482.13(b)(3). All requirements related to Psychiatric Advance Directives must be met as part of the Hospital Conditions of Participation for Patients Rights.
4. Chemical or Physical Restraints, Seclusion, or Behavior Management within a psychiatric plan of care. These issues are addressed extensively in the Hospital Patient's Rights Legislation published in 64 FR 36070, July 2, 1999. All applicable requirements described in this publication must be met.
5. Certification of Facilities as psychiatric hospitals, psychiatric Inpatient Units within a Psychiatric Institution, or Psychiatric Inpatient Units within a General Hospital as defined in CMS Publication 100-01, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 5, Sections 20.3, 20.4, 20.5, 20.6 and 20.7. All requirements described in the Medicare interpretive manuals apply.6. Items and Services Furnished, Paid for or Authorized by Governmental Entities as defined by CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 16, Section 50.3.1.

Coding Information:

Procedure codes may be subject to National Correct Coding Initiative (NCCI) edits or OPPS packaging edits. Refer to NCCI and OPPS requirements prior to billing Medicare.

For services requiring a referring/ordering physician, the name and NPI of the referring/ordering physician must be reported on the claim.

A claim submitted without a valid ICD-10-CM diagnosis code will be returned to the provider as an incomplete claim under Section 1833(e) of the Social Security Act.

The diagnosis code(s) must best describe the patient's condition for which the service was performed. For diagnostic tests, report the result of the test if known; otherwise the symptoms prompting the performance of the test should be reported.

Documentation Requirements:

Documentation that supports medical necessity and active treatment may take many forms. These documentation requirements are intended to help providers identify those documentation elements that will best support the medical necessity of the services they render. It is not expected that every item of these documentation requirements will appear in every record. Upon medical review, the IPF record will be reviewed as a whole, and services may be denied only if there is insufficient documentation to support the medical necessity of the claim.

The patient's medical record must contain documentation that fully supports the medical necessity for services included within the related LCD. (See "Indications and Limitations of Coverage.") This documentation includes, but is not limited to, relevant medical history, physical examination, and results of pertinent diagnostic tests or procedures.

The reasons for admission must be clearly documented as stated by the patient or others significantly involved, or both.

Listing an ICD-10-CM code in the Mental Disorders category (F01- F99) does not assure coverage of the specific service. Upon medical review, coverage criteria specified in the related Local Coverage Determination shall be applied to the entire medical record to determine medical necessity.

Medicare contractors may automatically deny a claim without any manual review if a National Coverage Determination (NCD) or a Local Coverage Determination (LCD) specifies the circumstances under which a service is denied and those circumstances exist, or the service is specifically excluded from Medicare coverage by statute.

Inpatient Psychiatric Facility Services Certification and Recertification Requirements:

The physician's recertification should state:

1. That inpatient psychiatric hospital services furnished since the previous certification or recertification were, and continue to be, medically necessary for either:
   
   
   1. Treatment which could reasonably be expected to improve the patient's condition;
      
      
   2. Diagnostic study;
2. The hospital records indicate that the services furnished were either intensive treatment services, admission and related services necessary for diagnostic study, or equivalent services, and

1. Effective July 1, 2006, physicians will also be required to include a statement recertifying that the patient continues to need, on a daily basis, active treatment furnished directly by or requiring the supervision of inpatient psychiatric facility personnel.

For convenience, the period covered by the physician's certification and recertification is referred to a period during which the patient was receiving active treatment. If the patient remains in the hospital but the period of "active treatment" ends (e.g., because the treatment cannot reasonably be expected to improve the patient's condition, or because intensive treatment services are not being furnished), program payment can no longer be made even though the patient has not yet exhausted his/her benefits. Where the period of "active treatment" ends, the physician is to indicate the ending date in making his recertification. If "active treatment" thereafter resumes, the physician should indicate, in making his recertification, the date on which it resumed (CMS Publication 100-01, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 4, Section 10.9)

Initial Psychiatric Evaluation:

The initial psychiatric evaluation with medical history and physical examination should be performed within 24 hours of admission, but in no case later than 60 hours of admission, in order to establish medical necessity for psychiatric inpatient hospitalization services. In order to support the medical necessity of admission, the documentation in the initial psychiatric evaluation should include, whenever available, the following items:

• Patient’s chief complaint;
• Description of acute illness or exacerbation of chronic illness requiring admission;
• Current medical history, including medications and evidence of failure at or inability to benefit from a less intensive, outpatient program;
• Past psychiatric and medical history;
• History of substance abuse;
• Family, vocational and social history;
• Mental status examination, including general appearance and behavior, orientation, affect, motor activity, thought content, long and short term memory, estimate of intelligence, capacity for self harm and harm to others, insight, judgment, capacity for activities of daily living (ADLs);
• Physical examination;
• Formulation of the patient’s status, including an assessment of the reasonable expectation that the patient will make timely and significant practical improvement in the presenting acute symptoms as a result of the psychiatric inpatient hospitalization services; and
• ICD-10-CM/DSM-5™ diagnoses, including all five axes of the multiaxial assessment as described in the DSM-5™.

A team approach may be used in developing the initial psychiatric evaluation and the plan of treatment (see “Plan of Treatment” section below), but the physician (MD/DO) must personally document the mental status examination, physical examination, diagnosis, and certification. It will not always be possible to obtain all the suggested information at the time of evaluation. In such cases, the limited information that is obtained and documented, must still be sufficient to support the need for an inpatient level of care.

Physician Orders:
Physician orders should include, but are not limited to, the following items:

1. The types of psychiatric and medical therapy services and medications;
2. Laboratory and other diagnostic testing;
3. Allergies;
4. Provisional diagnosis(es); and
5. Types and duration of precautions (e.g., constant observation X 24 hours due to suicidal plans, restraints).

Plan of Treatment:
The Plan of Treatment is the tool used by the physician and multi-disciplinary treatment team to implement the physician-ordered services and move the patient toward the expected outcomes and goals. Although the Plan of Treatment is a requirement, the format and specific items to be included are up to the provider. Documentation of the parameters below is suggested to support the medical necessity for the inpatient services throughout the patient’s stay.

1. This individualized, comprehensive, outcome-oriented plan of treatment should be developed:
   
   1. within the first three (3) program days after admission;
   2. by the physician, the multidisciplinary treatment team, and the patient; and should be
   3. based upon the problems identified in the physician’s diagnostic evaluation, psychosocial and nursing assessments.
2. The treatment plan should include:
   1. the specific treatments ordered, including the type, amount, frequency, and duration of the services to be furnished;
   2. the expected outcome for each problem addressed; and
   3. contain outcomes that are measurable, functional, time-framed, and directly related to the cause of the patient’s admission.
3. Treatment plan updates should show the treatment plan to be reflective of active treatment, as indicated by documentation of changes in the type, amount, frequency, and duration of the treatment services rendered as the patient moves toward expected outcomes. Treatment plan updates should be documented at least weekly, as the physician and treatment team assess the patient’s current clinical status and make necessary changes. Lack of progress and its relationship to active treatment and reasonable expectation of improvement should also be noted.
   
   
4. The initial treatment plan and updated plans must be signed by the physician and those mental health professionals contributing to the treatment plan.

Progress Notes:

General:
A separate progress note should be written for each significant diagnostic and therapeutic service rendered and should be written by the team member rendering the service. Although each progress note may not contain every element, progress notes should include a description of the nature of the treatment service, the patient’s status (behavior, verbalizations, mental status) during the course of the service, the patient’s response to the therapeutic intervention and its relation to the long or short term goals in the treatment plan. Each progress note should be legible, dated and signed, and include the credentials of the rendering provider. It should be clear from the progress notes how the particular service relates to the overall plan of care.

Physician Progress Notes:
Physician progress notes should be recorded at each patient encounter and contain pertinent patient history, changes in signs and symptoms, with special attention to changes to the patient’s mental status, and results of any diagnostic testing. The notes should also include an appraisal of the patient’s status and progress, and the immediate plans for continued treatment or discharge. The course of the patient’s inpatient diagnostic evaluation and treatment should be able to be inferred from reading the physician progress notes.

Individual and Group Psychotherapy and Patient Education and Training Progress Notes:
Individual and group psychotherapy and patient education and training progress notes should describe the service being rendered, (i.e., name of group, group type, brief description of the content of the individual session or group), the patient’s communications, and response or lack of response to the intervention. Each progress note should reflect the particular characteristics of the therapeutic/educational encounter to distinguish it from other similar interventions.

Discharge Plan:
It is expected as a matter of good quality of care that careful discharge planning occur to enable a successful transition to outpatient care.