Local Coverage Determination (LCD)

Psychiatric Inpatient Hospitalization


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Proposed LCD
Proposed LCDs are works in progress that are available on the Medicare Coverage Database site for public review. Proposed LCDs are not necessarily a reflection of the current policies or practices of the contractor.

Document Note

Note History

Contractor Information

LCD Information

Document Information

Source LCD ID
Original ICD-9 LCD ID
Not Applicable
LCD Title
Psychiatric Inpatient Hospitalization
Proposed LCD in Comment Period
Source Proposed LCD
Original Effective Date
For services performed on or after 10/01/2015
Revision Effective Date
For services performed on or after 11/14/2019
Revision Ending Date
Retirement Date
Notice Period Start Date
Notice Period End Date

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Issue Description
Issue - Explanation of Change Between Proposed LCD and Final LCD

CMS National Coverage Policy

Language quoted from Centers for Medicare and Medicaid Services (CMS), National Coverage Determinations (NCDs) and coverage provisions in interpretive manuals is italicized throughout the policy. NCDs and coverage provisions in interpretive manuals are not subject to the LCD Review Process (42 CFR 405.860[b] and 42 CFR 426 [Subpart D]). In addition, an administrative law judge may not review an NCD. See Section 1869(f)(1)(A)(i) of the Social Security Act.

Unless otherwise specified, italicized text represents quotation from one or more of the following Centers for Medicare and Medicaid Services (CMS) sources:

Title XVIII of the Social Security Act (SSA):

Section 1812(a)(1) Inpatient hospital services defined.

Section 1812(b)(3) Lifetime limit of 190 days for inpatient psychiatric benefit days.

Section 1814(4) Medical Records document that services were furnished while the individual was receiving intensive treatment, admission and related services for a diagnostic study, or equivalent services requirement.

Section 1833(e) prohibits Medicare payment for any claim which lacks the necessary information to process the claim.

Section 1835(a) Physician certification as a requirement.

Section 1861(a), 1861(c), and 1861(f) "Spell of illness", "inpatient psychiatric hospital services", "psychiatric hospital", "medical and other health services" defined.

Section 1862(a)(1)(A) excludes expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.

Code of Federal Regulations:

42 CFR Section 409.62 describes the lifetime maximum on inpatient psychiatric care.

42 CFR Section 410.32 indicates that diagnostic tests may only be ordered by the treating physician (or other treating practitioner acting within the scope of his or her license and Medicare requirements).

42 CFR Section 411.4(a) states that the Medicare Program does not pay for services if the beneficiary has no legal obligation to pay.

42 CFR Section 411.8(a) states that the Medicare Program does not pay for services if the services are paid for directly or indirectly by a governmental entity.

CMS Publications:

CMS Publication 100-01, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 4:

    10 Certification and Recertification by Physicians for Hospital Services - General
    10.1 Failure to Certify or Recertify for Hospital Services
    10.2 Who May Sign Certification or Recertification
    10.4 Inpatient Hospital Services Certification and Recertification
    10.5 Selection by Hospital of Format and Method for Obtaining Statement
    10.9 Inpatient Psychiatric Facility Hospital Services Certification and Recertification
    20.2 Timing for Certification and Recertification for a Beneficiary Admitted Before Entitlement

CMS Publication 100-01, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 5:

    20.3 Psychiatric Hospital
    20.4 Certification of Parts of Institutions as a Psychiatric Hospital
    20.5 Part of a Psychiatric Institution as a Psychiatric Hospital
    20.6 General Hospital Facility of Psychiatric Hospital
    20.7 Part of a General Hospital as a Psychiatric Hospital

CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2

    10 Inpatient Psychiatric Facility Services
    10.1 Background
    10.2 Statutory Requirements
    10.3 Affected Medicare Providers
    20 Admission Requirements
    30 Medical Records Requirements
    30.1 Development of Assessment/Diagnostic Data
    30.2 Psychiatric Evaluation
    30.2.1 Certification and Recertification Requirements Certification Recertification
    30.2.2 Active Treatment Principles for Evaluating a Period of Active Treatment
    30.2.3 Services Supervised and Evaluated by a Physician
    30.3 Treatment Plan
    30.3.1 Individualized Treatment or Diagnostic Plan
    30.3.2 Services Expected to Improve the Condition or for Purpose of Diagnosis
    30.4 Recording Progress
    30.5 Discharge Planning and Discharge Summary
    40 Personnel Requirements
    40.1 Director of Inpatient Psychiatric Services; Medical Staff
    40.2 Nursing Services
    50 Psychological Services
    60 Social Services
    70 Therapeutic Activities
    80 Benefit Application
    90 Benefits Exhaust

CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 4:

    10 Inpatient Psychiatric Benefit Days Reduction
    10.1 Patient Status on Day of Entitlement
    10.2 Institution's Status in Determining Days Deducted
    20 Days of Admission, Discharge, and Leave
    30 Reduction for Psychiatric Services in General Hospitals
    40 Determining Days Available
    50 Inpatient Psychiatric Hospital Services – Lifetime Limitation

CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 16:

    50.3.1Application of Exclusion to State and Local Government Providers

CMS Publication 100-03, Medicare National Coverage Determinations (NCD) Manual, Chapter 1:

    30.4 Electrosleep Therapy
    30.5 Transcendental Meditation
    70.1 Consultations with a Beneficiary's Family and Associates
    130.1 Inpatient Hospital Stays for the Treatment of Alcoholism
    130.3 Chemical Aversion Therapy for Treatment of Alcoholism
    130.4 Electrical Aversion Therapy for Treatment of Alcoholism (Electroversion Therapy, Electro-shock Therapy, Noxious Faradic Stimulation)
    130.6 Treatment of Drug Abuse (Chemical Dependency)
    130.8 Hemodialysis for Treatment of Schizophrenia
    160.25 Multiple Electroconvulsive therapy (MECT)
    230.4 Diagnosis and Treatment of Impotence

CMS Publication 100-04, Medicare Claims Processing Manual, Chapter 1:

    10.4 Claims Submitted for Items or Services Furnished to Medicare Beneficiaries in State or Local Custody Under a Penal Authority

CMS Publication 100-04, Medicare Claims Processing Manual, Chapter 3:

    30.1 Requirements for CAH Services, CAH Skilled Nursing Care Services and Distinct Part Units

CMS Publication 100-04, Medicare Claims Processing Manual, Chapter 29:

    230 Where to Appeal and Initial Determinations

Coverage Guidance

Coverage Indications, Limitations, and/or Medical Necessity


Inpatient psychiatric hospitalization provides twenty four (24) hours of daily care in a structured, intensive, and secure setting for patients who cannot be safely and/or adequately managed at a lower level of care. This setting provides daily physician (MD/DO) supervision, twenty-four (24) hour nursing/treatment team evaluation and observation, diagnostic services, and psychotherapeutic and medical interventions.

Inpatient psychiatric care may be delivered in a Psychiatric Hospital, a Psychiatric Hospital Acute Care Unit within a Psychiatric Institution, or a Psychiatric Inpatient Unit within a General Hospital.


Medicare patients admitted to inpatient psychiatric hospitalization must be under the care of a physician who is knowledgeable about the patient. The physician must certify/recertify (see "Documentation Requirements" section in the related Billing and Coding Article) the need for inpatient psychiatric hospitalization. The patient must require "active treatment" of his/her psychiatric disorder. The patient or legal guardian must provide written informed consent for inpatient psychiatric hospitalization in accord with state law. If the patient is subject to involuntary or court-ordered commitment, the services must still meet the requirements for medical necessity in order to be covered by Medicare.

Admission Criteria (Intensity of Service):
The patient must require intensive, comprehensive, multimodal treatment including 24 hours per day of medical supervision and coordination because of a mental disorder. The need for 24 hours of supervision may be due to the need for patient safety, psychiatric diagnostic evaluation, potential severe side effects of psychotropic medication associated with medical or psychiatric comorbidities, or evaluation of behaviors consistent with an acute psychiatric disorder for which a medical cause has not been ruled out.

The acute psychiatric condition being evaluated or treated by inpatient psychiatric hospitalization must require active treatment, including a combination of services such as intensive nursing and medical intervention, psychotherapy, occupational and activity therapy. Patients must require inpatient psychiatric hospitalization services at levels of intensity and frequency exceeding what may be rendered in an outpatient setting, including psychiatric partial hospitalization. There must be evidence of failure at, inability to benefit from, or unacceptable risk in an outpatient treatment setting. Claims for care delivered at an inappropriate level of intensity will be denied.

The following parameters are intended to describe the severity of illness and intensity of service that characterize a patient appropriate for inpatient psychiatric hospitalization. These criteria do not represent an all-inclusive list and are intended as guidelines.

Admission Criteria (Severity of Illness):
Examples of inpatient admission criteria include (but are not limited to):

  1. Threat to self requiring 24-hour professional observation
    1. suicidal ideation or gesture within 72 hours prior to admission
    2. self mutilation (actual or threatened) within 72 hours prior to admission
    3. chronic and continuing self destructive behavior (e.g., bulemic behaviors, substance abuse) that poses a significant and/or immediate threat to life, limb, or bodily function.
  2. Threat to others requiring 24-hour professional observation:
    1. assaultive behavior threatening others within 72 hours prior to admission.
    2. significant verbal threat to the safety of others within 72 hours prior to admission.
  3. Command hallucinations directing harm to self or others where there is the risk of the patient taking action on them.
  4. Acute disordered/bizarre behavior or psychomotor agitation or retardation that interferes with the activities of daily living (ADLs) so that the patient cannot function at a less intensive level of care during evaluation and treatment.
  5. Cognitive impairment (disorientation or memory loss) due to an acute Axis I disorder that endangers the welfare of the patient or others.
  6. For patients with a dementing disorder for evaluation or treatment of a psychiatric comorbidity (e.g., risk of suicide, violence, severe depression) warranting inpatient admission.
  7. A mental disorder causing major disability in social, interpersonal, occupational, and/or educational functioning that is leading to dangerous or life-threatening functioning, and that can only be addressed in an acute inpatient setting.
  8. A mental disorder that causes an inability to maintain adequate nutrition or self-care, and family/community support cannot provide reliable, essential care, so that the patient cannot function at a less intensive level of care during evaluation and treatment.
  9. Failure of outpatient psychiatric treatment so that the beneficiary requires 24-hour professional observation and care. Reasons for the failure of outpatient treatment could include:
    1. Increasing severity of psychiatric symptoms;
    2. Noncompliance with medication regimen due to the severity of psychiatric symptoms;
    3. Inadequate clinical response to psychotropic medications;
    4. Due to the severity of psychiatric symptoms, the patient is unable to participate in an outpatient psychiatric treatment program.

NOTE: For all symptom sets or diagnoses, the severity and acuity of symptoms and the likelihood of response to treatment, combined with the requirement for an intensive, 24-hour level of care, are the significant factors in determining the necessity of inpatient psychiatric treatment.

Active Treatment:

The use of mild tranquilizers or sedatives solely for the purpose of relieving anxiety or insomnia would not constitute active treatment.

Although it is a CMS requirement that the physician see the patient at least once per week, this is a dated reference, referring to a time when patients were hospitalized for long periods of time. The current standard of practice is that the physician usually sees the patient five times per week.

Discharge Criteria (Intensity of Service):
Patients in inpatient psychiatric care may be discharged by stepping down to a less intensive level of outpatient care. Stepping down to a less intensive level of service than inpatient hospitalization would be considered when patients no longer require 24-hour observation for safety, diagnostic evaluation, or treatment as described above. These patients would become outpatients, receiving either psychiatric partial hospitalization or individual outpatient mental health services, rendered and billed by appropriate providers. It may be appropriate for some patients to receive an unsupervised pass to leave the hospital for a brief period in order to assess their readiness for outpatient care.

Discharge Criteria (Severity of Illness):
Patients whose clinical condition improves or stabilizes, who no longer pose an impending threat to self or others, and who do not still require 24-hour observation available in an inpatient psychiatric unit should be stepped down to outpatient care. Patients who are persistently unwilling or unable to participate in active treatment of their psychiatric condition would also be appropriate for discharge.

Qualified Providers:
For Medicare coverage, inpatient psychiatric diagnostic and psychotherapy services rendered to Medicare beneficiaries must be provided by individuals licensed or otherwise authorized by the state in which they practice, to render such services. While non-licensed trainees may provide psychotherapy services as part of a training program, those psychotherapy services rendered by individuals not licensed or authorized by the state will be considered not medically necessary, and may contribute to the denial of inpatient psychiatric claims. The majority of psychotherapy services must be provided by licensed personnel to assure a satisfactory patient outcome and Medicare coverage. Non-physician practitioners, licensed or authorized by the state, may perform duties within their scope of practice, such as individual and/or group psychotherapy, family counseling, occupational therapy, and diagnostic services. Providers of inpatient psychiatric services may include:

1. Medical Doctor (MD)

2. Doctor of Osteopathy (DO)

Nonphysician Clinical Practitioners:
1. Clinical Psychologists

2. Clinical Nurse Specialists (CNSs), Adult Psychiatric and Mental Health Nurse Practitioners, or other master's-prepared nurses with appropriate mental health training and/or experience.*

3. Licensed/certified clinical social workers (CSWs), master’s-prepared social workers with additional clinical training AND licensure or state certification.

4. Occupational Therapists

* Medicare requires nurses who provide psychiatric diagnostic evaluation and psychotherapy services to have special training and/or experience beyond the standard curriculum required for an RN. Such nurses should have one or more of the following credentials: MS/MSN – Master of Science in Psychiatric Nursing (or its equivalent); CNS – Clinical Nurse Specialist in Adult Psychiatric and Mental Health Nursing; NP – Adult Psychiatric and Mental Health Nurse Practitioner.

These requirements do not apply to the standard nursing services rendered to psychiatric inpatients such as nursing evaluations, passing medications, psychiatric education and training services, and milieu interventions.

Other Providers Licensed or Otherwise Authorized by the State:
1. Marriage and Family Therapists (MFTs).

2. Registered Therapists and Certified Alcohol and Drug Counselors.

3. Recreational Therapists.

4. Registered pharmacists who may provide individual medication counseling and periodic educational groups

5. Other licensed or certified mental health practitioners whose scope of practice requires a specific level of supervision (e.g., Psychological Assistants, MFT interns and non-licensed/certified master’s degree in social work may provide services within the limits of state scope of practice, licensure, and regulations).

Other Comments Related to Qualified Providers:
1. Unlicensed psychology interns are not considered to be a covered provider of service.

2. Supervision of trainees must at least meet the state-mandated supervision requirements. Such supervision need not occur on the inpatient psychiatric unit but must be documented and documentation must be maintained in the hospital and available for inspection upon request by Medicare or submitted to Medicare when requested.

3. Routine services provided as a part of the care of psychiatric inpatients, oftentimes performed by bachelor degree level psychiatric technicians, under the direction of the nursing service, need to conform to local state licensing or certification requirements, if any.

NOTE: Limits of local, state or federal scope of practice acts, legislation, and licensure regulations apply to all practitioners within an inpatient psychiatric treatment unit. In all cases, the most restrictive limit shall apply (e.g., who may or may not perform individual or group psychotherapy, and for what conditions).


  1. Failure to provide documentation to support the necessity of test(s) or treatment(s) may result in denial of claims or services. This includes medical records:
    1. that do not support the reasonableness and necessity of service(s) furnished;
    2. in which the documentation is illegible; or
    3. where medical necessity for inpatient psychiatric services is not appropriately certified by the physician.
  2. The following services do not represent reasonable and medically necessary inpatient psychiatric services:
    1. Services which are primarily social, recreational or diversion activities, or custodial or respite care;
    2. Services attempting to maintain psychiatric wellness for the chronically mentally ill;
    3. Treatment of chronic conditions without acute exacerbation;
    4. Vocational training;
    5. Medical records that fail to document the required level of physician supervision and treatment planning process;
    6. Electrosleep therapy
    7. Electrical Aversion Therapy for treatment of alcoholism
    8. Hemodialysis for the treatment of schizophrenia
    9. Transcendental Meditation
    10. Multiple Electroconvulsive Therapy (MECT).
  3. It is not reasonable and medically necessary to provide inpatient psychiatric hospital services to the following types of patients:
    1. Patients who require primarily social, custodial, recreational, or respite care;
    2. Patients whose clinical acuity requires less than twenty-four (24) hours of supervised care per day;
    3. Patients who have met the criteria for discharge from inpatient hospitalization;
    4. Patients whose symptoms are the result of a medical condition that requires a medical/surgical setting for appropriate treatment;
    5. Patients whose primary problem is a physical health problem without a concurrent major psychiatric episode;
    6. Patients with alcohol or substance abuse problems who do not have a combined need for "active treatment" and psychiatric care that can only be provided in the inpatient hospital setting.
    7. Patients for whom admission to a psychiatric hospital is being used as an alternative to incarceration.

Items and Services Furnished by Physicians Under Part B:

Professional services billed to Medicare Part B (e.g., services of psychiatrists and psychologists) may be medically necessary, even though psychiatric inpatient hospitalization services are not.

If the facility portion of inpatient psychiatric services is denied as not medically necessary this does not mean that the physician service is also not medically necessary. The physician service to the patient may be medically necessary even though the level of service rendered in an inpatient psychiatric facility is not medically necessary.

Physician visits to a patient must involve a face-to-face encounter. Physician visits that only comprise team conferences or discussion with staff can not be billed to the carrier.

Summary of Evidence


Analysis of Evidence (Rationale for Determination)


Proposed Process Information

Synopsis of Changes
Changes Fields Changed
Associated Information
Sources of Information
Open Meetings
Meeting Date Meeting States Meeting Information
Contractor Advisory Committee (CAC) Meetings
Meeting Date Meeting States Meeting Information
MAC Meeting Information URLs
Proposed LCD Posting Date
Comment Period Start Date
Comment Period End Date
Reason for Proposed LCD
Requestor Information
This request was MAC initiated.
Requestor Name Requestor Letter
View Letter
Contact for Comments on Proposed LCD

Coding Information

Bill Type Codes

Code Description

Revenue Codes

Code Description


Group 1

Group 1 Paragraph


Group 1 Codes



ICD-10-CM Codes that Support Medical Necessity

Group 1

Group 1 Paragraph:


Group 1 Codes:



ICD-10-CM Codes that DO NOT Support Medical Necessity

Group 1

Group 1 Paragraph:


Group 1 Codes:



Additional ICD-10 Information

General Information

Associated Information
Sources of Information

Other Medicare contractor (carrier and fiscal intermediary) Local Medical Review Policies (LMRPs)/Local Coverage Determinations (LCDs) 


American Psychiatric Association: Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition, Text Revision. Washington, DC, American Psychiatric Association, 2000.

Anderson AJ, Micheels P, Cuoco LF, Byne T. Criteria based voluntary and involuntary psychiatric admissions modeling. International Journal of Psychosocial Rehabilitation. 1998;2(2):176-188. Retrieved May 22, 2003 from the World Wide Web: http://www.psychosocial.com/research/vol.html.

Gartner, L, Mee-Lee, D. The role and current status of patient placement criteria in the treatment of substance abuse disorders. U.S. Department of Health and Human Services, Public Health Service, Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Treatment, 2002. DHHS Publication No. (SMA) 02-3684.

Goldman RL, Weir CR, Turner CW, Smith CB. Validity of utilization management criteria for psychiatry. Am J Psychiatry. 1997;154:349-354. Retrieved May 22, 2003 from the World Wide Web: http://ajp.psychiatryonline.org/cgi/content/abstract/154/3/349.

Hart A, Hopkins C, eds. ICD-9-CM 2003, 9th Revision, Clinical Modification, Sixth Edition. Salt Lake City, UT: 2002.

Hermann RC, Leff HS, Logodmos G. Selecting process measure for quality improvement in mental healthcare. The Evaluation Center @HSRI July 2002. Retrieved July 2, 2003 from the World Wide Web: http://www.cqaimh.org/toolkit.website.pdf

McGovern J. Management of risk in psychiatric rehabilitation. The Psychologist. 1996:405-408. Retrieved May 22, 2003 from the World Wide Web: http://www.academicarmageddon.co.uk/library/MCG.htm.

Merck Manual of Diagnosis and Therapy, Section 15. Retrieved May 22, 2003 from the World Wide Web: http://www.merck.com/pubs/mmanual/section15/chapter194/194a.htm.

Silka VR, Hauser MJ. Psychiatric assessment of the person with mental retardation. Psychiatric Annals. 1997;27:3. Retrieved May 22, 2003 from the World Wide Web: http://www.psychiatry.com/mr/assessment.html.

Silver MS, Burak OR. Transfer of facility clients to inpatient psychiatry: eight criteria to consider. Journal of Healthcare Quality. 2002;24(5):11-14. Retrieved May 22, 2003 from the World Wide Web: http://www.allenpress.com/jhq/119/119.html.

ValueOptions, Inc. Provider Handbook, Section III, Clinical criteria and clinical practice guidelines: adult mental health facilities and programs, Subsection 2.201 (Acute inpatient mental health [adult]). Retrieved May 22, 2003 from the World Wide Web: http://www.valueoptions.com/provider/handbook/three/302b.htm.

Washington Peer Review Organization, General criteria set for non-physician review, Chapter 4 (Guidelines for rehabilitation, psych and addiction), revised 7/1/98 (acute psychiatric illness); revised 7/1/97 (addiction).
Texas Medical Foundation, QIO Criteria: Indications for Hospitalization.

Revision History Information

Revision History Date Revision History Number Revision History Explanation Reasons for Change
11/14/2019 R7

Consistent with Change Request 10901, all coding information, National coverage provisions, and Associated Information (Documentation Requirements, Utilization Guidelines) have been removed from the LCD and placed in the related Billing and Coding Article, A56865. There has been no change in coverage with this LCD revision.

  • Revisions Due To Code Removal
05/01/2019 R6

Updated paragraph in LCD Coverage Indications, Limitations and/or Medical Necessity in compliance with TDL Provider Education Instruction.

  • Provider Education/Guidance
01/16/2019 R5

LCD updated to comply with language changes related to certification and admission requirements in the Inpatient Psychiatric Facility (IPF) Benefit Policy Manual (Internet Only Manual 100-02, chapter 2, §30).

01/16/2019: At this time 21st Century Cures Act will apply to new and revised LCDs that restrict coverage which requires comment and notice. This revision is not a restriction to the coverage determination; and, therefore not all the fields included on the LCD are applicable as noted in this policy.

  • Provider Education/Guidance
10/01/2018 R4

Due to the annual ICD-10-CM update, ICD-10 code F53 was deleted from the "ICD-10 Codes that Support Medical Necessity" Group 1 and replaced by codes F53.0 and F53.1.

10/01/2018: At this time 21st Century Cures Act will apply to new and revised LCDs that restrict coverage which requires comment and notice. This revision is not a restriction to the coverage determination; and, therefore not all the fields included on the LCD are applicable as noted in this policy.


  • Revisions Due To ICD-10-CM Code Changes
10/01/2017 R3

The following ICD-10 codes were added to the ICD-10 Codes that Support Medical Necessity section- Group1: F50.82, T14.91XA, T14.91XD, and T14.91XS, due to the annual ICD-10-CM update.

DATE (10/01/2017): At this time 21st Century Cures Act will apply to new and revised LCDs that restrict coverage which requires comment and notice. This revision is not a restriction to the coverage determination; and, therefore not all the fields included on the LCD are applicable as noted in this policy.


  • Revisions Due To ICD-10-CM Code Changes
10/01/2016 R2 Added ICD-10-CM diagnosis code range F42.2-F42.9 to the ICD-10 Codes that Support Medical Necessity section, Group 1 due to the annual ICD-10-CM update.
  • Revisions Due To ICD-10-CM Code Changes
10/01/2016 R1 ICD-10 code F64.1 descriptor was changed in the ICD-10 Codes that DO NOT Support Medical Necessity section due to annual ICD-10-CM update.
  • Revisions Due To ICD-10-CM Code Changes

Associated Documents

Related National Coverage Documents
Public Versions
Updated On Effective Dates Status
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