Psychiatric Codes

This LCD supplements but does not replace, modify, or supersede existing Medicare applicable National Coverage Determinations (NCDs) or payment policy rules and regulations for psychiatric codes. Federal statute and subsequent Medicare regulations regarding provision and payment for medical services are lengthy. They are not repeated in this LCD. Neither Medicare payment policy rules nor this LCD replace, modify, or supersede applicable state statutes regarding medical practice or other health practice professions acts, definitions and/or scopes of practice. All providers who report services for Medicare payment must fully understand and follow all existing laws, regulations and rules for Medicare payment for psychiatric codes and must properly submit only valid claims for them. Please review and understand them and apply the medical necessity provisions in the policy within the context of the manual rules. Relevant CMS manual instructions and policies may be found in the following Internet-Only Manuals (IOMs) published on the CMS Web site:

IOM Citations:

• CMS IOM Publication 100-02, Medicare Benefit Policy Manual,
  • Chapter 13, Section 100 Commingling and Section 110 Physician Services
  • Chapter 15, Sections 60 Services and Supplies Furnished Incident To a Physician’s/NPP’s Professional Service, 80.2 Psychological and Neuropsychological Tests, 160 Clinical Psychologist Services, 170 Clinical Social Worker (CSW) Services, and 270 Telehealth Services
• CMS IOM Publication 100-04, Medicare Claims Processing Manual,
  • Chapter 5, Section 100.4 Outpatient Mental Health Treatment Limitation
  • Chapter 9, Section 60 Billing and Payment Requirements for RHCs and FQHCs
  • Chapter 12, Sections 110 Physician Assistant (PA) Services Payment Methodology, 120 Nurse Practitioner (NP) And Clinical Nurse Specialist (CNS) Services Payment Methodology, 170 Clinical Psychologist Services, 190 Medicare Payment for Telehealth Services, and 210 Outpatient Mental Health Treatment Limitation
• CMS IOM Publication 100-08, Medicare Program Integrity Manual,
  • Chapter 13, Section 13.5.4 Reasonable and Necessary Provision in an LCD

Social Security Act (Title XVIII) Standard References, Sections:

• Title XVIII of the Social Security Act, Section 1862(a)(1)(A) states that no Medicare payment may be made for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury.
• Title XVIII of the Social Security Act, Section 1862(a)(7). This section excludes routine physical examinations.

Compliance with the provisions in this LCD may be monitored and addressed through post payment data analysis and subsequent medical review audits.

History/Background and/or General Information

This LCD provides guidelines for many psychiatric services. However, this LCD does not address all services, including BUT NOT LIMITED TO:

• Speech-language pathology services for communication disorders (see LCD #L35070)

Psychiatric care includes the therapeutic services provided to a beneficiary for the treatment of mental, psychoneurotic, and personality disorders which are directed toward identifying specific behavior patterns, factors determining such behavior, and effective goal-oriented therapies.

Providers of Mental Health Services

For approved providers of mental health services, the state licensure or authorization must specify that the provider’s scope of practice includes the provision of clinical psychotherapy for the treatment of mental illness. It is the responsibility of providers to be aware of their own state licensure laws and written agreements or protocols required, including changes as they occur.

Psychiatrists are physicians (MDs and DOs) trained in mental health disorders and may provide all services described in this policy.

Coverage for all non-physician practitioners is limited to services which they are authorized to perform by the state in which they practice.

Mental Health Services Under the "Incident to" Provision

Please see CMS IOM, Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 60 and Section 80.2, for information regarding “incident to” services

A billing provider may not hire and supervise a professional whose scope of practice is outside the hiring provider’s own scope of practice as authorized under State law, or whose professional qualifications exceed those of the supervising provider.

The training requirements and state licensure or authorization of individuals who perform psychological services are intended to ensure an adequate level of expertise in the cognitive skills required for the performance of diagnostic and therapeutic psychological services.

Please see IOM 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 80.2 for information regarding tests performed by technicians.

Section I: Psychiatric Diagnostic Evaluation

Indications

1. The diagnostic evaluation is a biopsychosocial assessment.
2. The diagnostic evaluation with medical services is a biopsychosocial and medical assessment.
3. Both of these evaluations may include discussion with family or other sources in addition to the patient.
4. The diagnostic interview is indicated for initial or periodic diagnostic evaluation of a patient for suspected or diagnosed psychiatric illness.
5. An additional diagnostic evaluation service may be considered medically reasonable and necessary for the same patient if a new episode of illness occurs, an admission or a readmission to inpatient status due to complications of the underlying condition occurs, or when re-evaluation is required to address a new referral question. Certain patients, especially children and geriatric patients may require more than one visit for the completion of the initial diagnostic evaluation. The indication for the assessment should be based on medical necessity and supported in the medical record.
6. Interactive procedures may be necessary and considered medically reasonable and necessary for patients whose ability to communicate is impaired by expressive or receptive language impairment from various causes. These may include conductive or sensorineural hearing loss, deaf mutism, aphasia, language barrier, or lack of mental development (childhood).
7. The Bariatric Surgical Management of Morbid Obesity LCD (L35022) provides specific criteria that support the medical necessity of the psychiatric diagnostic interview. Please refer to LCD L35022 for the specific criteria.
8. Coverage for the diagnostic interview is limited to providers who are practicing within their scope of practice and are authorized to perform the service in their state.

Section II: Psychological and Neuropsychological Testing

Indications

1. These diagnostic tests are used when mental illness is suspected, and clarification is essential for the diagnosis and the treatment plan.
2. Testing conducted when no mental illness/disability is suspected would be considered screening and would not be covered by Medicare. Non-specific behaviors that do not suggest the possibility of mental illness or disability are not an acceptable indication for testing.
3. Examples of problems that might require psychological or neuropsychological testing include:
   • Assessment of mental functioning for individuals with suspected or known mental disorders for purposes of differential diagnosis or treatment planning.
   • Assessment of patient strengths and disabilities for use in treatment planning or management when signs or symptoms of a mental disorder are present.
   • Assessment of patient capacity for decision-making when impairment is suspected that would affect patient care or management.
   • Differential diagnosis between psychogenic and neurogenic syndromes (e.g., depression versus dementia).
   • Detection of neurologic disease based on quantitative assessment of neurocognitive abilities (e.g., mild head injury, anoxic injuries, Acquired Immune Deficiency Syndrome [AIDS] dementia).
   • Delineation of the neurocognitive effects of central nervous system disorders.
   • Neurocognitive monitoring of recovery or progression of central nervous system disorders.
4. When a psychiatric condition or the presence of dementia has already been diagnosed, there is value to the testing only if the information derived from the testing would be expected to have significant impact on the understanding and treatment of the patient. Examples include:
   • Significant change in the patient’s condition.
   • The need to evaluate a patient’s capacity to function in a given situation or environment.
   • The need to specifically tailor therapeutic and or compensatory techniques to particular aspects of the patient’s pattern of strengths and disabilities.
5. Adjustment reactions or dysphoria associated with moving to a nursing home do not automatically constitute medical necessity for testing. Testing of every patient upon entry to a nursing home would be considered a routine service and would not be covered by Medicare. However, some individuals enter a nursing home at a time of physical and cognitive decline and may require psychological testing to arrive at a diagnosis and plan of care. Decisions to test individuals who have recently entered a nursing home need to be made judiciously, on a case-by-case basis. Medical necessity of such evaluations should be documented and maintained in the medical record.
6. Each test administered must be medically necessary. Standardized batteries of tests are only acceptable if each component test is medically necessary.
7. Depending on the issues to be assessed, a typical test battery may require 7 to 10 hours to perform, including administration, scoring and interpretation.
8. Formal evaluation of aphasia with an instrument such as the Boston Diagnostic Aphasia Examination performed during treatment, is typically performed only once during treatment and its medical necessity should be documented. If the test is repeated during treatment, the medical necessity of the repeat administration of the test must also be documented.

Rendering Providers

1. Physical Therapists (PTs), Occupational Therapists (OTs), and Speech Language Pathologists (SLPs) may perform assessment of aphasia with interpretation and report, developmental test administration performed by physician or other qualified health care professional, with interpretation and report and development testing, with interpretation and report, per standardized instrument form under the general supervision of a physician or a CP.
2. Independently Practicing Psychologists (IPPs) may provide psychological and neuropsychological tests when the tests are ordered by a physician. Please see CMS IOM Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 80.2 for information regarding non-physician practitioners (NPPs), such as NPs, CNSs and PAs who personally perform diagnostic psychological and neuropsychological tests and psychological and neuropsychological tests on an “incident to” basis.

Limitations

The following are considered not medically reasonable:

1. Routine re-evaluation of chronically disabled patients that is not required for a diagnosis or continued treatment.
2. Brief screening measures such as the Folstein Mini-Mental Status Exam or use of other mental status exams in isolation should not be classified separately as psychological or neuropsychological testing, since they are typically part of a more general clinical exam or interview.

Section III: Psychotherapy Services

Psychotherapy is the treatment for mental illness and behavior disturbances in which the clinician establishes a professional contract with the patient and, through definitive therapeutic communication, attempts to alleviate the emotional disturbances, reverse or change maladaptive patterns of behavior, and encourage personality growth and development.

Indications

1. Psychotherapy will be considered medically reasonable and necessary when the patient has a psychiatric illness or is demonstrating emotional or behavioral symptoms sufficient to cause inappropriate behavior or maladaptive functioning.
2. Psychotherapy services must be comprised of clinically recognized therapies that are pertinent to the patient’s illness or condition. The type, frequency and duration of services must be medically necessary for the patient’s condition under accepted practice standards.
3. There must be a reasonable expectation of improvement in the patient’s disorder or condition, demonstrated by an improved level of functioning, or maintenance of level of functioning where decline would otherwise be expected in the case of a disabling mental illness or condition, or chronic mental disorders.
4. The patient must have the capacity to actively participate in all therapies prescribed.
5. To benefit from psychotherapy, an individual must be cognitively intact to the degree that he/she can engage in a meaningful verbal interaction with the therapist.
6. For patients suffering from dementia, the type and degree of dementia must be taken into account in planning and evaluating effective psychotherapeutic interventions. If psychotherapy is provided to a patient with dementia, the patient’s record should support that the patient’s cognitive level of functioning was sufficient to permit the patient to participate meaningfully in the treatment.
7. The duration of psychotherapy must be individualized for every patient. The provider of service must document in the patient’s record the medical necessity for continued (prolonged) treatments.
8. Group therapy is defined as psychotherapy administered in a group setting with a trained group leader in charge of several patients. The group should not exceed 10 participants and the sessions should be at least 45 to 60 minutes in duration. While a video or movie may be used as an adjunct to the sessions, this modality should not be used as a replacement for the therapist’s active participation and the majority of the session should involve the interaction between the participants and the therapist leading the session. If group psychotherapy is provided to a patient with dementia, the patient’s record should document that the patient’s cognitive level of functioning was sufficient to permit the patient to participate meaningfully in the treatment.
9. Family therapy will be considered medically reasonable and necessary only for treatment of the Medicare beneficiary’s mental illness and not the family member’s problems. Family therapy is appropriate when intervention in the family interactions would be expected to improve or stabilize the patient’s emotional/behavioral disturbance. Family therapy is commonly the major treatment, especially for children and for the elderly. Where both husband and wife are covered by Medicare, such therapy may be the most effective treatment for both individuals.
10. Family psychotherapy without the patient present does not represent routine consultation with staff about the patient’s progress and treatment. Facility staff members are not considered caregivers for purposes of this policy; however, caretakers in group-living facilities may be considered caregivers for the purpose of this policy.

Rendering Providers

The following provider exceptions apply to psychotherapy services:

• CNSs may not render psychoanalysis services.
• Please see CMS IOM 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 170 regarding CSW services.
• Please see CMS IOM 100-02, Medicare Benefit Policy Manual, Chapter 15, for information on providers that may render psychotherapy codes that include an evaluation and management (E/M) component. Each element of these services (therapy and E/M) must be medically reasonable and necessary and should be documented in the patient's records. 

Limitations

1. Psychotherapy services are not considered medically reasonable and necessary when documentation indicates that dementia has produced a severe enough cognitive defect to prevent establishment of a relationship with the therapist, which allows insight-oriented, behavior-modifying, or supportive therapy to be effective.
2. Psychotherapy services are never covered for severe and profound mental retardation. Severe mental retardation is defined as an IQ 20-34 and profound mental retardation is defined as an IQ under 20.
3. Psychotherapy services are not considered medically reasonable and necessary when they primarily include teaching grooming skills, monitoring activities of daily living, recreational therapy (dance, art, play) or social interaction.
4. Family therapy sessions with a patient whose emotional disturbance would be unaffected by changes in the patterns of family interaction (i.e., a comatose patient) would not be considered medically reasonable and necessary. Similarly, an emotional disturbance in a family member, which does not impact on the Medicare patient’s status, would not be covered by that patient’s Medicare benefits.

Section IV: Other Psychiatric and Psychological Services

Indications

1. Narcosynthesis is indicated for patients who have difficulty verbalizing psychiatric problems without the aid of the drug.
2. Electroconvulsive therapy (ECT) is used in the treatment of depression and related disorders and other severe psychiatric conditions.
   • When a psychiatrist administers the anesthesia for an ECT procedure, the anesthesia service is considered part of the ECT procedure.

For frequency limitations please refer to the Utilization Guidelines section below.

Notice: Services performed for any given diagnosis must meet all of the indications and limitations stated in this LCD, the general requirements for medical necessity as stated in CMS payment policy manuals, any and all existing CMS national coverage determinations, and all Medicare payment rules.

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Please refer to the Local Coverage Article: Billing and Coding: Psychiatric Codes, A57130 for all coding information.

Documentation Requirements

General Documentation Requirements

1. All documentation must be maintained in the patient’s medical record and made available to the contractor upon request.
2. Every page of the record must be legible and include appropriate patient identification information (e.g., complete name, dates of service[s]). The documentation must include the legible signature of the physician or non-physician practitioner responsible for and providing the care to the patient.
3. The medical record documentation must support the medical necessity of the services as stated in this policy.
4. The total number of timed minutes must be documented in the patient's medical record.

Specific Documentation Requirements

Section I: Psychiatric Diagnostic Evaluation

1. The medical records must reflect in legible form the elements outlined in the above description of the services and contain all of the following elements:
   • Date
   • Referral source
   • Length of session (these are not timed codes; however, the standard length of time is generally considered to be between 45 minutes and one hour)
   • Content of session
   • Therapeutic techniques and approaches, including medications
   • Assessment of the patient’s ability to adhere to the treatment plan
   • Identity of person performing service (legible signature)
2. For interactive therapy, the medical record should indicate the adaptations utilized in the session and the rationale for employing these interactive techniques.
3. For services that include an E/M component, the E/M services should be documented.
4. The medical records must indicate the diagnosis, including psychological and/or medical conditions, as well as any psychosocial and environmental stressors.

Section II: Psychological and Neuropsychological Testing

1. The medical record should include all of the following information:
   • Reason for referral
   • Tests administered, scoring/interpretation and time involved
   • Present evaluation
   • Diagnosis (or suspected diagnosis that was the basis for the testing if no mental illness was found)
   • Recommendations for interventions, if necessary
   • Identity of person performing service

Section III: Psychotherapy Services

1. The medical record must indicate in legible form, the time spent in the psychotherapy encounter and the therapeutic maneuvers such as behavior modification, supportive interactions and interpretation of unconscious motivation that were applied to produce therapeutic change or stabilization.
2. All the following elements should be contained in or readily inferred from the medical record:
   • Type of service (individual, group, family, interactive, etc.)
   • Content of session
   • Therapeutic techniques and approaches, including medications
   • Identity of person performing service.
3. For interactive therapy, the medical record should indicate the adaptations utilized in the session and the rationale for employing these interactive techniques.
4. For services that include an E/M component, the E/M services should be documented.
5. Group therapy session notes can be organized according to the general session note guidelines for individual therapy appearing above, or the clinician may elect to use the following group note format:
   • One group note that is common to all patients, documenting date, length of time for each session, along with key issues presented. Other group members’ names should not appear in this note.
   • An additional notation or addendum to the group note, for each patient’s record commenting on that particular patient’s participation in the group process and any significant changes in patient status.

Section IV: Other Psychiatric and Psychological Services

See the general requirements at the beginning of this section.

Utilization Guidelines

• It is not reasonable and necessary for a PT, OT, SLP, Physician or NPP not under a therapy Plan of Care to report developmental test administration services more than once per provider, per discipline, per date of service, per patient.
• Medicare will not cover more than 3 psychiatric diagnostic evaluations, psychiatric diagnostic evaluation with medical services (or a combination of both) per year, per beneficiary, by the same provider. When providers are part of a Group NPI, the same limitation of 3 per year per Group NPI will apply.

Notice: This LCD imposes utilization guideline limitations that support automated frequency denials. Despite Medicare’s allowing up to these maximums, each patient’s condition and response to treatment must medically warrant the number of services reported for payment. Medicare requires the medical necessity for each service reported to be clearly demonstrated in the patient’s medical record. Medicare expects that patients will not routinely require the maximum allowable number of services.

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