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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case.
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101.

The rules say that physical therapy (PT), occupational therapy (OT), and speech therapy (ST) services are
covered only when they are medically reasonable and necessary. Therapy services are considered reasonable
and necessary when:

1. The services are specific and effective treatment for the patient's condition,

2. The services require the skills or direct supervision of a therapist,

3. The amount, frequency, and duration of the services is reasonable under accepted standards of practice, and

4. The services are needed to address recovery of or improvement in function OR to establish, design, deliver,
or carry out a maintenance program.

Medicare coverage is based not on a patient's potential for improvement, but rather on the patient's need for
skilled care. You can find these rules in the Centers for Medicare and Medicaid Services, Internet Only
Manual, Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 220.2.

The rules say that the initial evaluation should document the necessity of a course of therapy through objective
findings and subjective patient/caregiver self-reporting. Initial evaluations must be completed by the therapist
or physician/NPP that will be providing the therapy services. Initial evaluations are completed to determine the
medical necessity of initiating rehabilitative therapy or skilled instruction in maintenance activities that the
patient and/or caregiver can perform at home.

Initial evaluation may be warranted when there is a change in functional ability. The evaluation should clearly
describe the presenting complaint or problem for which the patient is seeking services of the physical or
occupational therapist.

The evaluation process assesses, for example, the severity and impact of the current problem, the possibility of
multi-site or multi-system involvement, the presence of pre-existing systemic conditions (e.g., diseases), and
the stability of the condition. If the patient presents with multi-system involvement and/or multiple site
involvement, all pertinent areas/conditions should be assessed at the initial evaluation (i.e., cervical pain and
knee pain; low back pain and rotator cuff irritation; cervical pain and low back pain). Only one initial
evaluation code should be used, reflecting the level of complexity of the evaluation, and all presenting
complaints and problems evaluated. If over the course of an episode of treatment, a new, unrelated diagnosis
occurs, another initial evaluation may be covered.

Initial evaluations may be covered when the documentation justifies the need for a skilled therapy evaluation,
even if it is determined that the patient does not require a skilled level of treatment.

Screening may be more appropriate than evaluation in some circumstances. For example, a patient develops an
acute lateral epicondylitis from painting. The patient seeks physician attention who subsequently recommends
that the patient see an occupational therapist. By the time the patient sees the OT, she presents without any pain
and has resumed all normal functional activities. Completing a screening interview of this patient should lead
the therapist to determine that an OT evaluation and treatment would not be medically necessary.

A screening is the gathering of information to determine the need for further evaluation by the clinician. The
screening process may include a review of the patient's medical record, a patient interview and observation of
the patient.

Routine screening is not a billable service. Although some regulations and state practice acts require
screening evaluations at specific intervals (such as at admission to a nursing home, or quarterly during the
patient's stay), for Medicare payment, evaluations must meet Medicare coverage guidelines.

Initial evaluations from other therapy disciplines performed on the same beneficiary may also be covered,
provided the evaluation and plan of care are not duplicative.

Consider the following points when billing for an evaluation.

Evaluations for deconditioning after hospitalization where it is anticipated that prior functional abilities
would spontaneously return through patient, caregiver and/or nursing activities are not considered medically
necessary and are not covered.
Pre-operative evaluations performed routinely to ascertain the patient's post-surgical needs and/or to explain
the services that will be provided post-operatively are non-covered. The patient's post-op experience and
functional limitations are unknown prior to the surgery and will at that time require a new evaluation of the
situation when medically necessary.
Driving assessments provided under an occupational therapy plan of care are covered only when there is a
reasonable expectation that the patient's ability to drive will be restored or improved. The need for the
assessment must be related to the presence of, or recovery from, a specific injury or illness. Generalized aging,
weakness or debility do not qualify as Medicare covered conditions for assessment or therapy services.
Assessment for the sole purpose of disqualifying a patient from driving is not a covered benefit.

You can find this information in Medicare's Local Coverage Determination (LCD): Outpatient Physical and
Occupational Therapy Services (L33631).

If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.