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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, 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. 

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.