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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 state that patients admitted to a partial hospitalization program must be under the care of a physician who is knowledgeable about the patient and certifies the need for partial hospitalization. The patient or legal guardian must provide written informed consent for partial hospitalization treatment. The patient must require comprehensive, multimodal treatment requiring medical supervision and coordination because of a mental disorder which severely interferes with multiple areas of daily life, including social, vocational, and/or educational functioning. Such dysfunction must be of an acute nature and not a chronic circumstance. 

Patients eligible for Medicare coverage of a partial hospitalization program comprise two groups: those patients who are discharged from an inpatient hospital treatment program, and the partial hospitalization program is in lieu of continued inpatient treatment; or those patients who, in the absence of partial hospitalization, would require inpatient hospitalization. There must be a reasonable expectation of improvement in the patient's disorder and level of functioning as a result of the active treatment provided by the partial hospitalization program. Active treatment directly addresses the presenting problems requiring admission to the partial hospitalization program. Active treatment consists of clinically recognized therapeutic interventions including individual, group, and family psychotherapies, occupational, activity, and psycho-educational groups pertinent to the patient's illness. Medical and psychiatric diagnostic evaluation and medication management are also integral to active treatment. The patient must have the capacity for active participation in all phases of the multidisciplinary and multimodal program. If a substance abuse disorder is also present, the program must be prepared to appropriately treat the co-morbid substance abuse disorder (dual diagnosis patients). A program comprised primarily of activity, social, or recreational therapy does not constitute a partial hospitalization program. Psychosocial programs which provide only a structured environment, socialization, and/or vocational rehabilitation are not covered by Medicare. 

Admission Criteria (Intensity of Service):

In general, patients should be treated in the least intensive and restrictive setting which meets the needs of their illness. Patients admitted to a partial hospitalization program do not require the 24-hour-per-day level of care provided in an inpatient setting, and must have an adequate support system to sustain/maintain themselves outside the partial hospitalization program and must not be a danger to themselves or others. 

At the same time, a partial hospitalization program level of care must be necessary to prevent inpatient hospitalization, and there must be evidence of failure at or inability to benefit from a less intensive outpatient program.

The acute psychiatric condition being treated by a partial hospitalization program must require active treatment, including a combination of services such as intensive nursing and medical intervention, psychotherapy, occupational and activity therapy. Patients must require partial hospitalization program services at levels of intensity and frequency comparable to patients in an inpatient setting for similar psychiatric illnesses. 

Admission Criteria (Severity of Illness):

Patients admitted to a partial hospitalization program generally must have an acute onset or decompensation of a covered Axis I mental disorder, as defined by the Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (DSM-IV-TR) published by the American Psychiatric Association (2000) (see the "ICD-10-CM Codes That Support Medical Necessity" section within the related Billing and Coding Article - A56850) which severely interferes with multiple areas of daily life. The degree of impairment will be severe enough to require a multidisciplinary structured program, but not so severe that patients are incapable of participating in and benefiting from an active treatment program, and able to be maintained outside the program. For patients who do not meet this degree of severity of illness, and for whom partial hospitalization services are not necessary, professional services billed to Medicare Part B (e.g., services of psychiatrists and psychologists) may be medically necessary, even though partial hospitalization services are not. 

Patients admitted for treatment to a partial hospitalization program will not be in immediate/imminent danger to self, others, or property, but there may be a recent history of self-mutilation, serious risk taking, or other self-endangering behavior. 

You can find more information at Local Coverage Determination (LCD): Psychiatric Partial Hospitalization Programs (L33626).

If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.

The Plan contract says that the Plan covers items and services in accordance with Medicare rules.