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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: 

Psychological Tests 
A psychological test is an instrument designed to measure unobserved constructs, also known as latent 
variables. Psychological tests are typically, but not necessarily, a series of tasks or problems that the respondent 
has to solve. Psychological tests can strongly resemble questionnaires, which are also designed to measure 
unobserved constructs, but differ in that psychological tests ask for a respondent's maximum performance 
whereas a questionnaire asks for the respondent's typical performance. A useful psychological test must be both 
valid (i.e., there is evidence to support the specified interpretation of the test results) and reliable (i.e., internally 
consistent or give consistent results over time, across raters, etc.). 

Psychological testing 
Psychological tests are used to identify problems in a variety of mental abilities and attributes, such as neuro-
cognitive, mental status, achievement and ability, personality, and neurological functioning. 
 
Psychological testing requires a clinically trained examiner. All psychological tests should be administered, 
scored, and interpreted by a trained professional such as a clinical psychologist, psychologist, advanced nurse 
practitioner with education in this area, or a physician assistant who works with a psychiatrist with expertise in 
the appropriate area. The purpose of psychological testing includes the following: 

1. To assist with diagnosis and management following clinical findings where a mental illness or 
psychological abnormality is suspected. 
2. To provide a differential diagnosis from a range of neurological/psychological disorders that present 
with similar constellations of symptoms, e.g., differentiation between pseudodementia and depression. 
3. To determine the clinical and functional significance of a brain abnormality. 
4. To delineate the specific cognitive basis of functional complaints. 

Neuropsychological Testing: 
These tests are requested for patients with a history of psychological, neurologic or medical disorders known to impact cognitive or neurobehavioral functioning. 
 
Neuropsychological testing is considered medically necessary for the following indications: 

1. When there are mild or questionable deficits on standard mental status testing or clinical interview, and 
neuropsychological testing is needed to establish the presence of abnormalities or distinguish them from 
changes that may occur with normal aging, or the expected progression of other disease processes; or 
2. When neuropsychological data can be combined with clinical, laboratory, and neuroimaging data to 
assist in establishing a clinical diagnosis in neurological or systemic conditions known to affect CNS 
functioning; or 
3. When there is a need to quantify cognitive or behavioral deficits related to CNS impairment, especially 
when the information will be useful in determining a prognosis or informing treatment planning by 
determining the rate of disease progression; or 
4. When there is a need for a pre-surgical or treatment-related cognitive testing to determine whether one 
might safely proceed with a medical or surgical procedure that may affect brain function (e.g., deep 
brain stimulation, resection of brain tumors or arteriovenous malformations, epilepsy surgery, stem cell 
transplant) or significantly alter a patient's functional status; or 
5. When there is a need to test for the potential impact of adverse effects of therapeutic substances that 
may cause cognitive impairment (e.g., radiation, chemotherapy, antiepileptic medications), especially 
when this information is utilized to determine treatment planning; or 
6. When there is a need to monitor progression, recovery, and response to changing treatments, in patients 
with CNS disorders, in order to establish the most effective plan of care; or 
7. When there is a need for objective measurement of the patient's subjective complaints about memory, 
attention, or other cognitive dysfunction, which serves to determine treatment by differentiating 
psychogenic from neurogenic syndromes (e.g., dementia vs. depression); or 
8. When there is a need to establish a treatment plan by determining functional abilities/impairments in 
individuals with known or suspected CNS disorders; or 
9. When there is a need to determine whether a patient can comprehend and participate effectively in 
complex treatment regimens (e.g., surgeries to modify facial appearance, hearing, or tongue debulking 
in craniofacial or Down syndrome patients; transplant or bariatric surgeries in patients with diminished 
capacity), and to determine functional capacity for health care decision-making, work, independent 
living, managing financial affairs, etc.; or 
10. When there is a need to design, administer, and/or monitor outcomes of cognitive rehabilitation 
procedures, such as compensatory memory training for brain-injured patients; or 
11. When there is a need to establish treatment planning through identification and assessment of the 
neurocognitive sequelae of systemic disease (e.g., hepatic encephalopathy; anoxic/hypoxic injury 
associated with cardiac procedures); or 
12. Assessment of neurocognitive functions for the formulation of rehabilitation and/or management 
strategies among individuals with neuropsychiatric disorders; or 
13. When there is a need to diagnose cognitive or functional deficits in children and adolescents based on 
an inability to develop expected knowledge, skills or abilities as required to adapt to new or changing 
cognitive, social, emotional, or physical demands. 
 
Examples of problems that might lead to neuropsychological testing include: 

1. Detection of neurologic diseases based on quantitative assessment of neurocognitive abilities (e.g., mild 
head injury, anoxic injuries, AIDS dementia);  
2. Differential diagnosis between psychogenic and neurogenic syndromes;  
3. Delineation of the neurocognitive effects of CNS disorders;  
4. Neurocognitive monitoring of recovery or progression of CNS disorders; and/or  5. Assessment of neurocognitive functions for the formulation of rehabilitation and/or management 
strategies among individuals with neuropsychiatric disorders.  
6. Determining the management of the patient by confirmation or delineation of diagnosis. 

Components of Neuropsychological Testing 

1. Test Selection 
Information from medical records, clinical interviews, and behavioral observations is integrated to 
guide the selection of specific neuropsychological tests. The selection of tests is a strategic process that 
varies as a function of patient characteristics (level of education, premorbid level of functioning, 
sensory abilities, physical limitations, fatigue level, age, and ethnicity) and the goals of the testing 
(establishing a diagnosis, measuring treatment effects, etc.). 
2. Test Administration and Scoring  
Tests are administered either directly by a Medicare provider with an appropriate state license or by a 
trained technician. A technician who administers the neuropsychological test must be directly 
supervised by the provider. 
 
Neuropsychological tests include direct question-and-answer, object manipulation, inspection and 
responses to pictures or patterns, paper-and-pencil written or multiple choice tests, which measure 
functional impairment and abilities in: 

a. General intellect 
b. Reasoning, sequencing, problem-solving, and executive function 
c. Attention and concentration 
d. Learning and memory 
e. Language and communication 
f. Visual-spatial cognition and visual-motor praxis 
g. Motor and sensory function 
h. Mood, conduct, personality, quality of life 
i. Adaptive behavior (Activities of Daily Living) 
j. Social-emotional awareness and responsivity 
k. Psychopathology (e.g., psychotic thinking or somatization) 
l. Motivation and effort (e.g., symptom validity testing) 
 
Limitations of Coverage: 
Psychological and Neuropsychological testing is considered not reasonable and necessary when: 

1. The patient is not neurologically and cognitively able to participate in a meaningful way in the testing 
process, or  
2. Used as screening tests given to the individual or to general populations [Section 1862(a)(7) of the 
Social Security Act does not extend coverage to screening procedures], or  
3. Administered for educational or vocational purposes that do not establish medical management, or  
4. Performed when abnormalities of brain function are not suspected, or  
5. Used for self-administered or self-scored inventories, or screening tests of cognitive function (whether 
paper-and-pencil or computerized), e.g., AIMS, Folstein Mini-Mental Status Examination, or  
6. Repeated when not required for medical decision-making (i.e., making a diagnosis or deciding whether 
to start or continue a particular rehabilitative or pharmacologic therapy), or  
7. Administered when the patient has a substance abuse background and any of the following apply: 
a. the patient has ongoing substance abuse such that test results would be inaccurate, or 
b. the patient is currently intoxicated, or 8. The patient has been diagnosed previously with brain dysfunction, such as Alzheimer's diseases and 
there is no expectation that the testing would impact the patient's medical management, or  
9. The test is administered solely as a screening test for Alzheimer's disease - Medicare does not cover 
screening for this diagnosis. 

You can find this rule at the Medicare Local Coverage Determination (LCD) L34646: Psychological and 
Neuropsychological Testing. 

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.