Appeal type: unknown
Decision: unknown

 
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 payment for inpatient psychiatric hospital services is to be made only for active treatment. 
For services to be designated as active treatment they must: 
 
1. be provided under an individualized treatment or diagnostic plan; 
 
2. reasonably be expected to improve the patients condition, or for the purpose of diagnosis; and 
 
3. be supervised and evaluated by a physician.   
You can find these rules in the Centers for Medicare and Medicaid Services, Internet Only Manual, Publication 
100-02, Medicare Benefit Policy Manual, Chapter 2, Sections 30.2.2 and 30.2.2.1. 
 
The rules say that Medicare will not pay any expenses for items or services which are not medically necessary 
and reasonable for the diagnosis or treatment of illness or injury. This exclusion extends to claims for services 
which are provided in inappropriate settings. You can find this rule in the Social Security Act, Section 
1862(a)(1). 
 
The rules say Admission Criteria (Intensity of Service): 
 
The patient must require intensive, comprehensive, multifaceted treatment including 24 hours per day of 
medical supervision and coordination because of a mental disorder. The need for 24 hours of supervision may 
be due to the need for patient safety, psychiatric diagnostic evaluation, potential severe side effects of 
psychotropic medication associated with medical or psychiatric comorbidities, or evaluation of behaviors 
consistent with an acute psychiatric disorder for which a medical cause has not been ruled out. 
 
The acute psychiatric condition being evaluated or treated by inpatient psychiatric hospitalization must require 
active treatment, including a combination of services such as intensive nursing and medical intervention, 
psychotherapy, occupational and activity therapy. Patients must require inpatient psychiatric hospitalization 
services at levels of intensity and frequency exceeding what may be rendered in an outpatient setting, including 
psychiatric partial hospitalization. There must be evidence of failure at, inability to benefit from, or 
unacceptable risk in an outpatient treatment setting. 
 For all symptom sets or diagnoses, the severity and acuity of symptoms and the likelihood of response to 
treatment, combined with the requirement for an intensive, 24-hour level of care, are the significant factors in 
determining the necessity of inpatient psychiatric treatment. 
 
The following parameters are intended to describe the severity of illness and intensity of service that 
characterize a patient appropriate for inpatient psychiatric hospitalization. These criteria do not represent an all-
inclusive list and are intended as guidelines. 
 
Admission Criteria (Severity of Illness): 
 
Examples of inpatient admission criteria include (but are not limited to): 
 
    Threat to self, requiring 24-hour professional observation (i.e., suicidal ideation or gesture within 72 hours 
prior to admission, self mutilation (actual or threatened) within 72 hours prior to admission, chronic and 
continuing self destructive behavior (e.g., bulemic behaviors, substance abuse) that poses a significant and/or 
immediate threat to life, limb, or bodily function). 
    Threat to others requiring 24-hour professional observation (i.e., assaultive behavior threatening others 
within 72 hours prior to admission, significant verbal threat to the safety of others within 72 hours prior to 
admission). 
    Command hallucinations directing harm to self or others where there is the risk of the patient taking action 
on them. 
    Acute disorder/bizarre behavior or psychomotor agitation or retardation that interferes with the activities of 
daily living (ADLs) so that the patient cannot function at a less intensive level of care during evaluation and 
treatment. 
    Cognitive impairment (disorientation or memory loss) due to an acute Axis I disorder that endangers the 
welfare of the patient or others. 
    A patient with a dementia disorder for evaluation or treatment of a psychiatric comorbidity (e.g., risk of 
suicide, violence, severe depression) warranting inpatient admission. 
    A mental disorder causing major disability in social, interpersonal, occupational, and/or educational 
functioning that is leading to dangerous or life-threatening functioning, and that can only be addressed in an 
acute inpatient setting. 
    A mental disorder that causes an inability to maintain adequate nutrition or self-care, and family/community 
support cannot provide reliable, essential care, so that the patient cannot function at a less intensive level of 
care during evaluation and treatment. 
    Failure of outpatient psychiatric treatment so that the beneficiary requires 24-hour professional observation 
and care. Reasons for the failure of outpatient treatment may include increasing severity of psychiatric 
condition or symptom, noncompliance with medication regimen due to the severity of psychiatric symptoms, 
inadequate clinical response to psychotropic medications or severity of psychiatric symptoms that an outpatient 
psychiatric treatment program is not appropriate. 
 
Active Treatment: 
 
For services in a hospital to be designated as "active treatment," they must be: 
 
    provided under an individualized treatment or diagnostic plan; 
    reasonably expected to improve the patient's condition or for the purpose of diagnosis; and 
    supervised and evaluated by a physician. 
 
Such factors as diagnosis, length of hospitalization, and the degree of functional limitation, while useful as 
general indicators of the kind of care most likely being furnished in a given situation, are not controlling in 
deciding whether the care was active treatment. Please refer to 42 CFR 482.61 on Conditions of Participation 
for Hospitals for a full description of what constitutes active treatment. The services must be provided in accordance with an individualized program of treatment or diagnosis 
developed by a physician in conjunction with staff members of appropriate other disciplines on the basis of a 
thorough evaluation of the patient's restorative needs and potentialities. Thus, an isolated service (e.g., a single 
session with a psychiatrist, or a routine laboratory test) not furnished under a planned program of therapy or 
diagnosis would not constitute active treatment, even though the service was therapeutic or diagnostic in 
nature. The plan of treatment must be recorded in the patient's medical record in accordance with 42 CFR 
482.61 on Conditions of Participation for Hospitals. 
 
The services must reasonably be expected to improve the patient's condition or must be for the purpose of 
diagnostic study. It is not necessary that a course of therapy have as its goal the restoration of the patient to a 
level which would permit discharge from the institution although the treatment must, at a minimum, be 
designed both to reduce or control the patient's psychotic or neurotic symptoms that necessitated hospitalization 
and improve the patient's level of functioning. 
 
The types of services which meet the above requirements would include not only psychotherapy, drug therapy, 
and shock therapy, but also such adjunctive therapies as occupational therapy, recreational therapy, and milieu 
therapy, provided the adjunctive therapeutic services are expected to result in improvement (as defined above) 
in the patient's condition. If the only activities prescribed for the patient are primarily diversional in nature (i.e., 
to provide some social or recreational outlet for the patient, it would not be regarded as treatment to improve 
the patient's condition. In many large hospitals these adjunctive services are present and part of the life 
experience of every patient. In a case where milieu therapy (or one of the other adjunctive therapies) is 
involved, it is particularly important that this therapy be a planned program for the particular patient and not 
one where life in the hospital is designated as milieu therapy. 
 
In accordance with the above definition of "improvement," the administration of antidepressant or tranquilizing 
drugs which are expected to significantly alleviate a patient's psychotic or neurotic symptoms would be termed 
active treatment (assuming that the other elements of the definition are met). However, the administration of a 
drug or drugs does not of itself necessarily constitute active treatment. Thus, the use of mild tranquilizers or 
sedatives solely for the purpose of relieving anxiety or insomnia would not constitute active treatment. 
 
Physician participation in the services is an essential ingredient of active treatment. The services of qualified 
individuals other than physicians, e.g., social workers, occupational therapists, group therapists, attendants, 
etc., must be prescribed and directed by a physician to meet the specific needs of the individual. In short, the 
physician must serve as a source of information and guidance for all members of the therapeutic team who 
work directly with the patient in various roles. It is the responsibility of the physician to periodically evaluate 
the therapeutic program and determine the extent to which treatment goals are being realized and whether 
changes in direction or emphasis are needed. Such evaluation should be made on the basis of periodic 
consultations and conferences with therapists, reviews of the patient's medical record, and regularly scheduled 
patient interviews at least once a week. Interpretation of at least once a week means that the physician will 
evaluate the therapeutic program at least weekly, whereas it is generally the standard of practice that a 
physician sees the patient five to seven times a week during an acute care hospitalization. 
 
The period of time covered by the physician's certification is referred to a "period of active treatment." This 
period should include all days on which inpatient psychiatric hospital services were provided because of the 
individual's need for active treatment (not just the days on which specific therapeutic or diagnostic services 
were rendered). For example, a patient's program of treatment may necessitate the discontinuance of therapy 
for a period of time, or it may include a period of observation, either in preparation for or as a follow-up to 
therapy, while only maintenance or protective services are furnished. If such periods were essential to the 
overall treatment plan, they would be regarded as part of the period of active treatment. 
 
 The fact that a patient is under the supervision of a physician does not necessarily mean the patient is getting 
active treatment. For example, medical supervision of a patient may be necessary to assure the early detection 
of significant changes in his/her condition; however, in the absence of a specific program of therapy designed 
to effect improvement, a finding that the patient is receiving active treatment would be precluded. 
 
The program's definition of active treatment does not automatically exclude from coverage services rendered to 
patients who have conditions that ordinarily result in progressive physical and/or mental deterioration. 
Although patients with such diagnosis will most commonly be receiving custodial care, they may also receive 
services which meet the program's definition of active treatment (e.g., where a patient with Alzheimer's 
disease or Pick's disease received services designed to alleviate the effects of paralysis, epileptic seizures, or 
some other neurological symptom, or where a patient in the terminal stages of any disease received life- 
supportive care). A period of hospitalization during which services of this kind were furnished would be 
regarded as a period of active treatment.  
 
Discharge Criteria (Intensity of Service): 
 
Patients in inpatient psychiatric care may be discharged to a less intensive level of outpatient care. A less 
intensive level of service would be considered when patients no longer require 24-hour observation for safety, 
diagnostic evaluation, or treatment as described above. These patients would become outpatients, receiving 
either psychiatric partial hospitalization or individual outpatient mental health services, rendered and billed by 
appropriate providers. 
 
Discharge Criteria (Severity of Illness): 
 
Patients whose clinical condition improves or stabilizes, who no longer pose an impending threat to self or 
others, and who do not require 24-hour observation available in an inpatient psychiatric unit should be 
discharged to outpatient care. In addition, patients who are persistently unwilling or unable to participate in 
active treatment of their psychiatric condition, would also be appropriate for discharge. You can find this 
information in Medicare's Local Coverage Determination (LCD): Psychiatric Inpatient Hospitalization 
(L33975). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.