**Abstract:**  
  
This LCD outlines the medical necessity requirements for Part A and Part B
services in the fields of psychiatry, psychology, clinical social work, and
psychiatric nursing for the diagnosis and treatment of various mental
disorders and/or diseases.  
  
 **Indications:**  
  
 **A. Approved Providers of Service**

While a variety of psychiatric/psychotherapeutic techniques are recognized for
coverage, the services must be performed by persons authorized by Medicare and
licensed by their state to render these services. For more information see the
NGS Medical Policy article on Psychological Services Provided "Incident to".

**B. General Coverage Requirements:**

This section applies to psychiatric services rendered in a hospital outpatient
facility, but the medical necessity parameters contained herein may also be
applicable to services billed to Part B by individual providers.

Hospital outpatient psychiatric services: The services must be for the purpose
of diagnostic study or the services must reasonably be expected to improve the
patient's condition. when their ancillary services and supplies provided
incident to comply with state law and meet all these requirements:

  * Services and supplies are integral to the patient's normal treatment course and the physician or other listed NPP (non-physician practitioner) personally provided an initial service and remain actively involved in treatment
  * The practitioner commonly provides services and supplies without charge (included in the physician's or other listed NPP's bill)
  * Services and supplies are an expense to the physician or other listed NPP
  * Services and supplies are commonly offered in the physician's or other listed NPP's office or clinic

**Coverage Criteria.**

The services must meet the following criteria as above.  
  
 **Individualized Treatment Plan.**

The plan must state the type, amount, frequency, and duration of the services
to be furnished and indicate the diagnoses and anticipated goals. (A plan is
not required if only a few brief services will be furnished.)  
  
**Reasonable Expectation of Improvement.**

Services must be for the purpose of diagnostic study or reasonably be expected
to improve the patient's condition. The treatment must, at a minimum, be
designed to reduce or control the patient's psychiatric symptoms so as to
prevent relapse or hospitalization, _and_ improve or maintain the patient's
level of functioning.  
  
When stability can be maintained without further treatment or with less
intensive treatment, the psychological services are no longer medically
necessary.  
  
 **Frequency and Duration of Services.**

There are no specific limits on the length of time that services may be
covered. There are many factors that affect the outcome of treatment; among
them are the nature of the illness, prior history, the goals of treatment, and
the patient's response. As long as the evidence shows that the patient
continues to show improvement in accordance with his/her individualized
treatment plan, and the frequency of services is within accepted norms of
medical practice, coverage may be continued.  
  
When a patient reaches a point in his/her treatment where further improvement
does not appear to be indicated and there is no reasonable expectation of
improvement, the outpatient psychiatric services are no longer considered
reasonable or medically necessary.  
  
 **Mental Health Services provided in a CORF:**

Refer to Billing and Coding: Psychiatry and Psychology Services (A56937)

  
Note: Partial Hospitalization is a distinct and organized intensive treatment
program for patients who would otherwise require inpatient psychiatric care.
Partial Hospitalization services are not addressed in this policy.  
  
 **C. Specific Coverage Requirements:**  
  
Information in this part of the policy has been divided into seven (7)
sections.

  1. Psychiatric Diagnostic Procedures 
  2. Interactive Complexity 
  3. Psychotherapy 
  4. Psychotherapy in Crisis 
  5. Psychiatric Somatotherapy 
  6. Other Psychiatric Services or Procedures 
  7. Central Nervous System Assessments/Tests (e.g., Neuro-Cognitive, Mental Status, Speech Testing) 

Unless otherwise indicated, the above procedures must be performed by persons
authorized by Medicare and by the state in which they practice.  
  
 _Section I. Psychiatric Diagnostic Procedures:_  
  
Description: The psychiatric diagnostic procedure requires the elicitation of
a complete medical (including past, family, social) and psychiatric history, a
mental status examination, establishment of an initial diagnosis, an
evaluation of the patient's ability and capacity to respond to treatment, and
an initial plan of treatment. Information may be obtained from not only the
patient, but also other physicians, healthcare providers, and/or family if the
patient is unable to provide a complete history.  
  
_Section II. Interactive Complexity:_  
  
Description:"Interactive complexity" refers to specific communication factors
that complicate the delivery of a psychiatric procedure. Common factors
include more difficult communication with discordant or emotional family
members and engagement of young and verbally undeveloped or impaired
patients." (CPT 2013, _Professional Edition,_ p.483)  
  
Interactive complexity  is  principally used to evaluate children and also
adults who do not have the ability to interact through ordinary verbal
communication. The healthcare provider uses inanimate objects, such as toys
and dolls for a child, physical aids and non-verbal communication to overcome
barriers to therapeutic interaction, or an interpreter for a person who is
deaf or one who does not speak the same language as the healthcare provider.  
  
Interactive complexity may also be used in the evaluation of adult patients
with organic mental deficits, or for those who are catatonic or mute.  
  
Interactive complexity may be reported with psychotherapy when at least one of
the following is present:

  1. Maladaptive communication (eg, high anxiety, high reactivity, repeated questions or disagreement)
  2. Emotional or behavioral conditions inhibiting implementation of treatment plan
  3. Mandated reporting/event exists (eg, abuse or neglect) or
  4. Play equipment, devices, interpreter, or translator required due to inadequate language expression or different language spoken between patient and professional.

  
_Section III. Psychotherapy Psychiatric Therapeutic Procedures:_  
  
Information in this part of the policy has been subdivided into three (3)
sections. These sections address the following:

  * Insight oriented, behavior modifying, supportive, and/or interactive psychotherapy
  * Psychoanalysis, group psychotherapy, family psychotherapy, and/or interactive group psychotherapy
  * Narcosynthesis for psychiatric diagnostic and/or therapeutic purposes

A.  Insight oriented, behavior modifying, supportive, and/or interactive
psychotherapy  
  
Psychotherapy is defined as "the treatment for mental illness and behavioral
disturbances in which the physician or other qualified health care
professional through definitive therapeutic communication attempts to
alleviate the emotional disturbances, reverse or change maladaptive patterns
of behavior and encourage personality growth and development." (CPT 2013,
_Professional Edition,_ p.485)  
  
The duration of a course of psychotherapy must be individualized for each
patient. Prolonged treatment may be subject to medical necessity review. The
provider must document the medical necessity for prolonged treatment.  
  
Comments: While a variety of psychotherapeutic techniques are recognized for
coverage, the services must be performed by persons authorized by their state
to render psychotherapy services. Healthcare providers would include:
physicians, clinical psychologists, registered nurses with special training
(as described in the "Indications" section), and clinical social workers.
Medicare coverage of psychotherapy does not include teaching grooming skills,
monitoring activities of daily living (ADL), recreational therapy (dance, art,
play) or social interaction. Therefore, psychotherapy codes should not be used
to bill for ADL training and/or teaching social interaction skills.  
  
B. Group psychotherapy, family psychotherapy, and/or interactive group
psychotherapy  
  
Psychoanalysis:  
  
The practice of psychoanalysis involves using special techniques to gain
insight into and treat a patient's unconscious motivations and conflicts using
the development and resolution of a therapeutic transference to achieve
therapeutic effect. It is a different therapeutic modality than psychotherapy.  
  
Comments: The physician or other healthcare professional using this technique
must be trained by an accredited program of psychoanalysis.

  
Group psychotherapy, family psychotherapy, and/or interactive group
psychotherapy:  
  
Description: Services involving the treatment of the family unit when
maladaptive behaviors of family members are exacerbating the beneficiary's
mental illness or interfering with the treatment, or to assist the family in
addressing the maladaptive behaviors of the patient and to improve treatment
compliance.  
  
Comments: Family psychotherapy services are covered only where the primary
purpose of such psychotherapy is the treatment of the patient's condition.
Examples include:

  * When there is a need to observe and correct, through psychotherapeutic techniques, the patient's interaction with family members.
  * Where there is a need to assess the conflicts or impediments within the family, and assist, through psychotherapy, the family members in the management of the patient.

The term "family" may apply to traditional family members, live-in companions,
or significant others involved in the care of the patient.

Facility staff members are not considered "significant others" for the
purposes of the LCD.  
  
Multiple-family group psychotherapy is generally non-covered by Medicare. Such
group therapy is usually directed to the effects of the patient's condition on
the family and its purpose is to support the affected family members.

  
Psychotherapy administered in a group setting:  
  
Description: Psychotherapy administered in a group setting, involving no more
than 12 participants, facilitated by a trained therapist simultaneously
providing therapy to these multiple patients. The group therapy session
typically lasts 45 to 60 minutes. Personal and group dynamics are discussed
and explored in a therapeutic setting allowing emotional catharsis,
instruction, insight, and support.  
  
Comments: Group therapy, since it involves psychotherapy, must be led by a
person who is licensed or otherwise authorized by the state in which he or she
practices to perform this service. This will usually mean a psychiatrist,
psychologist, clinical social worker, clinical nurse specialist, or other
person authorized by the state to perform this service. Registered nurses with
special training, as described in the "Indications and Limitations of Coverage
and/or Medical Necessity" section, may also be considered eligible for
coverage. For Medicare coverage, group therapy does not include:
socialization, music therapy, recreational activities, art classes,
excursions, sensory stimulation or eating together, cognitive stimulation, or
motion therapy, etc.  
  
  
C. Narcosynthesis for psychiatric diagnostic and/or therapeutic purposes.  
  
Description: Narcosynthesis is defined as the administration of sedative or
tranquilizer drugs, usually intravenously, to relax the patient and remove
inhibitions for discussion of subjects difficult for the patient to discuss
freely in the fully conscious state.  
  
Section IV. Psychotherapy in Crisis:  
  
Description: "Psychotherapy for crisis is an urgent assessment and history of
a crisis state, a mental status exam, and a disposition, The treatment
includes psychotherapy, mobilization of resources to defuse the crisis and
restore safety, and implementation of psychotherapeutic interventions to
minimize the potential for psychological trauma. The presenting problem is
typically life threatening or complex and requires immediate attention to a
patient with high distress." (CPT 2013, Professional Edition, p.486)  
  
Section V: Psychiatric Somatotherapy:  
  
Description: Psychiatric Somatotherapy, electroconvulsive therapy (ECT), is
described as the application of electric current to the brain, through scalp
electrodes to produce a seizure. It is used primarily to treat major
depressive disorder when antidepressant medication is contraindicated and for
certain other clinical conditions.  
  
Section VI: Other Psychiatric Services:  
  
A. Description: Individual psychophysiological therapy incorporating
biofeedback training by any modality (face to face with patient), with
psychotherapy (e.g., insight-oriented, behavior-modifying or supportive
psychotherapy)are not covered by Medicare .  
  
Comments: Medicare does not cover biofeedback for the treatment of
psychosomatic disorders.  
  
B. Description: Hypnotherapy. Hypnosis is an artificially induced alteration
of consciousness in which the patient is in a state of increased
suggestibility.  
  
Note: Environmental intervention for medical management purposes on a
psychiatric patient's behalf with agencies, employers, or institutions is not
covered by Medicare.  
  
C. Description: Psychiatric evaluation of hospital records, reports, testing,
or data for diagnosis. A physician or advanced mental health practitioner may
be asked to do a review of records for psychiatric evaluation without direct
patient contact. This may be accomplished at the request of an agency or peer
review organization. It may also be employed as part of an overall evaluation
of a patient's psychiatric illness or suspected psychiatric illness, to aid in
the diagnosis and/or treatment plan.  
  
D. Description: Reporting of examinations, procedures, and other accumulated
data. The treatment of the patient may require explanations to the family,
employers, or other involved persons for their support in the therapy process.

  
E. Description: Preparation of reports for insurance companies, agencies,
courts, etc.  
  
Comments:  Administrative services that do not involve face to face contact
with the patient and are considered bundled services and are not separately
payable by Medicare.  
  
  
Section VII: Central Nervous System Assessments/Tests (e.g., Neuro-Cognitive,
Mental Status, Speech Testing).  
  
A. Description: Psychological testing includes the administration,
interpretation, and scoring of the tests and other medically accepted tests
for evaluation of intellectual strengths, psychopathology, psychodynamics,
mental health risks, insight, motivation, and other factors influencing
treatment and prognosis.  
  
Comments: These tests do not represent psychotherapeutic modalities, but are
diagnostic aids. Use of such tests when mental illness is not suspected would
be a screening procedure not covered by Medicare. Each test performed must be
medically necessary. Therefore, standardized batteries of tests are not
acceptable unless each test in the battery is medically necessary.  
  
Changes in mental illness may require psychological testing to determine new
diagnoses or the need for changes in therapeutic measures. Repeat testing not
required for diagnosis or continued treatment would be considered medically
unnecessary. Nonspecific behaviors that do not indicate the presence of, or
change in, a mental illness would not be an acceptable indication for testing.
Psychological or psychiatric evaluations that can be accomplished through the
clinical interview alone (e.g., response to medication) would not require
psychological testing, and such testing might be considered as medically
unnecessary. Adjustment reactions or dysphoria associated with moving to a
nursing facility do not constitute medical necessity for psychological
testing.  
  
B. Description: Neuro-Cognitive, Mental Status, Speech Testing.  
  
Testing which is intended to diagnose and characterize the neurocognitive
effects of medical disorders that impinge directly or indirectly on the brain.
Examples of problems that might lead to neuropsychological testing are:

  * Detection of neurologic diseases based on quantitative assessment of neurocognitive abilities (e.g., mild head injury, anoxic injuries, AIDS dementia)
  * Differential diagnosis between psychogenic and neurogenic syndromes
  * Delineation of the neurocognitive effects of central nervous system disorders
  * Neurocognitive monitoring of recovery or progression of central nervous system disorders; or
  * Assessment of neurocognitive functions for the formulation of rehabilitation and/or management strategies among individuals with neuropsychiatric disorders.

  
Comments: The content of neuropsychological testing procedures differs from
that of psychological testing in that neuropsychological testing consists
primarily of individually administered ability tests that comprehensively
sample cognitive and performance domains that are known to be sensitive to the
functional integrity of the brain (e.g., abstraction, memory and learning,
attention, language, problem solving, sensorimotor functions, constructional
praxis, etc.). These procedures are objective and quantitative in nature and
require the patient to directly demonstrate his/her level of competence in a
particular cognitive domain. Neuropsychological testing does not rely on self-
report questionnaires such as the Minnesota Multiphasic Personality Inventory
2 (MMPI-2), rating scales such as the Hamilton Depression Rating Scale, or
projective techniques such as the Rorschach or Thematic Apperception Test
(TAT) when questions of how brain damage or degenerative disease processes
(e.g. right hemisphere CVA) may be affecting emotional expression or how
significant emotional distress or mood impairment might be affecting cognitive
function (e.g. question of presence of "pseudodementia") arise.  
  
Typically, psychological testing will require from four (4) to six (6) hours
to perform, including administration, scoring and interpretation. Supporting
documentation in the medical record must be present to justify greater than 8
hours per patient per evaluation. If the testing is done over several days,
the testing time should be combined and reported all on the last date of
service. If the testing time exceeds eight (8) hours, medical necessity for
extended time should be documented. Medical records may be requested.  
  
 **Limitations:**  
  
Severe and profound intellectual disabilities are never covered for
psychotherapy services or psychoanalysis. In such cases, rehabilitative,
evaluation and management (E/M) codes should be reported.  
  
Patients with dementia represent a very vulnerable population in which co-
morbid psychiatric conditions are common. However, for such a patient to
benefit from psychotherapy services requires that their dementia be mild
(e.g., Mini Mental Status Examination score above 15) and that they retain
their capacity to recall the therapeutic encounter from one session,
individual or group, to another. This capacity to meaningfully benefit from
psychotherapy must be documented in the medical record. Psychotherapy services
are not covered when documentation indicates that dementia has produced a
severe enough cognitive defect to prevent psychotherapy from being effective.  
  
Any diagnostic or psychotherapeutic procedure rendered by a practitioner not
practicing within the scope of his/her licensure or other State authorization
will be denied.  
  
Psychiatric services billed under the hospital outpatient benefit must be
provided in distinct outpatient settings. Outpatient hospital services
provided in conjunction with inpatient services, or under the auspices of an
excluded inpatient unit, residential treatment center, residential facility,
or skilled nursing facility, are not in compliance with Medicare regulations
and payment will be denied. Payment may be made for psychiatric services in
these settings by individual providers billing Part B.  
  
The following services do not represent reasonable and necessary outpatient
psychiatric services:

  * day care programs, which provide primarily social, recreational, or diversional activities, custodial or respite care;
  * programs attempting to enhance emotional wellness, e.g., day care programs;
  * services to a skilled nursing facility resident that should be expected to be provided by the nursing facility staff;
  * vocational training when services are related solely to specific employment opportunities, work skills, or work settings;
  * biofeedback training for psychosomatic conditions;
  * recovery meetings such as Alcoholics Anonymous, 12 Step, Al Anon, Narcotics Anonymous, due to their free availability in the community;
  * telephone calls to patients, collateral resources and agencies;
  * evaluation of records, reports, tests, and other data;
  * explanation of results to family, employers, or others;
  * preparation of reports for agencies, courts, schools, or insurance companies, etc. for medicolegal or informational purposes;
  * screening procedures provided routinely to patients without regard to the signs and symptoms of the patient's mental illness.

The following services are excluded from the scope of outpatient hospital
psychiatric services:

  * services to hospital inpatients;
  * meals, transportation;
  * supervision or administration of self-administered medications and supplying medications for home use.

Evaluations of the mental status that can be performed within the clinical
interview, such as a list of questions concerning symptoms of depression or
organic brain syndrome, corresponding to brief questionnaires such as the
Folstein Mini Mental Status Examination or the Beck Depression Scale, should
not be billed as psychological testing, but are considered included in the
clinical interview.  
  
Adjustment reactions or dysphoria associated with moving to a nursing facility
do not constitute medical necessity for psychological testing. However, if a
more serious mood disorder (e.g., major depression) is suspected upon
admission to a nursing facility, psychological or neuropsychological testing
may be indicated for differential diagnostic purposes and to develop
appropriate treatment planning.  
  
Routine testing of nursing home patients is considered screening and is not
covered.  
  
Each psychological test administered must be individually medically necessary.
A standard battery of tests is only medically necessary if each individual
test in the battery is medically necessary.  
  
Psychological testing should not be reported by the treating physician for
only reading the testing report generated by another clinician or explaining
the results of a neuropsychological assessment generated by another clinician
to the patient or family. Payment for these services is included in the
payment for other services rendered to the patient, including both services
provided by neuropsychologists and psychologists and evaluation and management
services billed provided by physicians, e.g., neurologists, rehabilitation
medicine physicians, and psychiatrists.  
  
Psychological testing is limited to physicians, clinical psychologists, and on
a limited basis, to qualified non-physician practitioners (e.g., speech
language pathologists for aphasia evaluation).  
  
  
 **General Comments Regarding Coverage of Outpatient Hospital Diagnostic and
Therapeutic Services:**  
  
Therapeutic services defined as hospital services and provided by a hospital
on an outpatient basis are incident to the services of physicians in the
treatment of patients.  
  
  

  
  

  
  
  
  
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