DEPARTMENT OF HEALTH & HUMAN SERVICES 	 Office of Inspector General 
Washington, D.C.  20201 
JUlt8l0'1U 

TO:  Marilyn Tavenner 
Acting Administrator and Chief Operating Officer 
Centers for Medicare & Medicaid Services 
FROM:  Stuart Wright 
Deputy Inspector General 
for Evaluation and Inspections 
SUBJECT: 	 Memorandum Report:  Medicare Part B Services During Non-Part A Nursing 
Home Stays:  Mental Health, OEI-06-06-00580 
This memorandum report presents the results of a medical record review to determine the extent to 
which Part B mental health services provided to Medicare beneficiaries during non-Part A I nursing 
home2 stays in 2006 did not meet program requirements for coverage.  We used resident 
assessment data from the Minimum Data Set (MDS) to identify all nursing home stays nationwide 
during 2006 and contracted with licensed psychiatrists and professional coders to conduct medical 
record reviews for a sample of claims with Part B mental health services. 
We found that 39 percent of Medicare Part B claims allowed for mental health services during 
non-Part A nursing home stays in 2006 did not meet the program requirements for coverage. 
Spe~ifically, services were medically unnecessary, undocumented or inadequately documented, 
or miscoded.  These errors resulted in an estimated $74 million in inappropriate Part B payments, 
of the $211 million allowed in 2006.  Claims for psychotherapy services comprised the majority 
ofthese inappropriately paid claims .. Additionally, we foun~ that 71 percent ofthe sampled 
mental health claims contained inaccurate diagnosis codes or lacked adequate documentation to 
support the diagnosis code, although these codes did not directly affect reimbursement. 
J Nursing home stays not paid by Medicare Part A (part A) constitute non-Part A stays. Part A covers posthospital skilled nursing facility (SNF) 
care to eligible beneficiaries for up to 100 days in SNFs during which Part A will pay for mental health services as part of the nursing home's 
daily rate. After the 100 days or if the beneficiary does not qualifY for a Part A stay, Medicare Part B (Part B) may provide coverage for mental 
health services. Non-Part A stays occur in Medicare-certified SNFs, Medicaid-certified nursing facilities (NF), and dually certified SNFfNFs. 
2 For purposes of this evaluation, the term "nursing home" is generic for any nursing home regardless of primary payer (e.g., Medicare, 
Medicaid, or private resources). 
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BACKGROUND  
In 2006, Medicare allowed $1.7 billion for Part B mental health services that diagnose, treat, or 
manage psychiatric disorders.3  This amount remained nearly constant at $1.6 billion in 2008.4  
Mental health services are assigned procedure codes from the Healthcare Common Procedure 
Coding System (HCPCS).5  (See Appendix A for a list of mental health HCPCS codes included 
in this review.)  In addition to HCPCS codes, providers must identify the appropriate diagnosis 
for each submitted claim using the International Classification of Diseases 9th Revision  
(ICD-9).6  In general, diagnoses of mental health disorders fall under ICD-9 codes 290 to 319. 
Types of Mental Health Services 
Under Medicare Part B, beneficiaries can receive a variety of mental health services to diagnose, 
treat, or manage mental health disorders.  Medicare Part B allowed mental health services 
include psychiatric diagnosis, psychotherapy, and psychiatric treatments other than 
psychotherapy.  
Psychiatric diagnosis.  Diagnostic services used to identify mental health disorders allow providers 
to plan for a patients treatment of care.  Psychiatric diagnostic services may include psychological 
and neuropsychological testing.  During psychological testing, providers assess the emotionality, 
intellectual abilities, personality, or psychopathology of the patient.  Additionally, providers may 
perform neuropsychological testing to assess the presence of aphasias,7 developmental disorders, 
or other neuropsychological disorders.    
Psychotherapy.  Subsequent to identifying mental health disorders, treatments of care may include 
psychotherapy, a therapeutic procedure covered by Medicare, involving therapeutic communication 
between the provider of service and the patient.  Providers attempt to alleviate emotional 
disturbances in the patients life and relationships by identifying and resolving problems needed to 
achieve optimal functioning and reversing or changing maladaptive behavior patterns. 
Psychiatric treatments other than psychotherapy.  Other treatments covered by Part B include 
biofeedback training, family consultations, pharmacologic management, electroconvulsive therapy, 
 
3
 This total includes all claims, including those for beneficiaries residing in or out of nursing homes, with psychiatric codes (Current Procedural 
Terminology (CPT) codes 9080190899) in addition to claims for evaluation, management, and central nervous system tests that are supported 
by a mental disorder diagnosis.  The estimate is based on Office of Inspector General (OIG) analysis of a 1-percent sample of the 2006 Medicare 
National Claims History. 
4
 Ibid.  The figure is based on OIG analysis of the 2008 Medicare National Claims History (NCH). 
5
 Centers for Medicare & Medicaid Services (CMS), Medicare Claims Processing Manual, Pub. No. 100-04, ch. 7,  20.  All CMS manuals 
referenced in this report can be accessed at http://www.cms.gov/Manuals/IOM/list.asp?intNumPerPage=all&submit=Go.   
6
 In addition to the ICD-9, CMS and its contractors use the American Psychiatric Associations Diagnostic and Statistical Manual of Mental 
Disorders (DSM), which covers all mental health disorders for both children and adults.  The DSM lists known causes of a disorder, gender 
statistics, age at onset, and prognosis, as well as research concerning the optimal treatment approaches.  Together, the ICD-9 and the DSM 
provide the diagnostic codes used for mental health conditions. 
7
 Aphasias involve disorders of expressive and receptive speech and language function. 
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environmental intervention, hypnotherapy, psychoanalysis, and other services not directly related to 
psychotherapy. 
During non-Part A nursing home stays, Medicare generally pays providers 80 percent of the 
allowed amount for Part B services.  However, for mental health services provided in outpatient 
settings, Medicare first limits its incurred expenses to 62.5 percent of the allowed amount, and then 
pays 80 percent of the reduced amount.  As a result, Medicare may pay only 50 percent for mental 
health services.  This payment policy is called the outpatient mental health treatment limitation.8  
Mental Health Coverage Guidance 
In 2003, CMS issued guidance to its payment contractors in the form of a program memorandum 
specifically focusing on Part B mental health services.  The program memorandum summarized a 
number of existing guidelines for coverage as follows:9 
(1) Section 1862(a)(1)(A) of the Social Security Act states that all Medicare Part B services, including 
mental health services, must be reasonable and necessary for the diagnosis or treatment of an illness or injury 
or to improve the functioning of a malformed body member.   
(2) For every service billed, providers must indicate the specific sign, symptom, or patient complaint 
necessitating the service. 
(3) CPT and ICD-9-CM codes reported on health insurance claim form should be supported by 
documentation in the medical record.  
(4) Providers should follow the documentation guidance for psychiatric diagnostic or evaluative interview 
procedures and psychiatric therapeutic procedures (CPT codes 90801  98002, 90804  90899 under the 
Psychiatric Section)  as described in the Physicians Current Procedural Terminology . 
CMS instructed its payment contractors to include the memorandum in bulletins to providers and to 
post it on the contractors Web sites.   
Mandate for Office of Inspector General To Monitor Part B Payments 
With the repeal of the Balanced Budget Act of 1997s (BBA)10 consolidated billing provisions 
for non-Part A stays,11 section 313(d) of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA)12 directed OIG to conduct monitoring of 
Medicare Part B payments during non-Part A stays to ensure that there are no excessive services 
provided.13   
 
8
 Certain mental health services are exempt from the outpatient mental health treatment limitation (e.g., diagnostic services, such as 
psychological testing).  See 42 CFR  410.155. 
9
 CMS, Program Memorandum Change Request 2520, Transmittal AB-03-037, March 28, 2003. 
10
 P.L. 105-33. 
11
 Section 4432 of the BBA established a prospective payment system for Part A stays and required nursing homes to arrange for and consolidate 
into a single Medicare bill the Part B services that a resident needs during his or her nursing home stay. 
12
 P.L. 106-554. 
13
 Section 313 of the BIPA maintained consolidated billing for Part A stays and therapy services (regardless of Part A coverage), but repealed 
consolidated billing requirements for non-Part A stays.  Therefore, claims for beneficiaries during non-Part A stays continue to be individually 
submitted by suppliers and providers, except for therapy services. 
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As part of this monitoring, OIG recently completed evaluations of durable medical equipment 
use14 and enteral nutrient pricing.15  Two ongoing evaluations include a medical record review of 
enteral nutrition therapy claims and an overview of Part B services during non-Part A nursing 
home stays.   
Related Work  
Over the last decade, OIG has performed several reviews of mental health services provided to 
Medicare beneficiaries.16  In a 2001 review, OIG focused on mental health services in nursing 
homes and found that over one-third of the mental health services were not medically necessary, 
were not documented, or were questionable.17  In another review, OIG found that approximately  
31 percent of outpatient Part B mental health services allowed in 1998 were paid in error resulting 
in $185 million in inappropriate payments.18     
More recently, OIG issued a report in 2007 on payments for Part B mental health services provided 
to beneficiaries in 2003.19  The study included all settings, not just nursing homes.  The report 
found that 47 percent20 of the mental health services allowed by Part B did not meet program 
requirements, resulting in approximately $718 million in inappropriate payments.  Of the sampled 
services, OIG found that miscoded and undocumented services accounted for 26 percent and  
19 percent, respectively, of identified errors.  Further, medically unnecessary services and services 
that violated the incident to rule21 each accounted for 4 percent of identified errors.  OIG 
recommended that CMS revise, expand, and reissue its 2003 program memorandum on Part B 
mental health services with an increased emphasis on proper documentation and coding and 
emphasis on the requirements of the incident to rule.  In its response, CMS agreed that 
additional focused provider education on mental health services may be warranted, but noted that 
significant information on medical documentation requirements and on the incident to rule was 
available on its Web site.  To date, CMS has not reissued the 2003 program memorandum.  
However, in July 2008, CMS issued a special edition article to explain and consolidate Medicares 
guidelines for payment of Part B mental health services.22 
 
 
14
 OIG, Part B Services During Non-Part A Nursing Home Stays:  Durable Medical Equipment (OEI-06-07-00100), July 2009. 
15
 OIG, Medicare Part B Services During Non-Part A Nursing Home Stays:  Enteral Nutrient Pricing (OEI-06-07-00590), January 2010.   
16
 OIG, Five-State Review of Partial Hospitalization Programs at Community Mental Health Centers (A-04-98-02145), October 1998; Review of 
Outpatient Psychiatric Services at Psychiatric Hospitals for Calendar Year 1998 (A-01-99-00530), November 2000; and Medicare Part B 
Payments for Mental Health Services (OEI-03-99-00130), May 2001.     
17
 OIG, Medicare Payments for Psychiatric Services in Nursing Homes:  A Follow-up (OEI-02-99-00140), January 2001. 
18
 OIG, Medicare Part B Payments for Mental Health Services (OEI-03-99-00130), May 2001.   
19
 OIG, Medicare Payments for 2003 Part B Mental Health Services:  Medical Necessity, Documentation, and Coding (OEI-09-04-00220),  
April 2007.   
20
 This is the percentage of identified unduplicated errors.   
21
 Section 1861(s)(2)(A) of the Social Security Act, 42 CFR  410.26. 
22
 CMS, Medicare Payments for Part B Mental Health Services, July 2008.   
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Payment Errors Identified and Reviewed by CMS  
In 2002, CMS established the Comprehensive Error Rate Testing (CERT) program to review 
approximately 100,000 randomly selected claims for payment accuracy.  The CERT reviews result 
in annually published reports by CMS, and identify the degree to which sampled claims complied 
with Medicare coverage, coding, and billing regulations.   
According to the 2006 CERT report, psychotherapy (HCPCS code 90806:  4550 minute session of 
individual insight-oriented psychotherapy furnished in an office or outpatient facility) was among 
the top 20 services with documentation errors.23  This psychotherapy service had a documentation 
error rate of 5.1 percent and a projected improper payment amount of nearly $13 million.  These 
CERT results, however, are not comparable with our studys results because of methodological 
differences between the two reviews.  For example, the CERT focuses on a random sample of all 
claims submitted to Medicares fee-for-service program, whereas this review focused solely on a 
random sample of Part B mental health claims submitted during non-Part A nursing home stays.   
METHODOLOGY 
Scope 
For this study, we identified all Part B mental health claims associated with beneficiaries during  
non-Part A nursing home stays in 2006.  We conducted a medical necessity, documentation, and 
coding review of mental health services provided to a random sample of nursing home residents 
during these stays.   
Identification of Mental Health Claims During Non-Part A Nursing Home Stays 
We utilized several databases obtained from CMS to identify Part B payments allowed for mental 
health services during non-Part A nursing home stays.  These databases included the MDS, the 
Online Survey Certification and Reporting system (OSCAR), the Enrollment Database (EDB), and 
the NCH.     
Minimum Data Set.  The MDS is a core set of screening, clinical, and functional status elements, 
including common definitions and coding categories, which forms the foundation of the 
comprehensive assessment for all residents of long-term care facilities certified to participate in 
Medicare or Medicaid.24  It includes information about each residents health, physical functioning, 
mental status, and general well-being, as well as nursing home admission and discharge dates.  
Each nursing home reports these individual assessments electronically to the State upon admission 
and updates them at least quarterly.25  The States subsequently transmit MDS data to CMS.  We 
used the MDS (version 2.0) to identify all assessed nursing home residents in 2006 and their  
Social Security numbers (SSN), related nursing homes, and nursing home stay dates.  To determine 
resident stay dates between January 1 and December 31, 2006, we extracted all nursing home 
 
23
 CMS, Long Report  Improper Medicare Fee-For-Service Payments Report, November 2006. 
24
 CMS, Resident Assessment Instrument Version 2.0 Manual, December 2002, ch. 1, p. 4. 
25
 More assessments are required for stays paid under the Part A SNF benefit. 
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admission and discharge dates for each resident.  We used assessment dates as proxies for missing 
admission or discharge dates according to the following assumptions: 
  Missing Admission Date.  If the resident was in the nursing home on January 1, 2006 
(determined from subsequent assessments that the nursing homes conducted), we used the date 
of the first assessment conducted in 2005 as the admission date.   
  Missing Discharge Date.  We defined the date of the last assessment (received through  
March 2007) as the discharge date.   
Online Survey Certification and Reporting system.  The OSCAR database contains nursing home 
facility demographic information, as well as survey results from nursing home certification and 
complaint surveys.  To obtain information about nursing homes (e.g., facility name; address; 
number of beds; and SNF, NF, or dual SNF/NF certification), we linked the MDS facility 
identification numbers with the facility numbers maintained in OSCAR.   
Enrollment Database.  The EDB includes beneficiary-level data (e.g., name, SSN, and Medicare 
Health Insurance Claim Number (HICN)).  Using this database, we matched SSNs contained in the 
MDS file to SSNs in the EDB to identify Medicare beneficiaries and their associated HICNs.  We 
excluded beneficiaries having no matching SSN from further analysis.   
National Claims History.  The NCH is a data reporting system that includes both Part A and Part B 
claims.  We used the NCH to identify mental health claims allowed by Part B during non-Part A 
nursing home stays.  To identify mental health claims associated with Medicare beneficiaries with 
nursing home stays (identified earlier), we first matched their HICNs to claims with mental health 
service HCPCS.  This match identified mental health claims allowed for Medicare beneficiaries 
during all nursing home stays.  To identify claims only during non-Part A stays, we then removed 
all claims for Part A paid SNF stays26 and inpatient hospital stays by matching the stay dates from 
the MDS to the SNF and inpatient hospital claims in the NCH.  The resulting dataset comprised all 
mental health claims for which billing was allowed under Part B during non-Part A nursing home 
stays in 2006.   
Sample Design 
The matches with the MDS, the OSCAR, the EDB, and the NCH resulted in a population of all 
beneficiaries who had allowed Part B mental health claims during non-Part A nursing home stays 
in 2006.  A random sample of 400 claims out of 2,963,572 claims was reviewed for medical 
necessity, sufficiency of documentation, and appropriateness of billing codes.  Medical reviews 
could not be done for 24 of the sampled claims for the following reasons:  the facility identification 
was unavailable, the facility moved and could not be reached by telephone or mail, or the facility 
indicated that the beneficiary had never been in its facility.  Therefore, the resulting sample 
comprised 376 claims. 
 
26 OIG routinely conducts audits related to the issue of inappropriate Part B payments occurring during Part A stays.  As such, we excluded all 
Part A stays from our review. 
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Medical Review 
To conduct a medical review of the sample of Part B mental health claims, we obtained medical 
records and documentation from the providers of service and nursing homes where the 
beneficiaries were residing in 2006.  To allow for records relating to an entire episode of care, we 
requested resident records for 6 months prior to the date of the sampled claim(s) to 1 month 
following the date; this provided more context and detail for the medical reviewers.  When a 
provider did not respond to our initial request for documentation, we sent up to two followup 
request letters and conducted followup telephone calls for more information.  See Appendix B for a 
list of medical documents requested from nursing homes and providers.   
Identifying medically unnecessary, inadequately documented, and miscoded claims.  We contracted 
with licensed psychiatrists and professional coders to conduct a review of medical records for 
beneficiaries associated with the sampled claims.  The psychiatrists and coders reviewed 
beneficiaries nursing home medical records and provider services records, and compared them 
against coverage guidelines, definitions from the ICD-9, the DSM, and the CPT.   
We calculated inappropriately paid amounts for claims with medically unnecessary services, 
inadequately documented services, and miscoded services.27  Some of the sampled claims had 
more than one type of error.  However, in calculating the total claims inappropriately paid, we 
adjusted for overlapping errors by counting claims with multiple errors only once.  
Standards 
This study was conducted in accordance with the Quality Standards for Inspections approved by 
the Council of Inspectors General on Integrity and Efficiency. 
RESULTS 
Thirty-nine Percent of Mental Health Claims Allowed by Medicare Part B During  
Non-Part A Nursing Home Stays in 2006 Did Not Meet Program Requirements for Coverage, 
Resulting in $74 Million in Inappropriate Payments 
Medicare allowed approximately $211 million for Part B mental health claims during non-Part A 
nursing home stays in 2006.  Thirty-nine percent of these claims did not meet the program 
requirements for coverage.  As a result, Medicare allowed inappropriate payments of $74 million 
for these mental health claims.  For example, we found that 25 percent of claims were 
undocumented or lacked adequate documentation to determine whether they were medically 
necessary or whether they supported the services billed.  Other errors involved claims that were 
medically unnecessary or miscoded.  Table 1 groups these sampled claims by type of error and 
displays statistical projections of these errors to the population of Medicare Part B payments during 
non-Part A nursing home stays in 2006.  Related confidence intervals are provided in Appendix C. 
 
27
 Miscoded services can be upcoded (billed for higher procedure codes than were actually performed), downcoded (billed for lower procedure 
codes than were actually performed), or inaccurately coded (the correct service is completely different from the service billed). 
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Table 1.  Medicare Part B Allowed Mental Health Claims That Did Not Meet Program 
Requirements for Coverage During Non-Part A Nursing Home Stays in 2006 
Sample  
Projected 
(376 Total Claims) 
Type of Error 
Inappropriately  Percentage of  Inappropriately 
Number of Claims
Allowed Amount Services   Allowed Amount
Medically Unnecessary  37 $2,870 9.8  $21,264,592
Undocumented/Inadequately Documented*  95 $7,158 25.3  $53,034,825
To Determine Medical Necessity  46 $3,525 12.2  $26,114,330
To Support Services Billed  84 $6,313 22.3  $46,774,798
Miscoded  29 $534 7.7  $3,953,850
(Total Overlapping Errors)  (14) ($587) (3.7)  ($4,351,857)
Total Errors 147 $9,975 39.1  $73,901,410
* We adjusted for claims that had both of these documentation errors by counting them only once. 
Source:  OIG medical review of Part B mental health services provided to beneficiaries during non-Part A nursing home stays in 2006. 
 
Medicare Part B allowed inappropriate payments of $21 million for medically unnecessary mental 
health claims.  Based on the psychiatrists medical review, we estimate that 10 percent (37 of  
376 claims) of Part B mental health claims allowed during non-Part A nursing home stays in 2006 
were medically unnecessary.  For example, a medically unnecessary service involved a patient who 
was given full sessions of psychotherapy twice a week.  Given the patients memory problems and 
dementia, the psychiatrist reviewer determined that the intensity and level of treatment were 
unnecessary and inappropriate, especially after 3 years of treatment.28    
Medicare Part B allowed inappropriate payments of $53 million for mental health claims lacking 
adequate documentation.  We estimate that 25 percent (95 of 376 claims) of Part B mental health 
claims allowed during non-Part A nursing home stays in 2006 were undocumented, lacked 
adequate documentation to determine whether they were medically necessary, or lacked adequate 
documentation to support the services billed.29  Of the 376 sampled mental health claims, 9 percent 
(33 of 376 claims) were completely undocumented, 3 percent (13 of 376 claims) lacked adequate 
documentation to determine whether services were reasonable and medically necessary,30 and  
22 percent (84 of 376 claims) lacked adequate documentation to substantiate either the 
appropriateness of the service billed or the date of service.  These errors resulted in $18 million,  
$8 million, and $47 million in inappropriate payments by Part B, respectively.  Because we 
 
28
 Payment contractor coverage guidelines (i.e., local coverage determinations) do not cover psychotherapy services when documentation 
indicates that dementia has produced a severe enough cognitive defect to prevent establishment of a relationship with the therapist which allows 
insight-oriented, behavior-modifying, or supportive therapy to be effective. 
29
 Under section 1833(e) of the Social Security Act, [n]o payment shall be made to any provider of services  unless there has been furnished 
such information as may be necessary in order to determine the amounts due such provider  for the period with respect to which the amounts 
are being paid or for any prior period. 
30
 For the majority of these claims, there were no records for the correct date of service.   
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adjusted for claims that had two or more of these documentation errors by counting them only 
once, total inappropriate payment due to lack of documentation was $53 million. 
Medicare Part B allowed inappropriate payments of $4 million for miscoded mental health claims.  
We estimated that 8 percent of mental health claims allowed by Medicare Part B were miscoded, 
resulting in $4 million in overpayments.  Of the 376 sampled Part B mental health claims, 
reviewers identified 29 claims that contained HCPCS billing codes that did not accurately reflect 
the services provided.  We found that 17 of these 29 miscoded claims were upcoded, meaning that 
providers billed for higher procedure codes than were actually performed.  For example, a provider 
billed for a longer length of service than indicated by the medical records, resulting in an 
overpayment.  The provider billed for psychotherapy treatment that lasted 45 to 50 minutes (90818) 
while medical reviewers determined that only a 20- to 30-minute (90816) session was provided.  
The remaining 12 miscoded claims contained inaccurate services codes, in which the correct 
service is completely different from the service billed.31  For example, one provider billed for 
psychotherapy treatment that lasted 20 to 30 minutes (90816), while medical reviewers determined 
that the provider actually furnished medication management (90862).  Accounting for sample 
claims with both overpayments and underpayments, we estimate that Medicare Part B allowed net 
overpayments of $4 million.   
Psychotherapy Services Comprised the Vast Majority of Errors Related to Medical Necessity, 
Documentation, and Miscoding 
Consistent with the 2006 CERT report, which found that a psychotherapy service was among the 
top 20 services with documentation errors, we found that psychotherapy services were associated 
with the most number of errors related to medical necessity, documentation, and miscoding.  
Individual insight-oriented psychotherapy services, specifically, accounted for the majority of 
claims across all error types.  For example, individual insight-oriented psychotherapy services 
comprised 30 (of 37) claims and 24 (of 29) claims that had medical necessity errors and miscoding 
errors, respectively.  See Table 2 for the distribution of errors by types of mental health services.  
Other services associated with errors include group psychotherapy, family psychotherapy, drug 
management, psychiatric examination, and electroconvulsive therapy. 
 
31
 Five of these twelve inaccurate services resulted in underpayments by Medicare Part B. 
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Table 2.  Distribution of Error Types by Types of Mental Health Service* 
Inadequate  Inadequately 
Total Claims 
Medically  Documentation To  Documented To 
Service Type (As Billed)  Miscoded  (Unduplicated 
Unnecessary  Determine Medical  Support Services 
Count) 
Necessity Billed
Individual Insight-Oriented 
30  31  49  24  100 
Psychotherapy 
Group Psychotherapy  4  4  12  1  18 
Pharmacologic Management  
2  9  16  2  20 
With No Psychotherapy 
Psychiatric Diagnostic  
1  2  6  1  7 
Interview Examination 
Family Psychotherapy  0  0  0  1  1 
Electroconvulsive Therapy  0  0  1  0  1 
Total Number of Claims  37  46  84  29  147 
*Sample size=376 
Source:  OIG medical review of Part B mental health services provided to beneficiaries during non-Part A nursing home stays in 2006. 
 
Although Diagnosis Codes Did Not Directly Affect Reimbursement, 71 Percent of Part B 
Mental Health Claims Contained Inaccurate Diagnosis Codes or Lacked Adequate 
Documentation To Support the Diagnosis Code 
Based on the psychiatrists medical review, we found that 268 of the 376 (71 percent)32 sampled 
Part B mental health claims contained errors related to the ICD-9 codes listed on the claims.33  
These inaccurate ICD-9 codes did not have a direct impact on the reimbursement of the sampled 
Part B mental health claims.34  In most cases, the medical record supported the need for mental 
health services.  However, including an inaccurate or undocumented diagnosis is inconsistent with 
the 2003 program memorandum and possibly could affect quality of care if it prevented a patient 
from receiving the proper treatment to address his or her illness.  Furthermore, other providers who 
become involved in the patients care might mistakenly rely on an inaccurately coded diagnosis 
when planning further treatments for the patient.   
Of the 268 sampled Part B mental health claims that contained errors related to the ICD-9 codes, 
174 contained inaccurate ICD-9 codes.  For example, one patient had been diagnosed with senile 
dementia with depressive features (ICD-9 code 290.21), but medical reviewers determined that the 
patient should have been diagnosed with Alzheimers disease35 (ICD-9 code 331.0) based on 
 
32
 We adjusted for claims that had both of these diagnostic errors by counting them only once. 
33
 Forty-five percent (120 of 268) of these claims also did not meet 1 or more of the program requirements previously discussed.  
34
 CMSs CERT contractors do not consider ICD-9 diagnostic codes when identifying errors in their reviews, as long as the condition indicated 
in the medical record supports the medical necessity of the service.  
35
 Alzheimer's disease is a neurodegenerative disorder of the central nervous system resulting in progressive loss of memory and intellectual 
functions; begins in the middle or later years; characterized by brain lesions, such as neurofibrillary tangles and neuritic plaques. 
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medical record documentation.  For the remaining 94 claims, reviewers could not make a 
determination about the appropriateness of the diagnosis due to the lack of documentation.36     
CONCLUSION  
Medicare Part B payments for mental health services during non-Part A nursing home stays 
continue to be an area of concern.  Our results are consistent with prior OIG reports that have 
identified inappropriately paid mental health services.  Thirty-nine percent of Part B mental 
health claims allowed during non-Part A nursing home stays in 2006 were paid inappropriately 
because of claims that were medically unnecessary, undocumented or inadequately documented, 
or miscoded.  These errors resulted in an estimated $74 million in inappropriate Part B payments.   
To address issues related to Part B payments for mental health services, CMS promoted provider 
awareness by posting guidance material online and issued a special edition article in 2008 to 
explain and consolidate Medicares guidelines for payment of Part B mental health services.37  
Although the article may have improved provider compliance since issuance, we cannot 
determine its impact because CMS issued the guidance material after the service dates for the 
claims examined during this evaluation.   
This report is being issued directly in final form because it contains no recommendations.  If you 
have comments or questions about this report, please provide them within 60 days.  Please refer 
to report number OEI-06-06-00580 in all correspondence. 
 
 
 
36
 Based on CMSs program memorandum, ICD-9 codes reported on claim forms should be supported by documentation in the medical record. 
37
 CMS, Medicare Payments for Part B Mental Health Services, July 2008.   
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APPENDIX A 
Table A-1:  Healthcare Common Procedure Coding System Mental Health Codes  
Description  Current Procedural Terminology  Code 
Psychiatric Diagnosis 
Evaluation of patient self-assessment for depression  S3005 
Interview  9080190802 
Evaluation of records or reports  90885 
Report preparation  90889 
Psychological testing  9610196103 
Neuropsychological testing  9611896120 
Psychotherapy 
Individual 
Insight-oriented    Hospital or residential care    9081690819, 9082190822 
    Office or outpatient  9080490809 
Interactive    Hospital or residential care    9082390824, 9082690829 
Office or outpatient  9081090815 
Family  9084690847, 90849 
Group  90853, 90857 
Pharmacologic management with minimal psychotherapy  90862 
Psychiatric Services Other Than Psychotherapy 
Pharmacologic management with no psychotherapy  M0064 
Partial hospitalization services  S0201 
Intensive outpatient psychiatric services  S9480 
Family stabilization services  S9482 
Crisis intervention mental health services  S9484S9485 
Psychoanalysis  90845 
Narcosynthesis analysis  90865 
Electroconvulsive therapy  90870 
Biofeedback training  9087590876 
Hypnotherapy  90880 
Environmental intervention  90882 
Consultation with family  90887 
Any unlisted mental health service and procedure  90899 
Note:  A medical evaluation and management service conducted on the same day as a psychotherapy service must not be reported separately 
when billing codes 90805, 90807, 90809, 90811, 90813, 90815, 90817, 90819, 90822, 90824, 90827, and 90829. 
Source:  Centers for Medicare & Medicaid Services, and American Medical Associations Physicians Current Procedural Terminology. 
 
 
OEI-06-06-00580          Medicare Part B Services During Non-Part A Nursing Home Stays:  Mental Health   
 
 
 
Page 13  Marilyn Tavenner 
 
 
APPENDIX B 
Table B-1:  Medical Record Documents Requested From Nursing Homes and 
Providers 
The following documents for a period of 6 months prior to identified service to 1 month following service: 
Physician orders to include telephone and verbal orders 
Physician progress notes 
History and physical notes 
 
Medication records
Nurse progress notes 
Other progress notes 
Discharge summaries for any inpatient stays during 2006 
Psychiatric, psychological, or other related notes/records/procedures/tests 
All MDS resident assessments conducted during 2005 through 2007 
Any mental health assessments conducted during 2005 through 2007 
Any other information concerning medical necessity 
Source:  Office of Inspector General evaluation of 376 sample Part B mental health claims for non-Part A nursing home stays during 2006. 
 
OEI-06-06-00580          Medicare Part B Services During Non-Part A Nursing Home Stays:  Mental Health   
 
 
 
Page 14  Marilyn Tavenner 
 
 
APPENDIX C  
 
Table C-1:  Confidence Intervals for Mental Health Claims That Did Not Meet Program 
Requirements for Coverage During Non-Part A Nursing Home Stays in 2006* 
Estimated Inappropriately 
95-Percent 
Statistic  N  Allowed Amount/ 
Confidence Interval 
Percentage of Claims 
$21,264,592  $18,578,943$23,950,242 
Medically Unnecessary  37 
9.8 %  6.812.9 % 
$53,034,825    $48,636,041$57,433,609 
Undocumented/Inadequately Documented**  95 
25.3 %  20.929.7 % 
$26,114,330  $23,273,569$28,955,090 
To Determine Medical Necessity  46 
12.2 %  8.915.6 % 
$46,774,798  $42,543,041$51,006,555 
To Support Services Billed  84 
22.3 %  18.126.6% 
$3,953,850  $1,722,334$6,185,365 
Miscoded  29 
7.7 %  5.010.4% 
($4,351,857)  ($1,961,476$6,742,239) 
(Total Overlapping Errors)  (14) 
(3.7 %)  (1.85.6 %) 
$73,901,410  $67,495,681$80,307,138 
    Total Errors  147 
39.1 %  34.144.1 % 
*Sample size=376; N=number in sample 
** We adjusted for claims that had two or more of these documentation errors by counting them only once. 
Source:  Office of Inspector General analysis and projections of 376 sample Part B mental health claims and payments for non-Part A nursing home 
stays during 2006. 
 
 
 
 
 
 
 
 
 
 
 
 
 
OEI-06-06-00580          Medicare Part B Services During Non-Part A Nursing Home Stays:  Mental Health