Changes to Coverage and Billing of Partial Hospitalization Program Services

by Valerie A. Rinkle, MPA

On March 31, CMS released special edition MLN Matters article SE1607 regarding new enforcement editing requirements for the Medicare Benefit Policy Manual (Internet-Only Manual 100-02), Chapter 6, section 70.3, which describes coverage and billing of Partial Hospitalization Program (PHP) services. This guidance is likely due to the significant problems with PHP service claims and coding highlighted in the 2016 proposed and final OPPS rules.

This guidance is effective for PHP services furnished on or after July 1.

CMS defines a PHP program as a distinct and organized intensive treatment program for patients who would otherwise require inpatient psychiatric care. PHP services are covered under Medicare Part B when provided by a hospital outpatient department (HOPD) (including a CAH) or a Medicare-certified Community Mental Health Clinic (CMHC). PHP services closely resemble highly structured short-term hospital inpatient behavioral health programs. Partial hospitalization services include active treatment that incorporates individualized treatment plans that describe the type, frequency, and duration of services as well as coordination of services around each patient’s needs. The services require a multidisciplinary team approach under the direction of a physician and reflect a high degree of structure and scheduling. Treatment goals should be measurable, functional, regularly scheduled, medically necessary, and directly related to the PHP.

For PHP services to be covered, patients in a PHP must be under care of a physician who certifies the medical necessity of the services and the patient must be able to participate and tolerate a minimum of 20 hours per week of therapeutic services. The services must be comprehensive, structured, multimodal treatment that necessitates medical supervision and coordination due to a mental disorder (i.e., mental health diagnosis) that severely interferes with multiple areas of daily life.

PHP covered services include:

• Individual or group psychotherapy
• Occupational therapy
• Drugs and biologicals; not self-administered
• Individualized activity therapies; not recreational
• Family counseling services
• Patient training and education
• Medically necessary diagnostic services related to mental health treatment

CMS began efforts to improve PHP payment with extensive data analysis and policy changes finalized in the CY 2008 final rule (72 FR 66670). At that time, CMS made two refinements to the methodology: (1) 10 revenue codes that are common among hospital-based PHP claims were remapped to the most appropriate cost centers; and (2) the PHP median per diem cost was computed with a separate per diem cost for each day rather than for each bill. In CY 2009, CMS continued refinements by implementing several regulatory, policy, and payment changes, including a two-tiered payment approach for PHP services under which one amount was paid for days with three services under APC 0172 (Level I Partial Hospitalization) and a higher amount was paid for days with four or more services under APC 0173 (Level II Partial Hospitalization) (73 FR 68688). Also in CY 2009, CMS revised the regulations at 42 CFR 410.43 to codify existing basic PHP patient eligibility criteria and physician certification requirements under 42 CFR 424.24.

To view the complete article that appeared on Medicare Compliance Watch, click here.