Psychiatric Inpatient Hospitalization

LCD Information Document Information Source LCD ID N/A LCD ID L34183 Original ICD-9 LCD ID Not Applicable LCD Title Psychiatric Inpatient Hospitalization Proposed LCD in Comment Period N/A Source Proposed LCD N/A Original Effective Date For services performed on or after 10/01/2015 Revision Effective Date For services performed on or after 04/02/2026 Revision Ending Date N/A Retirement Date N/A Notice Period Start Date N/A Notice Period End Date N/A CPT codes, descriptions, and other data only are copyright 2025 American Medical Association. All Rights Reserved. Fee schedules, relative value units, conversion factors and/or related components are not assigned by the AMA, are not part of CPT, and the AMA is not recommending their use. The AMA does not directly or indirectly practice medicine or dispense medical services. The AMA assumes no liability for data contained or not contained herein. CPT is a registered trademark of the American Medical Association. 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Issue Issue Description This LCD outlines limited coverage for this service with specific details under Coverage Indications, Limitations and/or Medical Necessity. Issue - Explanation of Change Between Proposed LCD and Final LCD CMS National Coverage Policy Language quoted from Centers for Medicare and Medicaid Services (CMS), National Coverage Determinations (NCDs) and coverage provisions in interpretive manuals is italicized throughout the policy. NCDs and coverage provisions in interpretive manuals are not subject to the LCD Review Process (42 CFR 405.860[b] and 42 CFR 426 [Subpart D]). In addition, an administrative law judge may not review an NCD. See Section 1869(f)(1)(A)(i) of the Social Security Act.Unless otherwise specified, italicized text represents quotation from one or more of the following Centers for Medicare and Medicaid Services (CMS) sources:Title XVIII of the Social Security Act (SSA):Section 1812(a)(1) Inpatient hospital services defined.Section 1812(b)(3) Lifetime limit of 190 days for inpatient psychiatric benefit days.Section 1814(4) Medical Records document that services were furnished while the individual was receiving intensive treatment, admission and related services for a diagnostic study, or equivalent services requirement.Section 1833(e) prohibits Medicare payment for any claim which lacks the necessary information to process the claim.Section 1835(a) Physician certification as a requirement. Section 1861(a), 1861(c), and 1861(f) "Spell of illness", "inpatient psychiatric hospital services", "psychiatric hospital", "medical and other health services" defined. Section 1862(a)(1)(A) excludes expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.Code of Federal Regulations:42 CFR Section 409.62 describes the lifetime maximum on inpatient psychiatric care.42 CFR Section 410.32 indicates that diagnostic tests may only be ordered by the treating physician (or other treating practitioner acting within the scope of his or her license and Medicare requirements).42 CFR Section 411.4(a) states that the Medicare Program does not pay for services if the beneficiary has no legal obligation to pay.42 CFR Section 411.8(a) states that the Medicare Program does not pay for services if the services are paid for directly or indirectly by a governmental entity.CMS Publications:CMS Publication 100-01, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 4: 10 Certification and Recertification by Physicians for Hospital Services - General 10.1 Failure to Certify or Recertify for Hospital Services 10.2 Who May Sign Certification or Recertification 10.4 Inpatient Hospital Services Certification and Recertification 10.5 Selection by Hospital of Format and Method for Obtaining Statement 10.9 Inpatient Psychiatric Facility Hospital Services Certification and Recertification 10.20.2 Timing for Certification and Recertification for a Beneficiary Admitted Before Entitlement CMS Publication 100-01, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 5: 20.3 Psychiatric Hospital 20.4 Certification of Parts of Institutions as a Psychiatric Hospital 20.5 Part of a Psychiatric Institution as a Psychiatric Hospital 20.6 General Hospital Facility of Psychiatric Hospital 20.7 Part of a General Hospital as a Psychiatric Hospital CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2 10 Inpatient Psychiatric Facility Services 10.1 Background 10.2 Statutory Requirements 10.3 Affected Medicare Providers 20 Admission Requirements 30 Medical Records Requirements 30.1 Development of Assessment/Diagnostic Data 30.2 Psychiatric Evaluation 30.2.1 Certification and Recertification Requirements 30.2.1.1 Certification 30.2.1.2 Recertification 30.2.2 Active Treatment 30.2.2.1 Principles for Evaluating a Period of Active Treatment 30.2.3 Services Supervised and Evaluated by a Physician 30.3 Treatment Plan 30.3.1 Individualized Treatment or Diagnostic Plan 30.3.2 Services Expected to Improve the Condition or for Purpose of Diagnosis 30.4 Recording Progress 30.5 Discharge Planning and Discharge Summary 40 Personnel Requirements 40.1 Director of Inpatient Psychiatric Services; Medical Staff 40.2 Nursing Services 50 Psychological Services 60 Social Services 70 Therapeutic Activities 80 Benefit Application 90 Benefits Exhaust CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 4: 10 Inpatient Psychiatric Benefit Days Reduction 10.1 Patient Status on Day of Entitlement 10.2 Institution's Status in Determining Days Deducted 20 Days of Admission, Discharge, and Leave 30 Reduction for Psychiatric Services in General Hospitals 40 Determining Days Available 50 Inpatient Psychiatric Hospital Services – Lifetime Limitation CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 16: 50.3.1Application of Exclusion to State and Local Government Providers CMS Publication 100-03, Medicare National Coverage Determinations Manual, Chapter 1: 30.4 Electrosleep Therapy 30.5 Transcendental Meditation 70.1 Consultations with a Beneficiary's Family and Associates 130.1 Inpatient Hospital Stays for the Treatment of Alcoholism 130.3 Chemical Aversion Therapy for Treatment of Alcoholism 130.4 Electrical Aversion Therapy for Treatment of Alcoholism (Electroversion Therapy, Electro-shock Therapy, Noxious Faradic Stimulation) 130.6 Treatment of Drug Abuse (Chemical Dependency) 130.8 Hemodialysis for Treatment of Schizophrenia 160.25 Multiple Electroconvulsive therapy (MECT) 230.4 Diagnosis and Treatment of Impotence CMS Publication 100-04, Medicare Claims Processing Manual, Chapter 1: 10.4 Claims Submitted for Items or Services Furnished to Medicare Beneficiaries in State or Local Custody Under a Penal Authority CMS Publication 100-04, Medicare Claims Processing Manual, Chapter 3: 30.1 Requirements for CAH Services, CAH Skilled Nursing Care Services and Distinct Part Units CMS Publication 100-04, Medicare Claims Processing Manual, Chapter 29: 230 Where to Appeal and Initial Determinations Coverage Indications, Limitations, and/or Medical Necessity Abstract:Inpatient psychiatric hospitalization provides twenty four (24) hours of daily care in a structured, intensive, and secure setting for patients who cannot be safely and/or adequately managed at a lower level of care. This setting provides daily physician (MD/DO) supervision, twenty-four (24) hour nursing/treatment team evaluation and observation, diagnostic services, and psychotherapeutic and medical interventions. Inpatient psychiatric care may be delivered in a Psychiatric Hospital, a Psychiatric Hospital Acute Care Unit within a Psychiatric Institution, or a Psychiatric Inpatient Unit within a General Hospital as defined in CMS Publication 100-01, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 5, Sections 20.3, 20.4, 20.5, 20.6, and 20.7. Indications:Medicare patients admitted to inpatient psychiatric hospitalization must be under the care of a physician who is knowledgeable about the patient. The physician must certify/recertify (see "Documentation Requirements" section) the need for inpatient psychiatric hospitalization. The patient must require "active treatment" of his/her psychiatric disorder. The patient or legal guardian must provide written informed consent for inpatient psychiatric hospitalization in accord with state law. If the patient is subject to involuntary or court-ordered commitment, the services must still meet the requirements for medical necessity in order to be covered by Medicare. Admission Criteria (Intensity of Service):The patient must require intensive, comprehensive, multimodal 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. Claims for care delivered at an inappropriate level of intensity will be denied.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 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: 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 disordered/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. For patients with a dementing 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 could include: Increasing severity of psychiatric symptoms; Noncompliance with medication regimen due to the severity of psychiatric symptoms; Inadequate clinical response to psychotropic medications; Due to the severity of psychiatric symptoms, the patient is unable to participate in an outpatient psychiatric treatment program. NOTE: 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. Active Treatment:The italicized text in this portion of the policy is quoted verbatim from CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30: For services in an IPF (Inpatient Psychiatric Facility) 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. Refer to 42 CFR 482.61 on "Conditions of Participation for Hospitals" for a full description of what constitutes active treatment (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1). 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. 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" (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.3). The services provided 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 (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.3.2). The types of services which meet the above requirements would include not only psychotherapy, drug therapy, and electroconvulsive therapy, but also such therapeutic activities as occupational therapy, recreational therapy, and milieu therapy, provided the therapeutic activities 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 (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.3).In accordance with the above definition of improvement, the administration of antidepressant or tranquilizing drugs that 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 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 (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.3). 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 (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.3). (Although it is a CMS requirement that the physician see the patient at least once per week, this is a dated reference, referring to a time when patients were hospitalized for long periods of time. The current standard of practice is that the physician usually sees the patient five times per week.) When the physician periodically evaluates the therapeutic program to determine the extent to which treatment goals are being realized and whether changes in direction or emphasis are needed (based on consultations and conferences with therapists, review of the patient's progress as recorded on the medical record and the physician's periodic conversations with the patient), active treatment would be indicated. A finding that a patient is not receiving active treatment will not in itself preclude payment for physicians' services under Medicare Part B. As long as the professional services rendered by the physician are reasonable and necessary for the care of the patient, such services would be reimbursable under the medical insurance program. (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.3). 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 facility services were provided because of the individual's need for active treatment (not just the days on which specific therapeutic or diagnostic services are 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 (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1). 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 (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1). 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. (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 2, Section 30.2.2.1). Discharge Criteria (Intensity of Service):Patients in inpatient psychiatric care may be discharged by stepping down to a less intensive level of outpatient care. Stepping down to a less intensive level of service than inpatient hospitalization 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. It may be appropriate for some patients to receive an unsupervised pass to leave the hospital for a brief period in order to assess their readiness for outpatient care. 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 still require 24-hour observation available in an inpatient psychiatric unit should be stepped down to outpatient care. Patients who are persistently unwilling or unable to participate in active treatment of their psychiatric condition would also be appropriate for discharge. Qualified Providers:For Medicare coverage, inpatient psychiatric diagnostic and psychotherapy services rendered to Medicare beneficiaries must be provided by individuals licensed or otherwise authorized by the state in which they practice, to render such services. While non-licensed trainees may provide psychotherapy services as part of a training program, those psychotherapy services rendered by individuals not licensed or authorized by the state will be considered not medically necessary, and may contribute to the denial of inpatient psychiatric claims. The majority of psychotherapy services must be provided by licensed personnel to assure a satisfactory patient outcome and Medicare coverage. Non-physician practitioners, licensed or authorized by the state, may perform duties within their scope of practice, such as individual and/or group psychotherapy, family counseling, occupational therapy, and diagnostic services. Providers of inpatient psychiatric services may include: Physicians:1. Medical Doctor (MD) (See Title XVIII of the Social Security Act, Section 1861[r].)2. Doctor of Osteopathy (DO) (See Title XVIII of the Social Security Act, Section 1861[r].) Nonphysician Clinical Practitioners:1. Clinical Psychologists (See Title XVIII of the Social Security Act, Sections 1861[s][2][M] and 1861[hh][2][ii].)2. Clinical Nurse Specialists (CNSs), Adult Psychiatric and Mental Health Nurse Practitioners, or other master's-prepared nurses with appropriate mental health training and/or experience (See Title XVIII of the Social Security Act, Sections 1861[s][2][K][ii] and 1861[aa][5][B].)*3. Licensed/certified clinical social workers (CSWs), master’s-prepared social workers with additional clinical training AND licensure or state certification (See Title XVIII of the Social Security Act, Sections 1861[s][2][N] and 1861[hh][1].)4. Occupational Therapists (See Title XVIII of the Social Security Act, Section 1861[g] and 42 CFR Sections 440.110 and 484.4.)* Medicare requires nurses who provide psychiatric diagnostic evaluation and psychotherapy services to have special training and/or experience beyond the standard curriculum required for an RN. Such nurses should have one or more of the following credentials: MS/MSN – Master of Science in Psychiatric Nursing (or its equivalent); CNS – Clinical Nurse Specialist in Adult Psychiatric and Mental Health Nursing; NP – Adult Psychiatric and Mental Health Nurse Practitioner.These requirements do not apply to the standard nursing services rendered to psychiatric inpatients such as nursing evaluations, passing medications, psychiatric education and training services, and milieu interventions. Other Providers Licensed or Otherwise Authorized by the State:1. Marriage and Family Therapists (MFTs). 2. Registered Therapists and Certified Alcohol and Drug Counselors.3. Recreational Therapists.4. Registered pharmacists who may provide individual medication counseling and periodic educational groups5. Other licensed or certified mental health practitioners whose scope of practice requires a specific level of supervision (e.g., Psychological Assistants, MFT interns and non-licensed/certified master’s degree in social work may provide services within the limits of state scope of practice, licensure, and regulations). Other Comments Related to Qualified Providers:1. Unlicensed psychology interns are not considered to be a covered provider of service. 2. Supervision of trainees must at least meet the state-mandated supervision requirements. Such supervision need not occur on the inpatient psychiatric unit but must be documented and documentation must be maintained in the hospital and available for inspection upon request by Medicare or submitted to Medicare when requested. 3. Routine services provided as a part of the care of psychiatric inpatients, oftentimes performed by bachelor degree level psychiatric technicians, under the direction of the nursing service, need to conform to local state licensing or certification requirements, if any.NOTE: Limits of local, state or federal scope of practice acts, legislation, and licensure regulations apply to all practitioners within an inpatient psychiatric treatment unit. In all cases, the most restrictive limit shall apply (e.g., who may or may not perform individual or group psychotherapy, and for what conditions). Limitations: Failure to provide documentation to support the necessity of test(s) or treatment(s) may result in denial of claims or services under Sections 1862(a)(1)(A) and 1833(e) of the Title XVIII of the Social Security Act. This includes medical records: that do not support the reasonableness and necessity of service(s) furnished; in which the documentation is illegible; or where medical necessity for inpatient psychiatric services is not appropriately certified by the physician. The following services do not represent reasonable and medically necessary inpatient psychiatric services and coverage is excluded under Title XVIII of the Social Security Act, Section 1862(a)(1)(A): Services which are primarily social, recreational or diversion activities, or custodial or respite care; Services attempting to maintain psychiatric wellness for the chronically mentally ill; Treatment of chronic conditions without acute exacerbation; Vocational training; Medical records that fail to document the required level of physician supervision and treatment planning process; Electrosleep therapy (CMS Publication 100-03, Chapter 1, Section 30.4); Electrical Aversion Therapy for treatment of alcoholism (CMS Publication 100-03, Chapter 1, Section 130.4); Hemodialysis for the treatment of schizophrenia (CMS Publication 100-03, Chapter 1, Section 130.8); Transcendental Meditation (CMS Publication 100-03, Chapter 1, Section 30.5); Multiple Electroconvulsive Therapy (MECT) (CMS Publication 100-03, Chapter 1, Section 160.25). It is not reasonable and medically necessary to provide inpatient psychiatric hospital services to the following types of patients, and coverage is excluded under Title XVIII of the Social Security Act, Section 1862(a)(1)(A): Patients who require primarily social, custodial, recreational, or respite care; Patients whose clinical acuity requires less than twenty-four (24) hours of supervised care per day; Patients who have met the criteria for discharge from inpatient hospitalization; Patients whose symptoms are the result of a medical condition that requires a medical/surgical setting for appropriate treatment; Patients whose primary problem is a physical health problem without a concurrent major psychiatric episode; Patients with alcohol or substance abuse problems who do not have a combined need for "active treatment" and psychiatric care that can only be provided in the inpatient hospital setting. (CMS Publication 100-03, Chapter 1, Section 130.1 and 130.6, respectively); Patients for whom admission to a psychiatric hospital is being used as an alternative to incarceration. Listing an ICD-10-CM code in the Mental Disorders category does not assure coverage of the specific service. Upon medical review, coverage criteria specified in this Local Coverage Determination shall be applied to the entire medical record to determine medical necessity. Medicare contractors may automatically deny a claim without any manual review if a National Coverage Determination (NCD) or a Local Coverage Determination (LCD) specifies the circumstances under which a service is denied and those circumstances exist, or the service is specifically excluded from Medicare coverage by statute. Summary of Evidence N/A Analysis of Evidence (Rationale for Determination) N/A