Outpatient Psychotherapy

LCD Information Document Information Source LCD ID N/A LCD ID L39853 Original ICD-9 LCD ID Not Applicable LCD Title Outpatient Psychotherapy Proposed LCD in Comment Period N/A Source Proposed LCD DL39853 Opens in a new window Original Effective Date For services performed on or after 10/20/2024 Revision Effective Date N/A Revision Ending Date N/A Retirement Date N/A Notice Period Start Date 09/05/2024 Notice Period End Date 10/19/2024 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 No changes between proposed LCD and final LCD. CMS National Coverage Policy This Local Coverage Determination (LCD) supplements but does not supersede, modify, or replace any existing Medicare applicable National Coverage Determinations (NCDs) or payment policy rules and regulations for outpatient psychotherapy services. The federal statutes and Medicare regulations are lengthy and will not be repeated in this LCD. All providers who report service covered under this LCD must follow all existing laws, regulations and standards for Medicare payment and must properly submit valid claims for these services. Title XVIII of the Social Security Act, 1862(a)(1)(A) allows coverage and payment only for services deemed reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Title XVIII of the Social Security Act, 1862(a)(7) excludes routine physical exams. 45 CFR, §164.501 Definitions 42 CFR, §410.71 Clinical psychologist services and services and supplies incident to clinical psychologist services 42 CFR, §410.73-410.76 Coverage of services provided by clinical social workers, physician assistants, nurse practitioners, or clinical nurse specialists 42 CFR §410.100-410.105 Coverage, exclusions, requirements for coverage of services furnished to an outpatient in a Comprehensive Outpatient Rehabilitation Facility (CORF). CMS Internet-Only Manual, Pub. 100-01, Medicare General Information, Eligibility and Entitlement Manual, Chapter 3, §30 Outpatient Mental Health Treatment Limitation CMS Internet-Only Manual, Pub. 100-02, Medicare Benefit Policy Manual, Chapter 6, §20.5 Outpatient Therapeutic Services, §70.1 Outpatient Hospital Psychiatric Services (General), §70.2 Coverage Criteria for Outpatient Hospital Psychiatric Services CMS Internet-Only Manual, Pub. 100-02, Medicare Benefit Policy Manual, Chapter 12, §40.7 Social and/or Psychological Services CMS Internet-Only Manual, Pub. 100-02, Medicare Benefit Policy Manual, Chapter 15, §160 Clinical Psychologist Services CMS Internet-Only Manual, Pub. 100-03, Medicare National Coverage Determinations (NCD) Manual, Chapter 1, Part 1, §70.1, Consultations With a Beneficiary’s Family and Associates CMS Internet-Only Manual, Pub. 100-04, Medicare Claims Processing Manual, Chapter 12, §120.2 Outpatient Mental Health Treatment Limitation, §150 Clinical Social Worker (CSW) Services, §160, Independent Psychologist Services, §160.1 Payment, §170 Clinical Psychologist Services, §170.1 Payment, §210 Outpatient Mental Health Treatment Limitation CMS Internet-Only Manual, Pub. 100-08 Medicare Program Integrity Manual, Chapter 3, §3.3.2.6 Psychotherapy Notes Coverage Indications, Limitations, and/or Medical Necessity This LCD outlines the medical necessity requirements for Part A and Part B services in diagnosis and treatment of various mental health disorders and/or diseases. Psychotherapy is the treatment of mental illness and behavioral disturbances in which a provider establishes professional contact with a patient. Through therapeutic communication and techniques, the provider attempts to alleviate emotional disturbances, reverse or change maladaptive behaviors, facilitate coping mechanisms and/or encourage personality growth and development. Psychotherapy would be medically necessary when a patient has a psychiatric illness and/or is demonstrating emotional and/or behavioral symptoms sufficient to cause inappropriate behavior or maladaptive functioning. The psychotherapy services must be conducted by a state licensed provider whose training and scope of practice allows that provider to perform the services rendered. Psychotherapy treatment must be directly related to the patient’s identified condition/diagnosis. The psychotherapy may be administered as a standalone treatment or along with medical evaluation and management (E/M) services. The medical management services are unique to patients with psychiatric diagnoses and may include the medical E/M of underlying medical conditions, drug interactions and physical examinations, indicated drug management, physician orders, interpretation of laboratory or study diagnostics and observations. The patient must be willing to allow insight-oriented therapy (behavioral medication, interpersonal psychotherapy, supportive therapy, cognitive/behavioral techniques) for this form of treatment to be effective. If a patient receives psychotherapy as well as medical E/M services on the same date of service, there should be significant differences and separately identifiable interactions to be medically necessary. Psychotherapy Psychiatric Therapeutic Procedures -Defined as “the treatments 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 2024, Professional edition, P.758) -Insight oriented, behavior modifying, supportive and/or interactive psychotherapy. -Psychoanalysis, group psychotherapy, family psychotherapy, and/or interactive group psychotherapy. Psychoanalysis: the practice of psychoanalysis uses techniques to gain insight into and treat unconscious motivations and conflicts. This is not psychotherapy. Group Psychotherapy: psychotherapy in a group setting. No more than 12 individuals should be in the group. Sessions facilitated by a therapist trained to administer therapy to all participants simultaneously. These sessions must be led by a state recognized person licensed or authorized to perform this service. (Psychiatrist, psychologist, clinical social worker, clinical nurse specialist, etc.) This is a therapeutic setting where personal and group dynamics are explored to allow for emotional catharsis, instruction, insight, and support. (Does not include socialization, music therapy, art classes/therapy, recreational activities, excursions, etc.) The participants are a carefully screened group meeting for a predetermined period during which common issues are presented and relate to and evolve toward a theme or therapeutic goal. During sessions, personal and group dynamics are explored and discussed to allow for emotional outpouring, instruction, and support. Group therapy will be considered medically necessary when a patient has a psychiatric illness and/or is demonstrating emotional and/or behavioral symptoms sufficient to cause inappropriate behavior or maladaptive functioning. This service must be ordered by a provider as a part of an active treatment plan which is directly related to the patient’s condition/diagnosis. The treatment plan must be followed, and it must be endorsed by and monitored by the treating physician or the physician of record. Family Psychotherapy: a specialized technique of treating a patient’s mental illness by interacting with a patient’s family unit to modify the family structure, dynamic and interactions which may influence the patient’s behaviors and emotions. These family sessions may occur with or without the presence of the patient. This service must be done Face to Face. This process will identify which family communication patterns sustain and reflect the patient’s behaviors. A family member is someone identified as an individual who spends significant amounts of time with the patient and provides psychological support. This can include, but is not limited to, a caregiver and/or significant other. Family psychotherapy is only reasonable and necessary in clinically appropriate circumstances and when the primary purpose of the therapy is the treatment/management of the patient’s condition. For example: when there is a need to observe and correct patient interaction with family members, or a need to assess the conflicts or impediments within the family dynamic. Family psychotherapy will be considered medically necessary when a patient has a psychiatric illness and/or is demonstrating emotional and/or behavioral symptoms sufficient to cause inappropriate behavior or maladaptive functioning. Group therapy with families with similar issues may be indicated. These group sessions may be approved on an individual basis based on the need for this treatment for the beneficiary’s condition. Documentation must support the necessity of the therapy. Interactive Complexity Services: when there is no ability to communicate through verbal interaction. Therefore, non-verbal communication skills or an interpreter may be necessary. Can include difficult communication with discordant or emotional family members and engagement of impaired patients. It may involve the use of physical aids, inanimate objects, and non-verbal communication to overcome barriers to therapeutic interactions. Psychotherapy for Crisis: In a crisis situation, psychotherapy is an urgent assessment and must include history of the crisis state, a mental status exam and disposition. The presenting problem would typically be life threatening or complex situation and require immediate attention to a beneficiary in distress. Documentation must support the need for crisis psychotherapy and be based on time based, patient contact only, does not need to be continuous. Must be Face to Face. 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. If the psychotherapy treatment is prolonged, there must be adequate well-supported documentation for the ongoing service describing it as necessary. Prolonged treatment may be subject to medical review. Progress may be small or not measurable with each visit, however, a trend of improvement/regressions should be noted. When the services are in excess of established parameters, they may be subject to medical review. There should be a reasonable expectation for improvement where a decline would be otherwise expected based on patient diagnoses and condition. If there is a point where there is no further improvement, the services will no longer be considered reasonable or necessary. If documentation can support that the mental stability of a patient is dependent on further psychotherapy, this documentation must be provided. Timed codes utilized are to be based on the actual time spent with the beneficiary. For prolonged sessions, the appropriate add-on timed E/M codes are to be utilized. Psychotherapy does not include teaching grooming skills, monitoring activities of daily living (ADLs), recreational therapies (dance, art, play) or social interaction. Psychotherapy may be used alone or in conjunction with pharmacotherapy. Psychotherapy E/M codes Payable only to physicians or non-physician providers. Should only utilize a psychotherapy code if the service is primarily a psychotherapy service. Psychiatric somatotherapy (ECT), Biofeedback, Hypnotherapy, CNS testing are not covered under this LCD. The beneficiary must be able to recall the therapy interactions from one session to the next. Summary of Evidence Psychotherapy is utilized in treating mental health issues. Psychotherapy, along with medication, is one of the most common forms of mental health treatment. Psychotherapy, or talk therapy, refers to a variety of treatments that aim to help a person identify and change troubling emotions, thoughts, and behaviors. The goals of psychotherapy are to gain relief firm symptoms, maintain or enhance functioning and improve quality of life.1 Reasons for psychotherapy include: severe or long-term stress (job, family situation, grief), symptoms without physical findings (sleep pattern issues, appetite problems, low energy, irritability, lack of interest, hopelessness etc.), a diagnosis of a mental health disorder that interferes with a patient’s life from a health care professional, a child or family member with a mental health condition to better support that person. Psychotherapy can help identify the psychological root cause of a condition so a person can function better and have enhanced emotional well-being and healing.2 Most people who receive psychotherapy benefit with symptom relief and have improved life functionality. About 75% of people who enter psychotherapy show some benefit from this form of treatment.3 Numerous studies have shown brain changes with brain imaging techniques in patients with mental illness as a result of undergoing psychotherapy. This holds true for depression, panic disorder, PTSD (post-traumatic stress disorder), and other conditions. In most cases, the brain changes resulting from psychotherapy were similar to changes resulting from medication.4 Studies have shown that psychotherapy, specifically, cognitive behavioral therapy (CBT), during tapering and discontinuation of antidepressants were significantly less likely to experience relapse/recurrence compared with control conditions.5 Analysis of Evidence (Rationale for Determination) The cited studies have shown the improvement from psychotherapy in patient functioning, emotional control, alleviating symptoms of mental illness, minimizing stress, and improving quality of life for those suffering from various mental illnesses. Improvements were noted in patients with depression, PTSD, and panic disorder as well as other mental health maladies. Improvement has also been noted when used in conjunction with medications, where appropriate. Psychotherapy improves functioning and quality of life for many patients. Individualized care and treatment plans and goals tailored to each recipient enhances mental well-being rendering this service both reasonable and necessary.

This LCD outlines the medical necessity requirements for Part A and Part B services in diagnosis and treatment of various mental health disorders and/or diseases. Psychotherapy is the treatment of mental illness and behavioral disturbances in which a provider establishes professional contact with a patient. Through therapeutic communication and techniques, the provider attempts to alleviate emotional disturbances, reverse or change maladaptive behaviors, facilitate coping mechanisms and/or encourage personality growth and development. Psychotherapy would be medically necessary when a patient has a psychiatric illness and/or is demonstrating emotional and/or behavioral symptoms sufficient to cause inappropriate behavior or maladaptive functioning. The psychotherapy services must be conducted by a state licensed provider whose training and scope of practice allows that provider to perform the services rendered. Psychotherapy treatment must be directly related to the patient’s identified condition/diagnosis. The psychotherapy may be administered as a standalone treatment or along with medical evaluation and management (E/M) services. The medical management services are unique to patients with psychiatric diagnoses and may include the medical E/M of underlying medical conditions, drug interactions and physical examinations, indicated drug management, physician orders, interpretation of laboratory or study diagnostics and observations. The patient must be willing to allow insight-oriented therapy (behavioral medication, interpersonal psychotherapy, supportive therapy, cognitive/behavioral techniques) for this form of treatment to be effective. If a patient receives psychotherapy as well as medical E/M services on the same date of service, there should be significant differences and separately identifiable interactions to be medically necessary. Psychotherapy Psychiatric Therapeutic Procedures -Defined as “the treatments 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 2024, Professional edition, P.758) -Insight oriented, behavior modifying, supportive and/or interactive psychotherapy. -Psychoanalysis, group psychotherapy, family psychotherapy, and/or interactive group psychotherapy. Psychoanalysis: the practice of psychoanalysis uses techniques to gain insight into and treat unconscious motivations and conflicts. This is not psychotherapy. Group Psychotherapy: psychotherapy in a group setting. No more than 12 individuals should be in the group. Sessions facilitated by a therapist trained to administer therapy to all participants simultaneously. These sessions must be led by a state recognized person licensed or authorized to perform this service. (Psychiatrist, psychologist, clinical social worker, clinical nurse specialist, etc.) This is a therapeutic setting where personal and group dynamics are explored to allow for emotional catharsis, instruction, insight, and support. (Does not include socialization, music therapy, art classes/therapy, recreational activities, excursions, etc.) The participants are a carefully screened group meeting for a predetermined period during which common issues are presented and relate to and evolve toward a theme or therapeutic goal. During sessions, personal and group dynamics are explored and discussed to allow for emotional outpouring, instruction, and support. Group therapy will be considered medically necessary when a patient has a psychiatric illness and/or is demonstrating emotional and/or behavioral symptoms sufficient to cause inappropriate behavior or maladaptive functioning. This service must be ordered by a provider as a part of an active treatment plan which is directly related to the patient’s condition/diagnosis. The treatment plan must be followed, and it must be endorsed by and monitored by the treating physician or the physician of record. Family Psychotherapy: a specialized technique of treating a patient’s mental illness by interacting with a patient’s family unit to modify the family structure, dynamic and interactions which may influence the patient’s behaviors and emotions. These family sessions may occur with or without the presence of the patient. This service must be done Face to Face. This process will identify which family communication patterns sustain and reflect the patient’s behaviors. A family member is someone identified as an individual who spends significant amounts of time with the patient and provides psychological support. This can include, but is not limited to, a caregiver and/or significant other. Family psychotherapy is only reasonable and necessary in clinically appropriate circumstances and when the primary purpose of the therapy is the treatment/management of the patient’s condition. For example: when there is a need to observe and correct patient interaction with family members, or a need to assess the conflicts or impediments within the family dynamic. Family psychotherapy will be considered medically necessary when a patient has a psychiatric illness and/or is demonstrating emotional and/or behavioral symptoms sufficient to cause inappropriate behavior or maladaptive functioning. Group therapy with families with similar issues may be indicated. These group sessions may be approved on an individual basis based on the need for this treatment for the beneficiary’s condition. Documentation must support the necessity of the therapy. Interactive Complexity Services: when there is no ability to communicate through verbal interaction. Therefore, non-verbal communication skills or an interpreter may be necessary. Can include difficult communication with discordant or emotional family members and engagement of impaired patients. It may involve the use of physical aids, inanimate objects, and non-verbal communication to overcome barriers to therapeutic interactions. Psychotherapy for Crisis: In a crisis situation, psychotherapy is an urgent assessment and must include history of the crisis state, a mental status exam and disposition. The presenting problem would typically be life threatening or complex situation and require immediate attention to a beneficiary in distress. Documentation must support the need for crisis psychotherapy and be based on time based, patient contact only, does not need to be continuous. Must be Face to Face. 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. If the psychotherapy treatment is prolonged, there must be adequate well-supported documentation for the ongoing service describing it as necessary. Prolonged treatment may be subject to medical review. Progress may be small or not measurable with each visit, however, a trend of improvement/regressions should be noted. When the services are in excess of established parameters, they may be subject to medical review. There should be a reasonable expectation for improvement where a decline would be otherwise expected based on patient diagnoses and condition. If there is a point where there is no further improvement, the services will no longer be considered reasonable or necessary. If documentation can support that the mental stability of a patient is dependent on further psychotherapy, this documentation must be provided. Timed codes utilized are to be based on the actual time spent with the beneficiary. For prolonged sessions, the appropriate add-on timed E/M codes are to be utilized. Psychotherapy does not include teaching grooming skills, monitoring activities of daily living (ADLs), recreational therapies (dance, art, play) or social interaction. Psychotherapy may be used alone or in conjunction with pharmacotherapy. Psychotherapy E/M codes Payable only to physicians or non-physician providers. Should only utilize a psychotherapy code if the service is primarily a psychotherapy service. Psychiatric somatotherapy (ECT), Biofeedback, Hypnotherapy, CNS testing are not covered under this LCD. The beneficiary must be able to recall the therapy interactions from one session to the next.