CMS Pub. 100-04, ch. 12, § 210.1

A. Status of Patient

The limitation is applicable to expenses incurred in connection with the

treatment of an individual who is not an inpatient of a hospital. Thus,

the limitation applies to mental health services furnished to a person in

a physician’s office, in the patient’s home, in a skilled nursing facility,

as an outpatient, and so forth. The term “hospital” in this context

means an institution, which is primarily engaged in providing to

inpatients, by or under the supervision of a physician(s):

• Diagnostic and therapeutic services for medical diagnosis, treatment and

care of injured, disabled, or sick persons;

• Rehabilitation services for injured, disabled, or sick persons; or

• Psychiatric services for the diagnosis and treatment of mentally ill

patients.

B. Disorders Subject to the Limitation

The term “mental, psychoneurotic, and personality disorders” is defined

as the specific psychiatric diagnoses described in the International

Classification of Diseases, 9th Revision (ICD-9), under the code range

290-319.

When the treatment services rendered are both for a psychiatric

diagnosis as defined in the ICD-9 and one or more nonpsychiatric

conditions, separate the expenses for the psychiatric aspects of

treatment from the expenses for the nonpsychiatric aspects of

treatment. However, in any case in which the psychiatric treatment

component is not readily distinguishable from the nonpsychiatric

treatment component, all of the expenses are allocated to whichever

component constitutes the primary diagnosis.

1. Diagnosis Clearly Meets Definition - If the primary diagnosis reported for

a particular service is the same as or equivalent to a condition described in the

ICD9 under the code range 290-319 that represents mental, psychoneurotic and

personality disorders, the expense for the service is subject to the limitation except

as described in subsection D.

2. Diagnosis Does Not Clearly Meet Definition - When it is not clear

whether the primary diagnosis reported meets the definition of mental,

psychoneurotic, and personality disorders, it may be necessary to contact the

practitioner to clarify the diagnosis. In deciding whether contact is necessary in a

given case, give consideration to such factors as the type of services rendered, the

diagnosis, and the individual’s previous utilization history.

C. Services Subject to the Limitation

A/B MACs (B) must apply the limitation to claims for professional

services that represent mental health treatment furnished to individuals

who are not hospital inpatients by physicians, clinical psychologists,

clinical social workers, nurse practitioners, clinical nurse specialists

and physician assistants. Items and supplies furnished by physicians

or other mental health practitioners in connection with treatment are

also subject to the limitation.

Generally, A/B MACs (B) must apply the limitation only to treatment

services. However, diagnostic psychological and neuropsychological

testing services performed to evaluate a patient’s progress during

treatment are considered part of treatment and are subject to the

limitation.

D. Services Not Subject to the Limitation

1. Diagnosis of Alzheimer’s Disease or Related Disorder - When the primary

diagnosis reported for a particular service is Alzheimer’s Disease or an Alzheimer’s

related disorder, A/B MACs (B) must look to the nature of the service that has been

rendered in determining whether it is subject to the limitation. Alzheimer’s disease

is coded 331.0 in the “International Classification of Diseases, 9th Revision”, which

is outside the code range 290-319 that represents mental, psychoneurotic and

personality disorders. Additionally, Alzheimer’s related disorders are identified by

A/B MACs (B) under ICD-9 codes that are within the 290-319 code range

(290.XX or others as A/B MACs (B) determine appropriate) or outside the 290-319

code range as determined appropriate by A/B MACs (B). When the primary

treatment rendered to a patient with a diagnosis of Alzheimer’s disease or a related

disorder is psychotherapy, it is subject to the limitation. However, typically,

treatment provided to a patient with a diagnosis of Alzheimer’s Disease or a related

disorder represents medical management of the patient’s condition (such as

described under CPT code 90862 or any successor code) and is not subject to the

limitation. CPT code 90862 describes pharmacologic management, including

prescription, use, and review of medication with no more than minimal medical

psychotherapy.

2. Brief Office Visits for Monitoring or Changing Drug Prescriptions - Brief

office visits for the sole purpose of monitoring or changing drug prescriptions used

in the treatment of mental, psychoneurotic and personality disorders are not subject

to the limitation. These visits are reported using HCPCS code M0064 or any

successor code (brief office visit for the sole purpose of monitoring or changing

drug prescriptions used in the treatment of mental, psychoneurotic, and personality

disorders). Claims where the diagnosis reported is a mental, psychoneurotic, or

personality disorder (other than a diagnosis specified in subsection A) are subject

to the limitation except for the procedure identified by HCPCS code M0064 or any

successor code.

3. Diagnostic Services - A/B MACs (B) do not apply the limitation to

psychiatric diagnostic evaluations and diagnostic psychological and

neuropsychological tests performed to establish or confirm the patient’s diagnosis.

Diagnostic services include psychiatric diagnostic evaluations billed under CPT

codes 90801 or 90802 (or any successor codes) and, psychological and

neuropsychological tests billed under CPT code range 96101-96118 (or any

successor code range).

An initial visit to a practitioner for professional services often combines diagnostic

evaluation and the start of therapy. Such a visit is neither solely diagnostic nor

solely therapeutic. Therefore, A/B MACs (B) must deem the initial visit to be

diagnostic so that the limitation does not apply. Separating diagnostic and

therapeutic components of a visit is not administratively feasible, unless the

practitioner already has separately identified them on the bill. Determining the

entire visit to be therapeutic is not justifiable since some diagnostic work must be

done before even a tentative diagnosis can be made and certainly before therapy

can be instituted. Moreover, the patient should not be disadvantaged because

therapeutic as well as diagnostic services were provided in the initial visit. In the

rare cases where a practitioner’s diagnostic services take more than one visit, A/B

MACs (B) must not apply the limitation to the additional visits. However, it is

expected such cases are few. Therefore, when a practitioner bills for more than

one visit for professional diagnostic services, A/B MACs (B) may find it necessary

to request documentation to justify the reason for more than one diagnostic visit.

4. Partial Hospitalization Services Not Directly Provided by a Physician or a

Practitioner - The limitation does not apply to partial hospitalization services that

are not directly provided by a physician, clinical psychologist, nurse practitioner,

clinical nurse specialist, or a physician assistant. Partial hospitalization services

are billed by hospital outpatient departments and community mental health centers

(CMHCs) to A/B MACs (A). However, services furnished by physicians, clinical

psychologists, nurse practitioners, clinical nurse specialists, and physician

assistants to partial hospitalization patients are billed separately from the partial

hospitalization program of services. Accordingly, these professional’s mental

health services to partial hospitalization patients are paid under the physician fee

schedule by A/B MACs (B) and may be subject to the limitation. (See chapter 4,

section 260.1C).

5. Intensive Outpatient Services Not Directly Provided by a Physician or a

Practitioner - The limitation does not apply to intensive outpatient services that are

not directly provided by a physician, clinical psychologist, nurse practitioner,

clinical nurse specialist, or a physician assistant. Intensive outpatient services are

billed by hospital outpatient departments, community mental health centers

(CMHCs), RHCs, FQHCs, and OTPs to A/B MACs (A). However, services

furnished by physicians, clinical psychologists, nurse practitioners, clinical nurse

specialists, and physician assistants to intensive outpatient patients are billed

separately from the intensive outpatient program of services. Accordingly, these

professional’s mental health services to intensive outpatient patients are paid under

the physician fee schedule by A/B MACs (B) and may be subject to the limitation.

(See chapter 4, section 261.1C).

E. Computation of Limitation

A/B MACs (B) determine the Medicare approved payment amount

for services subject to the limitation. They:

• Multiply the approved amount by the limitation percentage amount;

• Subtract any unsatisfied deductible; and,

• Multiply the remainder by 0.8 to obtain the amount of Medicare payment.

The beneficiary is responsible for the difference between the amount paid by

Medicare and the full Medicare approved amount.

The following examples illustrate the application of the limitation in

various circumstances as it is gradually reduced under section 102 of

the Medicare Improvements for Patients and Providers Act (MIPPA).

Please note that although the calendar year 2009 Part B deductible of

$135 is used under these examples, the actual deductible amount for

calendar year 2010 and future years is unknown and will be subject to

change.

Example #1: In 2010, a clinical psychologist submits a claim for $200

for outpatient treatment of a patient’s mental disorder. The Medicare-approved amount is $180. Since clinical psychologists must accept

assignment, the patient is not liable for the $20 in excess charges. The

patient previously satisfied the $135 annual Part B deductible. The

limitation reduces the amount of incurred expenses to 68 ¾ percent of

the approved amount. Medicare pays 80 percent of the remaining

incurred expenses. The Medicare payment and patient liability are

computed as follows:

1. Actual charges……………………………………….…….$200.00

2. Medicare-approved amount……… ………….…….……$180.00

3. Medicare incurred expenses (0.6875 x line 2)……..……...$123.75

4. Unmet deductible………………………………………..…$0.00

5. Remainder after subtracting deductible (line 3 minus line 4)..$123.75

6. Medicare payment (0.80 x line 5)………………………….$99.00

7. Patient liability (line 2 minus line 6)……………………….$81.00

Example #2: In 2012, a clinical social worker submits a claim for $135

for outpatient treatment of a patient’s mental disorder. The Medicare-approved amount is $120. Since clinical social workers must accept

assignment, the patient is not liable for the $15 in excess charges. The

limitation reduces the amount of incurred expenses to 75 percent of the

approved amount. The patient previously satisfied $70 of the $135

annual Part B deductible, leaving $65 unmet. The Medicare payment

and patient liability are computed as follows:

1. Actual charges…………………………………….….$135.00

2. Medicare-approved am………………….……….......$120.00

3. Medicare incurred expenses (0.75 x line……..……….$90.00

4. Unmet deductible…………………………..………….$65.00

5. Remainder after subtracting deductible (line 3 minus line

6. Medicare payment (0.80 x line ………………………...$20.00

7. Patient liability (line 2 minus line 6)……………..........$100.00

Example #3: In calendar year 2013, a physician who does not accept

assignment submits a claim for $780 for services in connection with

the treatment of a mental disorder that did not require inpatient

hospitalization. The Medicare-approved amount is $750. Because the

physician does not accept assignment, the patient is liable for the $30

in excess charges. The patient has not satisfied any of the $135 Part B

annual deductible. The Medicare payment and patient liability are

computed as follows:

1. Actual charges.………………………………….$780.00

2. Medicare-approved amount……………………..$750.00

3. Medicare incurred expenses (0.8125 x line 2…....$609.38

4. Unmet deductible…… …………………………..$135.00

5. Remainder after subtracting deductible (line 3 minus line 4

6. 4)……………...$474.38

7. Medicare payment (0.80 x line 5) ……….……….$379.50

8. Patient liability (line 1 minus line 6)………… …$400.50

Example #4: A patient’s Part B expenses during calendar year

2014 are for a physician’s services in connection with the

treatment of a mental disorder that initially required inpatient

hospitalization, with subsequent physician services furnished on

an outpatient basis. The patient has not satisfied any of the $135

Part B deductible. The physician accepts assignment and

submits a claim for $780. The Medicare-approved amount is

$750. Since the limitation will be completely phased out as of

January 1, 2014, the entire $750 Medicare-approved amount is

recognized as the total incurred expenses because such expenses

are no longer reduced. Also, there is no longer any distinction

between mental health services the patient receives as an

inpatient or outpatient. The Medicare payment and patient

liability are computed as follows:

1. Actual charges…………………………………………………..$780.00

2. Medicare-approved amount……………………………………..$750.00

3. Medicare incurred expenses (1.00 x line………… …………..$750.00

4. Unmet deductible… …………………………………………..$135.00

5. Remainder after subtracting deductible (line 3 minus line 4)…..$615.00

6. Medicare payment (0.80 x line 5)……………………………….$492.00

7. Beneficiary liability (line 2 minus line 6)……………………….$258.00