The National Psychologist, March/April 2000

Vol. 9, No. 2, p 10.

HCFA may probe psychotherapy with demented patients

By Paula E. Hartman-Stein, Ph.D.

The chances of healthcare providers being audited in 2000 have increased significantly since President Clinton recommended and Congress approved the allocation of over 630 million dollars for Medicare anti-fraud activities.

The Office of Inspector General will have considerably more money this year for contractor oversight, according to James Georgoulakis, Ph.D., APA’s representative to the AMA Relative Update Committee. The committee is charged with making recommendations on the value of CPT codes, values then converted into reimbursement rates.

The entire anti-fraud program will receive $950 million in 2001. The reason for the staggering amount is that "for every dollar spent on finding fraud and abuse, the government gets $5 back," said Georgoulakis. "And the more dollars you have for audits, the more errors you are going to find."

In 2000 there are no new Health Care Financing Administration (HCFA) policies affecting mental health services. However, when HCFA audits of Medicare insurance carriers reveal that the number of claims paid for any service exceeds national averages, the carrier is obligated to review those claims by provider specialty.

One of the targets for investigation is whether psychotherapy for dementing clients is reasonable and necessary. The Current Procedural Terminology (CPT) manual defines psychotherapy as "the treatment for mental illness and behavioral disturbances in which the clinician establishes a professional contract with the patient and through definitive therapeutic communication, attempts to alleviate the emotional disturbances, reverse or change maladaptive patterns of behavior, and encourage personality growth and development."

Medicare auditors have questioned whether a patient who has dementia or other organic mental disorders has impaired cognitive functioning to such a degree as to preclude the "definitive therapeutic communication" required to occur in order to justify psychotherapy.

Deborah Frazer, Ph.D. director of Behavioral Health, Genesis ElderCare in Philadelphia, explains that "dementia is a continuous process, not a dichotomous variable. She continues: "For verbal psychotherapy with a mildly to moderately demented individual, the therapist must continuously monitor, evaluate, and document that the patient is benefiting from treatment." Frazer adds that this is no different from conducting psychotherapy with any patient. "It is an outcomes-based justification," and the challenge is to find the best outcome measure in this situation, she explained.

Many experts in geropsychology agree that with patients who no longer appear to benefit from verbal psychotherapy but who are exhibiting severe behavioral problems, behavioral management programs are the treatment of choice. Under the current definition of psychotherapy, such services are not reimbursable.

A different CPT code may be needed, or Frazer suggests changing the "and" in the basic definition of psychotherapy that requires the therapist to "encourage personality growth and development" to an "or". The development, implementation, and monitoring of individual behavior modification programs are professional skills that are widely practiced in the developmental disability area, she argues. "To deny such services for individuals with dementia is discriminatory, and reflects a basic misunderstanding of psychological processes."

Michael Duffy, Ph.D. from Texas A&M University in College Station, Texas, asserts that psychotherapy, including verbal psychotherapy "is not only defensible, but also essential for relieving distress in cognitively impaired clients." He explains that the loss of language in the dementing patient does not denote the loss of emotional life because while working memory may be compromised, emotional memory is preserved within mid-brain structures.

Documentation requirements

Hearing officers who review appeals of claim denials require considerable supporting evidence that the patient with cognitive impairment can benefit from psychotherapeutic treatment. Recommendations include: The diagnostic code used must reflect that a condition such as anxiety or depression co-exist in addition to the dementia diagnosis. Actual time spent with the patient must be documented in the progress note for each session.

Verbal interaction must have taken place and the patient must have been able to participate in the interaction. Attitudes about the patient’s illness or symptoms, early life experiences, or coping strategies or techniques are important.

Use outcome measures whenever possible such as the Cornell Scale for depression in dementia, Disruptive Behavior Scale, Nursing Home Behavior Problems Scale and the Cohen-Mansfield Agitation Inventory. When documenting for therapy for a demented or confused patient, the therapist must convey that the patient is benefiting directly from the treatment. Making life easier for the staff or caregiver is not an acceptable reason for any intervention that is reimbursable under the Medicare system.

Paula E. Hartman-Stein, Ph.D. is a clinical psychologist and consultant at the Center for Healthy Aging in Akron, Ohio. She is an online instructor for the Fielding Institute in Santa Barbara, California on geropsychology topics. She can be reached through the Internet at

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