FWA Insights: Appropriate billing of intensive outpatient programs

The appropriate billing of intensive outpatient programs (IOPs) for psychiatric services is essential to ensuring the compliance and integrity of healthcare payments. As the demand for mental health and substance use treatment grows, IOPs have become a vital bridge between inpatient care and traditional outpatient therapy. But the complexities of IOP billing in per diem structures can create opportunities for errors and fraud, waste, and abuse (FWA). Understanding how to bill these services properly can help prevent costly mistakes and protect health plans from improper payments.

Uncovering inconsistent billing

IOPs deliver structured treatment services designed for patients facing mental health or substance use disorders. These services typically include group therapy, individual counseling, medication management, and education. By doing so, IOPs offer a level of care that is less intensive than inpatient hospitalization but more comprehensive than standard outpatient therapy. Billing for IOPs often uses a flat daily rate which is charged regardless of the number or type of services provided, referred to as a per diem.

HCPCS code S9480 is a per diem code that covers multiple providers and treatment sessions across a single date of service. Best practices for this code dictate that billing should be applied by the facility, not by individual providers. Failure to adhere to these guidelines can lead to duplicate billing, increasing the risk of FWA.

Cotiviti’s investigation reveals duplicate claims

Despite the bundled nature of IOPs, providers and facilities may unbundle services, billing for each component separately. This practice can lead to coding errors and improper claims.

A recent medical record review performed by Cotiviti’s special investigations unit (SIU) uncovered that several providers billed for both individual components of IOP services (such as individual psychotherapy and group therapy) and for the IOP service itself on the same date. Many claims were submitted for services billed under an individual provider who did not personally render the care. Further investigation revealed that after individual providers received denials, the same facilities re-submitted claims for these services.

A summary of the medical records audited by Cotiviti was provided to the health plan with recommendations to perform a larger review and place the provider on prepayment monitoring.

Key takeaways

Consider these key points that health plan SIUs and provider billing teams should note to help prevent abusive or fraudulent billing: 

• IOP services include multiple treatment components; billing for individual services in addition to the IOP per diem on the same date is inappropriate.
• Facilities, not individual providers, should bill for IOP services, as care is typically delivered by multiple practitioners.
• Facility-only billing helps prevent duplicate claims and reduces the risk of FWA.

By following these principles, health plans can help ensure compliance, reduce errors, and safeguard the integrity of psychiatric service reimbursement.

Cotiviti’s prospective and retrospective 360 Pattern Review™ solution empowers health plans with automated, machine learning-powered  detection of suspect billing behaviors for true FWA prevention and management across the entire claim payment cycle. Read our fact sheet and learn how we identify potential fraud cases earlier with a 360-degree view of provider billing.