Intensive Outpatient Treatment (IOP)

January 11th, 2018 - Wyn Staheli, Director of Research
Categories:   Behavioral Health|Psychiatry|Psychology   Medicare   Modifiers  


Intensive Outpatient Programs (IOPs) are considered to be an intermediate level of care which is commonly considered after the patient has been discharged from inpatient care. For some patients and/or conditions they can also provide an effective level of care when hospitalization is not clinically indicated or preferred. The following are the broadly defined non-inpatient types of programs:

  • Psychiatric Partial Hospital Program (PHP)
  • Psychiatric Intensive Outpatient Program (IOP)
  • Substance Abuse Partial Hospital Program (PHP)
  • Substance Abuse Intensive Outpatient Program (IOP)

This article covers IOPs. Partial Hospitalization Programs (PHPs) are more intensive programs for patients who might otherwise require inpatient psychiatric care. PHPs have their own set of rules and guidelines that are not discussed here (click here to read more about PHPs). The biggest problem with billing IOP services is that payer requirements are not standardized for all payers which leaves it up to the provider to understand those requirements. Therefore, the information presented here provides some general guidelines, but they do not supercede payer policies. It is critical for IOP providers to obtain individual payer guidelines prior to rendering services..

Warning: ALWAYS verify coverage and billing guidelines with individual payers prior to providing services because their policies could be different than what is presented here.

Note: Many payers consider an IOP a short-term intervention and thus there are policy limits on the number of days. See Find-A-Code’s Behavioral Health Reimbursement Guide for more about verifying insurance coverage, including downloadable forms.


Generally speaking, IOPs must be licensed at the state level to provide partial hospitalization services and many payers require the facility to be credentialed with them. In-network facilities contracted with the payer have met credentialing requirements, but there could be out-of-network benefits in situations where a case manager determines that the patient’s needs would be better met at another facility. Additionally, the treating or billing provider typically must be contracted (in-network provider) with the payer.


Most IOPs provide behavioral health services for a minimum of 9 hours per week although we have heard of some programs which allow a minimum of six hours per week for children. Most programs meet several days a week for 2-3 hours per day. These are general numbers and they can vary from payer to payer, as well as, the types of conditions being treated. However, if you are using code H0015, the minimum is 3 hours per day at least 3 days per week. If more than 20 hours per week are necessary for patient care, then a PHP may be more appropriate.

Note: Because payment is tied to time, it is critical that time be meticulously documented in the patient record.


Procedure Codes

There are no CPT codes to describe these services. The two most commonly used codes for non-Medicare payers are:

H0015  Alcohol and/or drug services; intensive outpatient (treatment program that operates at least 3 hours/day and at least 3 days/week and is based on an individualized treatment plan), including assessment, counseling; crisis intervention, and activity therapies or education

S9480  Intensive outpatient psychiatric services, per diem

Note: Both codes may not be billed together. Use one or the other depending on payer preferences.

The following codes could also be used (depending on payer requirements):

H2019  Therapeutic behavioral services, per 15 minutes

H2020  Therapeutic behavioral services, per diem

H2035  Alcohol and/or other drug treatment program, per hour

H2036  Alcohol and/or other drug treatment program, per diem

S9475  Ambulatory setting substance abuse treatment or detoxification services, per diem (typically used for Partial Hospitalization Programs)

Alert: These codes are for non-Medicare plans. For more about Medicare, see the “CMS COVERAGE GUIDELINES” section that follows.

Claim Form 

Many payers require the use of the UB-04 Claim Form and specify preferred “Type of Bill” (TOB) and “Revenue Codes” (RC) which are based on the type of facility and services being provided. For example, one payer states to use TOB 131, RC 0906 and HCPCS code H0015 for substance abuse IOP. However, for other psychiatric services IOP, they want providers to use TOB 131, RC 0905 with HCPCS code S9480.

Additionally, be aware of modifier requirements. For example, Medicaid typically wants the level of care indicated (e.g., U2). The following are modifiers which could be required by payers:

  • TF  Intermediate level of care
  • TJ  Program group, child and/or adolescent
  • U1  Medicaid level of care 1, as defined by each state
  • U2  Medicaid level of care 2, as defined by each state
  • U3  Medicaid level of care 3, as defined by each state
  • U4  Medicaid level of care 4, as defined by each state
  • U5  Medicaid level of care 5, as defined by each state
  • U6  Medicaid level of care 6, as defined by each state
  • U7  Medicaid level of care 7, as defined by each state
  • U8  Medicaid level of care 8, as defined by each state
  • U9  Medicaid level of care 9, as defined by each state
  • UA  Medicaid level of care 10, as defined by each state
  • UB  Medicaid level of care 11, as defined by each state
  • UC  Medicaid level of care 12, as defined by each state
  • UD  Medicaid level of care 13, as defined by each state


Medicare’s coverage of IOP services has historically been less comprehensive than other services and their billing standards are not the same as other commercial payer IOP policies. In order to be reimbursed by Medicare, it is essential to meet the following eligibility requirements as outlined in CMS’s Medicare Benefit Policy Manual, Chapter 6, Section 70.1.

1. Individualized Treatment Plan: “The plan must state the type, amount, frequency, and duration of the services to be furnished and indicate the diagnoses and anticipated goals.”

2. Physician Supervision and Evaluation: “Services must be supervised and periodically evaluated by a physician to determine the extent to which treatment goals are being realized.” This includes consultation and conference with therapists and staff, review of medical records, and patient interviews. Documentation needs to indicate that the treatment plan has been evaluated and revised as necessary to meet treatment goals.

3. Reasonable Expectation of Improvement: “Services must be for the purpose of diagnostic study or reasonably be expected to improve the patient's condition. The treatment must, at a minimum, be designed to reduce or control the patient's psychiatric symptoms so as to prevent relapse or hospitalization, and improve or maintain the patient's level of functioning.”

Medicare’s billing guidelines for IOP are unclear. Unlike other payers, it appears that Medicare prefers that providers bill using the applicable HCPCS and CPT codes as they do for other outpatient treatments. Be sure to use the appropriate Place of Service (POS) codes. There do not appear to be any ‘per diem’ facility type codes which Medicare requires for IOP. We recommend talking to the local Provider Relations department to see if they will offer you further guidance.

For more information on Medicare coverage:

  • Click here to read information from the Center for Medicare Advocacy
  • Click here to go to Medicare’s Mental health care (outpatient) page
  • Click here to go to the Medicare Benefit Policy Manual Chapter 6


Generally speaking, when using per diem rate codes for IOP, many payers consider provider services to be included and thus cannot be billed separately. For example, a BC/BS of North Dakota newsletter stated (emphasis added) that providers need to use code S9480 and that:

Psychiatric IOP is paid on the lesser of charge or a per diem rate. Psychotherapy services (individual, family and group) and pharmacologic management services completed by any provider type are considered to be included in the facility per diem payment.

One thing to note is that there could be an additional reporting option. The same BC/BS of North Dakota newsletter also stated (emphasis added):

If an independent practitioner with the appropriate licensure provides IOP, the services are submitted on the CMS-1500 using H2035 which is then reimbursed based on an hourly rate rather than the facility rate.

Before billing with H2035, check with the payer to determine if they have an ‘independent practitioner’ clause which would allow the additional reporting of services. The provider cannot be part of the billing facility staff in order to be considered ‘independent’ and must bill with the appropriate NPI. Be sure to use the proper number of units.

One last factor to consider is that these included services must be direct services. For example, a BC/BS of Kansas document states the following which is good guidance regardless of payer (emphasis added):

The program provides a minimum of nine hours of direct services per week. Typically, this is three hours per day, three days per week. Direct services are face to face interactive services spent with licensed staff. This does not include watching films or videos, doing assigned readings, doing assignments or filling out inventories or questionnaires, or participating in community based support groups such as Alcoholics Anonymous or Narcotics Anonymous.

Note that they specifically state ‘licensed staff’. Volunteers, interns, trainees, etc. are not licensed staff and their time does not count towards direct services.

Typically NOT Billed Separately

The following are often considered all-inclusive (not separately payable) when billing the facility per diem rate.

  • Supplies
  • Ancillary services
  • Diagnostic testing and evaluations, including neuro-psychological testing
  • Lab tests including drug and alcohol tests
  • Medication management
  • All therapy sessions, including individual, group, and family
  • Crisis intervention

Note: Most programs exclude psychotherapy sessions. However, in certain situations, TRICARE does allow for individual psychotherapy sessions (not group sessions) to be billed and reimbursed separately from the per diem rate.


Some payers require pre-authorizations while others do not so verifying your in-network status and pre-authorization information prior to admission to these programs is essential to ensure coverage.

It is also a common practice for payers to require either an authorization (or re-authorization if prior authorizations are required) after 90 days to verify that there is patient progress. Typically, 12-16 weeks is a sufficient time-frame to see measurable progress.

Coverage for many plans is typically limited to 180 days.

Some payers require availability to 24/7 psychiatric and psychological services. Check with the payer to determine their requirements.


Questions, comments?

If you have questions or comments about this article please contact us.  Comments that provide additional related information may be added here by our Editors.


Feb 4th, 2019 -


According to the Substance Abuse and Mental Health Services Administration (SAMHSA), "IOT programs usually specify the roles, responsibilities, qualifications, and personal characteristics of counselors who lead groups." Their training manual identifies several different types of "therapy" so the qualifications would depend on the type of therapy being provided in addition to requirements specific to the payer as well as the state. Sorry, there isn't a definitive answer for you - there are too many variables. Start by reviewing the policy for one of the payers for your state. See if they have special requirements.

As for enrollment, again, there often are payer specific requirements. The article references Medicare requirements which include verbiage that "Services must be prescribed by a physician and provided under an individualized written plan of treatment established by a physician after any needed consultation with appropriate staff members." So for Medicare, it does not state a PCP, just that it's prescribed by a physician so a psychiatrist would count. Medicare guidelines are a pretty safe standard, however, since many insurance plans require pre-authorization for IOP, it would be safest to contact their provider relations department to ensure that you are in compliance.

Jan 18th, 2019 - DrJ

Dr. James Wright

Does the Psychiatrist have to be physically present during each therapy session? Also, to enroll a patient in IOP is there an order needed by the patients PCP or can this be ordered by the Psychiatrist?

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