E/M or Psychotherapy: Making the Distinction
By Emily Hill, PA-C

Follow these steps to decide between the code for Evaluation and Management or Psychotherapy Services.

Despite what seems to be an increasing and endless list of coding rules and guidelines, healthcare professionals are still confronted with situations for which the proper code selection seems ambiguous. The Current Procedural Terminology (CPT) 2000 manual provides the opportunity to use Evaluation and Management (E/M) codes as well as psychiatric treatment codes for services provided to patients who present with emotional or mental health issues. Understanding the services described by each of these categories is essential to selecting the proper code. In this article, we’ll look at the distinctions between the E/M and Psychotherapy Services codes and the steps necessary for selecting the code that best describes your care of the patient.

Taking the First Step
The first decision you must make is to determine the type of service you are providing. Are your services best described by the psychotherapy or the E/M codes? Let’s look at the CPT 2000 definitions.

The psychotherapy codes are a subset of psychiatric treatment services (CPT 90801 to 90899) that include diagnostic and therapeutic services. Psychotherapy is divided into interactive psychotherapy and insight-oriented, behavior-modifying and/or supportive psychotherapy services. The CPT 2000 describes psychotherapy as the "treatment for mental illness and behavioral services 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." It may include the use of behavior modification techniques, supportive interactions, cognitive discussion of reality or a combination of these approaches.

In 1992, a complete restructuring of the codes used to describe patient visits was completed. These E/M codes encompass the services provided in the prevention or diagnosis and treatment of illness, injury or symptoms. They are primarily defined by the extent of the history, examination and medical decision making required to address the patient’s needs. Time spent counseling the patient or family and/or providing coordination of care can also define the service. In this instance, counseling takes on a meaning different from that often used by mental health professionals. For E/M purposes, counseling is a discussion concerning areas such as diagnostic testing, prognosis, treatment options, education and risk factor reduction. It is not the type of counseling that involves the use of "definitive therapeutic communication" such as that associated with psychotherapy.

The CPT provides clinical examples for selecting E/M services for some specialties in Appendix D of CPT 2000. Examples for psychiatry include:

Office visit for a patient abstinent from alcohol and benzodiazepines who complains of headaches, insomnia and anxiety;
• Office visit for a patient with a history of schizophrenia who has been seen bimonthly but is complaining of auditory hallucinations;
• Hospital visit for a patient in chronic pain who has attempted suicide; and
• Hospital visit for a psychotic, hostile, violently combative adolescent who is involuntarily committed.

It is important to remember that these are only examples. The type of service selected for each patient encounter must be determined by the particular services provided.

What’s the Next Decision?
Once the type of service has been decided, the place of service must be identified. Both the E/M and psychotherapy codes make a distinction between the broad categories of outpatient and inpatient services. A patient is considered an outpatient until given official inpatient status by the facility; this means that services rendered in facilities and areas other than a physician’s office might be reported using the outpatient codes. Common outpatient areas include clinics, emergency departments, observation areas and hospital outpatient facilities.

Psychotherapy services provided in inpatient hospital, partial hospital and residential care settings are all reported using the same set of inpatient psychotherapy codes. For E/M services, inpatient care provided to hospital inpatients and patients in a partial hospital setting is reported using the hospital inpatient services codes. Residential care is reported using the code set for nursing facility services.

What Determines the Final Code Selection?
The last step is to determine the content or level of the service. For E/M services, this is generally the extent of the history, exam and/or medical decision making. Under certain circumstances, time could be the deciding factor. The selection of the proper psychotherapy code is based on the face-to-face time spent with the patient during the session and whether E/M services are also provided. The E/M component of the psychotherapy codes involves services such as medical diagnostic evaluation, interpretation of laboratory or other studies, medication management and physician orders. It is important that your documentation supports medical evaluation and management when selecting a code that includes those services. It is also imperative that the face-to-face time be noted whenever it influences code selection.

Are There Other Considerations?
Although CPT does not restrict the use of the E/M or psychotherapy codes to certain types of providers, some third-party payers have restrictions. For example, Medicare does not cover E/M services or psychotherapy services with medical evaluation and management when provided by psychologists, clinical social workers or other nonphysician mental health professionals. Other payers limit coverage of the psychotherapy codes to certain mental health professionals, thereby denying reimbursement to family physicians and internists, etc., who report these services.

Emily Hill, PA-C is president of Hill & Associates, a national healthcare consulting firm specializing in coding and compliance for physician practices. Her e-mail address is

Putting It All Together
The proper code is selected using the following steps:

  • Determine whether the service is best described by the CPT definition of E/M or psychotherapy services.
  • Identify the appropriate place of service and the corresponding set of codes.
  • Select the appropriate code based on the content of the service.
  • Make sure your documentation is complete and accurate, and that it supports your code selection.


This article is derived from the McMahon Archives. This information may be time sensitive and was archived on 2/28/2001