< Back to Thought Leadership

Impairment Diagnoses in Outpatient Physical and Occupational Therapy

How would you like to reduce medical necessity denials in your outpatient therapy services? One way to do that is to ensure your therapists are capturing the impairment diagnoses in the plan of care.

What is Impairment Diagnoses?

Chapter 15 of the Medicare Benefit Policy Manual states:

“a diagnosis (where allowed by state and local law) and description of the specific problem(s) to be evaluated and/or treated. The diagnosis should be specific and as relevant to the problem to be treated as possible. In many cases, both a medical diagnosis (obtained from a physician/NPP) and an impairment-based treatment diagnosis related to treatment are relevant. The treatment diagnosis may or may not be identified by the therapist, depending on their scope of practice. Where a diagnosis is not allowed, use a condition description similar to the appropriate ICD code.

For example, the medical diagnosis made by the physician is stroke; however, the treatment diagnosis or condition description for PT may be abnormality of gait, for OT, it may be hemiparesis (weakness or inability to move on one side of the body), and for Speech, it may be dysphagia (difficulty swallowing).”

Are your therapists consistently denoting an impairment-based treatment diagnosis in the plan of care? If they are, are your coders coding them? Some coders may initially resist the concept of coding the impairment diagnoses. Once they understand that the physician (provider) signs the plan of care thus endorsing the plan and the denoted impairment diagnoses, they understand the appropriateness. It does introduce, however, a need for a process flow redesign.

The coders need to be able to access the plan of care as well as the referral information early in the process. Why does it matter? It matters because the medical diagnosis might not meet the entry criteria that is acceptable to the insurance company and the claim could result in a denial. The therapist should assign an impairment diagnosis in the plan of care which is signed by the physician. Thus, the medical diagnosis and impairment diagnoses can be placed on the claim.

Contact Blue about Outpatient Therapy Patient Impairment Diagnoses

Could your organization better address impairment (treatment) diagnoses within your outpatient therapy department?

Blue & Co., LLC,’s Outpatient Therapy Business Advisory Services provides both Assessment and Implementation Guidance to help hospitals understand their revenue and growth opportunities and facilitate changes in processes and behaviors to achieve them. These engagements are not about FTE reduction.

Contact John Britt or your local Blue & Co. advisor to learn more about Outpatient Therapy Referral Development.

John Britt, Senior Manager

not-for-profit cecl model

Decoding The New CECL Model for Not-For-Profits

By Priya Singleton, CPA, Director at Blue & Co. The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of […]

Learn More

Final Hospital 340B Outpatient Prospective Payment System (“OPPS”) Remedy

On November 2, 2023, the Centers for Medicare & Medicaid Services (CMS) released a final rule outlining a plan to correct and reverse the 340B payment cuts from calendar years […]

Learn More
restricted fund tracking

Restricted Fund Tracking and Cash Management

By Andrew Brock, CPA, Senior Manager at Blue & Co. Earlier in June 2023, an article was published by our not-for-profit services team titled “Unveiling the Dynamics of Donor-Restricted Contributions”. […]

Learn More