CurrentAlliance HealthPolicy 8A-5

Diagnostic Assessment

Defines Medicaid coverage, clinical elements, provider qualifications, settings, exclusions, prior approval, billing and documentation requirements for Diagnostic Assessment services for mental health, substance use, intellectual and developmental disability conditions in NC Medicaid.

Policy Summary

PayerAlliance Health

PolicyDiagnostic Assessment

Policy CodePolicy 8A-5

Change TypeAmendments, Tribal code additions, prior approval clarification, same-day restriction removal

Effective DateJan 1, 2004

Next Review Date

Key ActionDocument the diagnostic assessment report with all Section 1.0 elements, sign and date by the licensed professionals, and retain the written report in the service record.

SourceLink

POLICY UPDATE CHANGES

01/01/2025 amended Section 1.0: Elements of the Diagnostic Assessment; removed requirement to send PCP to designated contractor for administrative review and authorization of services.

01/01/2025 removed restriction: diagnostic assessment on same day as ACT, Intensive In-Home, MST or Community Support Team services.

01/01/2025 revised Section 5.0 language referencing prior approval/authorizations to comply with Mental Health Parity and CFR §438.900.

01/01/2025 added 'or equivalent federal Tribal code' to provider qualifications and certifications (Sections 6.1 and 6.2).

01/01/2025 added statement that Federally recognized tribal and Indian Health Service providers may be exempt from one or more items in Attachment A in accordance with Federal Law and regulations.

04/01/2021 policy posted as a stand-alone coverage policy with ASAM criteria added for SUD diagnostic assessments.

02/15/2023 amended various editorial and template items including 'person-centered' spelling and movement of retroactive eligibility language to Attachment H.

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Diagnostic Assessment equals one event

2Minimum Qualified Professionals per team

10Minimum ASAM training hours required (SUD)

2004Original Effective Year

Coverage Summary

Policy: NC Medicaid Clinical Coverage Policy No: 8A-5 — Diagnostic Assessment. Coverage stance: covered_with_criteria. Scope: defines Medicaid coverage, clinical elements, provider qualifications, settings, exclusions, prior approval, billing and documentation requirements for Diagnostic Assessment services for mental health, substance use, intellectual and developmental disability conditions in NC Medicaid.

Policy number: 8A-5. Original effective year: 2004 (Original Effective Date: January 1, 2004). Last review / amended date: January 1, 2025 (Amended Date: January 1, 2025).

Medicaid shall cover the service when medically necessary: Medicaid shall cover the procedure, product, or service related to this policy when medically necessary, and ALL of the following are met (general medical necessity criteria apply).

One-line criteria intro for Diagnostic Assessment: Medicaid shall cover Diagnostic Assessment when ONE of the following is met (e.g., known or suspected MH/SUD/IDD diagnosis per DSM-5 or initial triage indicating need for additional services).

Brief stats (supporting): Diagnostic Assessment equals one event; minimum Qualified Professionals per team: 2; minimum ASAM training hours required for SUD: 10.

Key policy facts

Policy number8A-5

SubjectDiagnostic Assessment (NC Medicaid Clinical Coverage Policy No:8A-5)

Coverage stancecovered_with_criteria

Effective date2004-01-01

Last review2025-01-01

Minimum QPs2

ASAM training hours10

Medical Necessity & Required Elements

General Medical Necessity Criteria

Medicaid shall cover the procedure, product, or service related to this policy when medically necessary, and ALL of the following are met:

ALL of the following

The procedure, product, or service is individualized, specific, and consistent with symptoms or confirmed diagnosis of the illness or injury under treatment, and not in excess of the beneficiary's needs.
The procedure, product, or service can be safely furnished, and no equally effective and more conservative or less costly treatment is available statewide.
The procedure, product, or service is furnished in a manner not primarily intended for the convenience of the beneficiary, the beneficiary's caretaker, or the provider.

Specific Criteria Covered for Diagnostic Assessment

Medicaid shall cover Diagnostic Assessment when ONE of the following is met:

Provider Actions & Billing Requirements

Prior Authorization

Prior Approval Not Required

Prior approval is not required for diagnostic assessment services described in this policy when the service meets the coverage criteria and provider documentation requirements set forth herein.

Documentation Required

Assessment Report Documentation Required

A written diagnostic assessment report is required. The report must include all elements listed in the policy (presenting problems, history, medications, biopsychosocial review, participation, analysis including ASAM when SUD present, DSM-5 diagnosis, recommendations) and must be signed and dated by the licensed professional completing the assessment. The signed assessment serves as the initial order for services included in the Person Centered Plan (PCP). Maintain the original report in the beneficiary's service record per retention requirements.

Documentation Required

Interdisciplinary Team Note Required

Coding & Billing Guidance

Billing and Claim Typesmixed

CMS-1500	Professional claim form / 837P transaction (claim type)
UB-04	Institutional claim form / 837I transaction (claim type)
837P	Professional electronic transaction
837I	Institutional electronic transaction

Coding Guidancemixed

CPT (various)	Use the most specific CPT that accurately and completely describes the procedure; if no specific CPT exists use appropriate unlisted CPT code and follow CPT unlisted procedure and special report instructions.
HCPCS (various)	Use the most specific HCPCS; if no specific HCPCS exists use appropriate unlisted HCPCS code and follow HCPCS unlisted procedure and special report instructions.
ICD-10-CM (various)	Report ICD-10-CM to the highest level of specificity that supports medical necessity; use current ICD-10 edition in effect at time of service.
UB-04 revenue codes (various)	Use UB-04 Data Specifications Manual for valid revenue codes and follow National Uniform Billing Guidelines when applicable.

Separate Billing for Psychological Testing or Specialized AssessmentsCPTCovered

psychological/testing CPT codes

Psychological, developmental, or neuropsychological testing are billed separately using appropriate CPT codes when such testing or specialized assessments are indicated.

Use the most specific procedure and diagnosis codes that accurately and completely describe the service provided: report ICD-10-CM to the highest level of specificity that supports medical necessity and use current CPT/HCPCS codes in effect at the time of service.

If no specific CPT or HCPCS code exists, report the service with the appropriate unlisted procedure code and include the special report as required by the CPT or HCPCS instructions.

For institutional billing, follow the UB-04 Data Specifications Manual and the National Uniform Billing Guidelines for valid revenue codes and billing practices.

Follow applicable modifier and billing unit guidance and the NCTracks Provider Claims and Billing Assistance Guide for claims submissions (CMS-1500/837P for professional; UB-04/837I for institutional).

Background

A diagnostic assessment is an intensive clinical and functional evaluation to determine medical necessity and to inform development of the beneficiary's treatment/service plan and person-centered plan (PCP). The assessment is team-based and must result in a written report that provides the clinical basis for the beneficiary's treatment or service plan; the written report must be retained in the service record.

The assessment must include required elements such as presenting problems, chronological health and behavioral history, current and past medications, multidimensional review (biological, psychological, familial, social, developmental, environmental), evidence of beneficiary (and legally responsible person) participation, analysis and case formulation (including ASAM LOC when SUD present), diagnoses using DSM-5, recommendations, signatures and dates by licensed professionals, and an interdisciplinary team service note documenting team review and participation.

Historical note: this policy was separated from Attachment D of CCP 8A and posted as a stand-alone coverage policy on 04/01/2021, and was amended on 01/01/2025 to remove the administrative authorization step requiring the PCP be sent to a designated contractor upon completion.

Quick definitions

DiagnosticTo examine specific symptoms and facts to understand or explain a condition.

Person Centered Plan (PCP)Process of determining real-life outcomes with individuals and developing strategies to achieve those outcomes.

Revision History

01/01/2025revisedLatest

Amended Section 1.0: Removed requirement that upon completion the PCP be sent to the designated contractor for administrative review and authorization of services (administrative authorization step removed).

01/01/2025removedLatest

Removed restriction prohibiting diagnostic assessment on the same day as Assertive Community Treatment (ACT), Intensive In-Home, Multisystemic Therapy (MST), or Community Support Team services (same-day service restrictions removed).

Policy Summary

PayerAlliance Health

PolicyDiagnostic Assessment

Policy CodePolicy 8A-5

Change TypeAmendments, Tribal code additions, prior approval clarification, same-day restriction removal

Effective DateJan 1, 2004

Next Review Date

Key ActionDocument the diagnostic assessment report with all Section 1.0 elements, sign and date by the licensed professionals, and retain the written report in the service record.

SourceLink

On This Page

ONE of

There is a known or suspected mental health, substance use disorder, intellectual or developmental disability diagnosis based on the DSM-5 diagnostic criteria.
Initial assessment or triage information indicates a need for additional mental health, substance use disorder, intellectual, or developmental disabilities treatment or supports.

Required Elements of the Diagnostic Assessment (must include ALL)

A diagnostic assessment must include ALL the following elements:

ALL of the following

Description of the presenting problems, including source of distress, precipitating events, and associated problems or symptoms.
Chronological general health, past trauma history and behavioral health history (including mental health and substance use including tobacco), treatment, and treatment response.
Current medications for medical, psychiatric, and substance use disorder treatment; identify past medications that were ineffective or caused significant side effects or adverse reactions.
Review of biological, psychological, familial, social, developmental and environmental dimensions to identify strengths, needs, and risks in each area.
Evidence of beneficiary and legally responsible person's (if applicable) participation in the assessment.
Analysis and interpretation of the assessment information with an appropriate case formulation including determination of ASAM level of care when a substance use disorder is present.
Diagnosis using DSM-5 (or subsequent edition) including mental health, substance use disorders, intellectual or developmental disabilities, physical health conditions and functional impairment.
Recommendations for additional assessments, services, supports or treatment based on the results of the diagnostic assessment.
The diagnostic assessment must be signed and dated by the licensed professionals completing the assessment (MD, DO, PA, NP, or licensed psychologist).
Evidence of an interdisciplinary team service note that documents the team's review and discussion of the assessment, documenting involvement/participation of all team members in formulation of diagnoses and treatment recommendations.

Provider Team Requirements

Diagnostic assessment team MUST include at least TWO Qualified Professionals (QPs) per 10A NCAC 27G .0104 or equivalent federal Tribal code:

ALL of the following

For MH or SUD diagnoses BOTH professionals must be licensed and ONE must be:
- MD
- DO
- Nurse Practitioner (NP)
- Physician Assistant (PA)
- Licensed Psychologist
For substance use-focused diagnostic assessment, the team must include an LCAS.
For intellectual or developmental disabilities
- One team member shall be an MD, DO, NP, PA, or licensed psychologist.
- One team member must be a master's level QP with at least two years of experience with individuals with intellectual or developmental disabilities.
The MD, DO, NP, PA, or psychologist shall have the required experience with the population served to provide this service.

ASAM Training and SUD-specific Requirements

When SUD is present, the assessment and clinician training requirements:

ALL of the following

A licensed clinician shall provide documentation verifying completion of training on the current ASAM Criteria (2013 edition or subsequent) covering specified learning objectives (listed in policy).
Training must be a minimum of ten hours covering the stated ASAM learning objectives.
Clinician must complete Diagnostic Assessment that includes an ASAM level of care determination on an eligible beneficiary diagnosed with a substance use disorder.
Clinician is expected to seek continuing education to maintain current knowledge of ASAM criteria.

An interdisciplinary team service note documenting the team's review and discussion of the assessment is required. The team note must document involvement and participation of team members in formulation of diagnoses and treatment recommendations.

Billing Rule

Claim Type & Coding Compliance

Claims must comply with required claim types and coding systems when billing for diagnostic assessment services. Use the appropriate professional or institutional claim form and standard code sets.

Affected codes / forms: CMS-1500, UB-04, 837P, 837I, CPT, HCPCS, ICD-10-CM

Billing Rule

Provider Eligibility & Scope of Practice

Only providers meeting the state's licensing and scope-of-practice requirements and any DHHS agreements may bill for diagnostic assessment services. Billing providers must deliver services within their professional scope and comply with applicable DHHS contractual requirements.

Documentation Required

ASAM Training Verification (SUD)

When a substance use disorder is present, providers must have documentation verifying ASAM training. The provider must have completed a minimum of 10 hours of ASAM-related training to support ASAM level of care determination included in the assessment.

Billing Rule

Place of Service Restrictions

Place of service restrictions apply for Medicaid beneficiaries. Diagnostic assessments are subject to institutional and IMD rules; services provided in institutions for mental disease (IMDs) or certain public institutions may be restricted for Medicaid populations per state and federal rules.

01/01/2025revisedLatest

Revised Section 5.0 language referencing prior approval/authorizations to comply with the Mental Health Parity and Addiction Equity Act and 42 C.F.R. §438.900; policy states prior approval is not required for Diagnostic Assessment.

01/01/2025revisedLatest

Added 'or equivalent federal Tribal code' to provider qualifications and provider certification requirements (Sections 6.1 and 6.2) to explicitly include tribal code equivalency.

01/01/2025addedLatest

Added statement in Attachment A that Federally recognized tribal and Indian Health Service providers may be exempt from one or more items in Attachment A in accordance with Federal law and regulations (Tribal/IHS exemption language added to claims-related information).

04/01/2021historical

Policy separated from Attachment D of CCP 8A and posted as a stand-alone clinical coverage policy; ASAM criteria were added as a requirement for substance use disorder (SUD) diagnostic assessments.

02/15/2023revised

Editorial and template updates including spelling change to 'person-centered', movement of retroactive eligibility language to Attachment H, ASAM level of care and training clarifications added earlier, and various non-clinical editorial amendments (not clinically substantive except where noted).