Site of Care: Outpatient Hospital Setting for Physical and Occupational Therapy
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Defines when physical therapy (PT) or occupational therapy (OT) provided in an outpatient hospital setting is considered medically necessary versus not medically necessary for adult and pediatric patients; applies to services under Cigna-administered health benefit plans.
Revised policy statement for specialized equipment and personnel.
Added criteria for coordinated multidisciplinary clinical expertise and equitable delivery of care.
Removed the list of specific conditions and examples.
Coverage Criteria — Hospital Outpatient PT/OT
Medically Necessary — Outpatient Hospital PT/OT
Covered when ANY of the following are met:
Examples of specialized equipment are listed in the policy.
Examples of specialized personnel are listed in the policy.
Not Medically Necessary — Other indications
Not medically necessary when NONE of the criteria above are met
Applies when none of criteria a–e for hospital outpatient PT/OT are satisfied.
Criteria for hospital-based outpatient therapy
Hospital-based outpatient therapy is appropriate when clinical circumstances indicate higher acuity or specialized resources; covered when ALL of the following apply:
Appropriate hospital-based outpatient setting
- Examples of conditions: Includes but is not limited to: amputation (e.g., Symes, transtibial, knee disarticulation, transfemoral, hip disarticulation, transradial, transhumeral, shoulder disarticulation); severe burn injuries requiring debridement and frequent dressing changes; major organ transplant surgery (heart, lung, liver, kidney); cardiovascular conditions requiring higher acuity monitoring (e.g., aortic stenosis, cardiomyopathy, implanted cardioverter-defibrillator or pacemaker, myocardial infarction, recent coronary intervention, severe valvular disease, stage 3 hypertension [BP > 180/110], symptomatic/unstable arrhythmia, unstable coronary syndromes, uncompensated CHF); neurologic conditions increasing monitoring risk (e.g., cerebellar ataxias, corticobasal degeneration, dysautonomia with BP/HR instability, history of CVA, multisystem atrophy, normal pressure hydrocephalus, Parkinson's disease, progressive motor neuron disease, progressive supranuclear palsy, severe TBI, spinal cord injury); pediatric congenital/genetic/neurologic/developmental impairments (e.g., autism spectrum disorders, genetic/congenital/chromosomal abnormalities, congenital endocrine/nutritional disorders, birth injuries, cerebral palsy, muscular dystrophy, spina bifida).
This is an illustrative list and is not exhaustive.
Services provided in an outpatient hospital setting are not medically necessary for any indication other than those that meet one or more of the specific criteria (a–e) listed in this policy. The policy explicitly restricts hospital-based outpatient PT/OT to situations where one or more of the defined conditions—such as need for specialized equipment, specialized personnel, coordinated multidisciplinary expertise, lack of a reasonably accessible freestanding facility, or barriers to equitable delivery of care—are present.
A diagnosis by itself does not determine the appropriate site of care. The policy states that the presence of a specific diagnosis alone does not determine the appropriate site of care, and diagnosis-only justification for hospital-based outpatient therapy is insufficient. Clinical documentation must describe the specific clinical needs (for example, increased medical complexity, risk of physiologic instability, need for specialized equipment or advanced expertise) that require the hospital outpatient setting.
This policy revision removed a previously included list of condition-specific examples. The Revision Details note that the policy: • revised statements on specialized equipment and personnel; • added criteria for coordinated multidisciplinary clinical expertise and equitable delivery of care; and • removed the list of specific conditions and examples previously included in the document (revision date 8/15/2026).
Summary: Physical therapy (PT) and occupational therapy (OT) delivered in an outpatient hospital setting are considered medically necessary only when one or more of the policy criteria (a–e) are met. If none of the criteria apply, PT/OT in the outpatient hospital setting is considered not medically necessary. Clinical circumstances requiring the hospital outpatient setting include need for specialized equipment or personnel, coordinated multidisciplinary expertise, geographic inaccessibility of freestanding facilities, or barriers to equitable care.
Therapy provided in a hospital outpatient setting without documentation demonstrating clinical need for specialized equipment, enhanced monitoring capabilities, or specialized personnel is not appropriate. The policy specifies that hospital-based outpatient PT/OT is appropriate when there is documented need for resources not available in freestanding clinics—otherwise care should be delivered in a freestanding PT/OT facility whenever clinically appropriate.
Coding and Place of Service
| 19 | Off Campus-Outpatient Hospital |
| 22 | On Campus-Outpatient Hospital |
| placeholder range entries (e.g., 372-444, 445-502, etc.) | Document shows coded index placeholders but no explicit CPT/HCPCS/ICD codes in this section. |
Provider Actions, Prior Authorization & Billing
Submission & place-of-service coding required for reimbursement
Reimbursement is provided only if requested services are submitted in accordance with the relevant criteria outlined in this Coverage Policy, including covered diagnosis and/or procedure code(s). Place of service codes 19 (Off Campus‑Outpatient Hospital) and 22 (On Campus‑Outpatient Hospital) are referenced for outpatient hospital settings. When billing, providers must use the most appropriate codes as of the effective date of the submission.
- Include covered diagnosis and/or procedure codes on submissions.
- Use place of service codes 19 or 22 when the service is performed in an outpatient hospital setting.
Prior authorization may be required for hospital‑based outpatient therapy
Prior authorization may be expected when therapy is requested in a hospital-based outpatient setting for patients with conditions indicating higher acuity monitoring, specialized equipment needs, or need for coordinated multidisciplinary care; document the specific clinical reasons when requesting authorization.
- Provide clinical rationale showing increased medical complexity or need for enhanced monitoring.
- State necessity for specialized equipment or multidisciplinary expertise in the authorization request.
Prior authorization for specialized site‑of‑care services
Obtain prior authorization when services require specialized equipment, specialized personnel, or coordinated multidisciplinary clinical expertise per payer requirements—policy statements were revised to emphasize these site‑of‑care criteria.
- Indicate the specialized equipment or personnel required and how care will be coordinated across disciplines.
- Reference the policy's multidisciplinary and equitable delivery criteria in the prior authorization rationale.
Submit covered codes only or risk denial
When billing, include only codes that are covered under this Coverage Policy; submissions lacking covered procedure or diagnosis codes will be denied as not covered.
- Verify that billed codes map to covered services per the policy's Coding Information before submission.
Diagnosis alone does not justify hospital‑based outpatient site
Use place of service and clinical documentation to justify hospital‑based outpatient billing; a diagnosis alone is not sufficient to establish the appropriate site of care.
- Do not rely on diagnosis-only justification when requesting hospital outpatient site placement.
Use most‑appropriate codes as of submission date
Follow payer instructions for coding as of the submission effective date and submit services in accordance with the policy's criteria and covered code guidance.
- Ensure codes used reflect the most appropriate codes in effect on the date of submission.
Coding & documentation: use current, appropriate codes
When billing, providers must use the most appropriate codes as of the effective date of the submission and submit services in accordance with the relevant criteria including covered diagnosis and/or procedure codes.
- Confirm coding aligns with the policy's Coding Information and place‑of‑service requirements.
Document clinical necessity for hospital‑based outpatient setting
Document the clinical rationale for hospital‑based outpatient care showing increased medical complexity, physiologic instability risk, need for specialized equipment, enhanced monitoring capabilities, or access to clinicians with advanced expertise.
- Describe specific clinical needs (e.g., risk of instability, monitoring requirements, specialized equipment) in the medical record and authorization requests.
Document health equity and social determinants of health
Consider and document social determinants of health and equity‑related factors (e.g., housing, transportation, language/literacy) that affect access, functioning, and quality‑of‑life outcomes when they influence the need for hospital‑based outpatient services.
- Include relevant SDOH or equity barriers in clinical notes and authorization rationale when they affect site‑of‑care decisions.
Claims without covered codes will be denied
Claims submitted for services that are not accompanied by covered code(s) under the applicable Coverage Policy will be denied as not covered.
- Validate that all billed services correspond to covered procedure/diagnosis codes per the policy before submission.
Site‑of‑care mismatch may trigger denial
Services billed as hospital‑based outpatient when the clinical circumstances do not support hospital setting (and would be appropriate in a freestanding clinic) may be questioned and potentially denied; ensure documentation supports the higher‑acuity site‑of‑care.
- Provide documentation of increased medical complexity, monitoring needs, specialized equipment, or advanced clinician expertise to justify hospital site of care.
Policy changes may affect prior authorization expectations and denial risk
Removal of the prior list of specific conditions may alter prior expectations about condition‑specific coverage; providers should ensure documentation addresses the current policy criteria rather than relying on previously published examples to avoid denials.
- When requesting authorization or submitting claims, document the specific clinical reasons that meet the policy's a–e criteria rather than citing removed example lists.
Background and Scope
Background: This policy addresses medical necessity for PT and OT services delivered in outpatient hospital settings for both adult and pediatric patients. Its intent is to identify when hospital resources—such as specialized equipment, specialized personnel, coordinated multidisciplinary expertise, or considerations related to geographic access and equity—are required because equivalent services are not available or appropriate in freestanding PT/OT facilities. The scope applies to services under Cigna-administered health benefit plans and requires documentation of specific clinical needs to justify hospital outpatient delivery.
Definitions and Examples
Policy Revision History
Policy effective date set to 2026-08-15.
Policy last reviewed on 2026-08-15.
Next scheduled review date set for 2027-07-15.
Revised policy statements regarding specialized equipment and specialized personnel for hospital-based outpatient PT/OT.
Added criteria addressing coordinated multidisciplinary clinical expertise and equitable delivery of care for hospital-based outpatient PT/OT.
Removed the previous list of specific conditions and examples from the policy.
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