Billing for habilitative and rehabilitative services

May 15, 2017


With the passing of the Affordable Care Act (ACA) in 2010, habilitative and rehabilitative services and devices became one of the ten Essential Health Benefits (EHB) required to be covered by health care plans. Effective January 1, 2017, federal regulations clarified how these benefits should be covered by requiring parity in coverage limits for habilitative and rehabilitative services and requiring separate visit limits for each.1

As a result of these new regulations, habilitative and rehabilitative services must be tracked separately for all members, including out-of-area members, to ensure visit limits are not combined. Therefore, providers that submit claims for habilitative services may need to make a change to their billing practices to support compliance with these requirements.

How are habilitative and rehabilitative services defined?

Federal regulations define these services as follows:

  • Habilitative services: Health care services and devices that help a person keep, learn, or improve skills and functioning for daily living. Examples include therapy for a child who is not walking or talking at the expected age. These services may include physical and occupational therapy, speech-language pathology, or other services for people with disabilities in a variety of inpatient and/or outpatient settings.
  • Rehabilitative services:
  • Rehabilitative services, including devices, are provided to help a person regain, maintain, or prevent deterioration of a skill or function that has been acquired but then lost or impaired due to illness, injury, or disabling condition.2

Billing requirements

When billing habilitative services on claims for Independence or out-of-area BlueCard® members, providers should use the available HCPCS modifier SZ (Habilitative Services). This billing requirement applies to claims for both professional and outpatient facility services. Also note the following for electronic claims:

  • Professional claims: The modifier is coded in the SV1 segment.
  • Facility claims: The modifier is coded in the SV2 segment.

Without the SZ modifier, the service will be considered rehabilitative; however, if providers use the modifier appropriately, Independence and other Blue Plans can track habilitative and rehabilitative services separately and comply with EHB requirements of the ACA regulations.

Note: The HCPCS code modifier SZ was created in 2014, so some offices may already bill with this modifier for habilitative services claims.

For more information

For more information about habilitative and rehabilitative services, review the following policies:

  • Commercial: #10.03.01g: Physical Medicine, Rehabilitation, and Habilitation Services;
  • Medicare Advantage: #MA10.003b: Physical Medicine & Rehabilitation Services: Physical Therapy (PT) and Occupational Therapy (OT).

To view these policies, visit our Medical Policy Portal and select Accept and Go to Medical Policy Online. Then select the Commercial or Medicare Advantage tab and type the policy name or number in the Search field.

1See the regulation at 45 CFR ? 156.115.

2See preamble in the 2016 Notice of Benefit and Payment Parameters (80 FR 10749).