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
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
When billing habilitative services on claims for Independence or out-of-area
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
- Professional claims: The modifier is coded in the SV1
- Facility claims: The modifier is coded in the SV2
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
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
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).