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Billing for Habilitation vs. Rehabilitation Services: What PTs, OTs, and SLPs Need to Know

Habilitation vs. Rehabilitation Services to provide equal coverage. Understand the differences and how to bill for each.

Erica McDermott
5 min read
July 26, 2018
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According to this AOTA briefing, in 2017, federal law mandated that many individual and small group market health plans provide beneficiaries with separate visit limits for habilitative and rehabilitative services in an effort to provide equal coverage. As a result, some insurance companies now require providers to affix modifiers to their claims, thus indicating the type of services being provided. With that in mind, we thought it’d be a good idea to provide some clarity around the differences between these service types—as well as how to properly bill for them. Here’s what you need to know:

The difference between habilitative and rehabilitative services comes down to the individual patient scenario.

According to the AOTA, “habilitative services help a person keep, learn, or improve skills and functioning for daily living.” Rehabilitative services, on the other hand, “help a person keep, get back, or improve skills and functioning for daily living that have been lost or impaired because a person was sick, hurt, or disabled.” In this resource, the APTA further explains the terms: “Rehabilitation refers to reestablishing skills that were acquired at the appropriate age but have been lost or impaired.” By contrast, habilitation services are “designed to establish skills that have not yet been acquired at an age-appropriate level.”

Both types of services can involve the same interventions.

It’s important to note that—according to AOTA and APTA—both types of services can involve the same interventions, and those interventions can be “provided in the same setting, to address the same functional deficits and achieve the same outcomes; the difference is whether they involve learning something new or relearning something that has been lost or impaired.” For example, AOTA explains that an OT “teaching a child who had a stroke in utero the fine motor skills to groom and dress would be providing habilitative services.” But, “a therapist helping a 10 year old who had a stroke re-learn how to groom and dress would be providing rehabilitative services.”

And patients can receive both types of services.

Furthermore, “the same patient can receive both habilitative and rehabilitative services.” For example, “teaching baby care skills to a new mother with multiple sclerosis would be providing habilitative services; helping her recover from an injury incurred during a flare up and fall would be providing rehabilitative services.” However, according to the APTA, you cannot provide both types of services using the same treatment goal. So, be sure your goals clearly differentiate the intent of the services being provided, “even if the same interventions are used.” To be clear, “habilitative goals must focus on providing a client with new skills, abilities, or functions.” Rehabilitation goals “must focus on restoration of previous functional abilities.”

There are new modifiers providers must use to indicate which type of services they’re providing.

As of January 1, 2018, modifiers 96 and 97 replaced the SZ modifier, which providers were previously using to indicate habilitative services (per CMS transmittal 3940):

  • Providers must now use modifier 96 (following the CPT code) to identify habilitative services or procedures that could be considered either habilitative or rehabilitative.
  • Modifier 97 serves the same purpose for rehabilitative services that could otherwise be considered either habilitative or rehabilitative.

In addition to including the appropriate modifier on every claim, providers should clearly document that they are providing services to either help a patient learn something new or relearn something that was lost. That way, your documentation clearly supports your use of the appropriate modifier and better communicates the patient’s story—as well as his or her experience at your practice.

Not every health plan is required to provide separate visit counts for habilitative and rehabilitative services.

According to the APTA, only those individual and small group plans that are compliant with the Affordable Care Act (ACA) are required to provide separate visit limits. “Self-funded small group health plans, large group health plans, [and] grandfathered health plans” are off the hook. Additionally, “this requirement does not apply to Medicare or traditional Medicaid”—although “it does apply to Medicaid managed care and to people newly eligible for Medicaid through Medicaid expansion.” Thus, it’s imperative to follow up with your individual payers to determine their protocol for use of the new modifiers, visit limits for each type of service, and provider reporting requirements.

Have you implemented the new rehabilitation and habilitation modifiers in your practice? If so, how has the transition been? We’d love to hear your story in the comment section below.


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