An Expert’s View On Coding, Compliance, and Clinical Documentation
In modern psychiatric practice, the way we document and code has evolved dramatically. A decade ago, psychiatry relied heavily on broad codes that often obscured the depth of psychotherapeutic work performed in a session. The shift toward ICD-10 and DSM-5 alignment brought a new era in coding and documentation that recognizes psychotherapy as a distinct and clinically valuable service, not just a component of general psychiatric care.
At PMHScribe, we build documentation tools that reflect how psychiatrists work in the real world. One of our design choices is to separate psychotherapy add-on documentation from the evaluation and management (E/M) note. Although coding guidelines do not require a separate chart note, we believe this approach offers clear advantages for clinicians, passing audits, and practice operations.
Here’s why.
The Coding Reality
CPT Guidelines Require Distinct Services
Per AMA CPT® guidelines, when you bill an E/M service with a psychotherapy add-on (90833, 90836, 90838), the two services must be significant and separately identifiable in the documentation. This means that the clinical work supporting the medical decision-making and the work supporting the psychotherapeutic intervention must each stand on its own in the record. Simply tacking a paragraph onto an E/M note is documented practice, but, from a billing and audit perspective, it can create ambiguity.
CMS reinforces this point in its documentation guidance: to report both an E/M service and psychotherapy on the same day, the time and content must be clearly separated in the medical record. The time spent in psychotherapy cannot be counted toward the E/M service, and vice versa.
In practical terms, this means documentation must show the distinct clinical focus, modality, and patient response for the psychotherapy portion, apart from medication management, risk assessment, and medical decision-making in the E/M. Some insurers go as far as to interpret start and stop times on the psychotherapy note. PMHScribe’s separated templates make that distinction intuitive and compliant.
Insurance Audits and Real-World Compliance
Auditors Do Not Read Like Clinicians
Throughout decades of practice and chart audits, reviewers often skim the note using a checklist to align billing and documentation. They are trained to ensure compliance, not to interpret clinical nuance. A single long note with merged narrative combined with an add-on code can easily lead to confusion during external chart reviews by Medicare, Medicaid, or private carriers.
Our experience in state audits, township funding audits, and federal reviews has repeatedly shown that separate, clear documentation reduces ambiguity and preemptively answers questions auditors tend to ask. When psychotherapy elements are buried in the E/M narrative, auditors often flag the service as not “distinct,” even when the clinical work was entirely appropriate.
Separating the psychotherapy service from the E/M by default helps protect practices before a claim denial, recoupment, or post-payment review.
Record Requests and Redaction Challenges
Many clinicians worry about privacy when releasing records. Under HIPAA, patients have a right to access their Protected Health Information (PHI), including progress notes, lab results, and diagnostic information. HIPAA’s Privacy Rule generally allows access within 30 days of a request.
The 21st Century Cures Act, also known as the Open Notes rule, further requires rapid and free access to electronic health information upon patient request. This includes clinical notes in the designated record set, subject to limited exceptions.
Psychotherapy notes, as defined under HIPAA, include clinician impressions, private therapeutic dialogue, and personal counseling observations, which may be excluded from patient access and HIPAA right of access when documented and stored separately from the rest of the medical record.
When psychotherapy data is mixed directly onto the general E/M note, redaction becomes a logistical nightmare. Black strikethroughs of text to “hide” protected content:
- Delay record fulfillment timelines
- Create suspicion in legal or external reviews
- Cause unnecessary confusion for patients and auditors
By separating psychotherapy documentation in PMHScribe, clinicians can generate a compliant record that meets access obligations while isolating sensitive narrative that may have a narrower disclosure requirement.
Malpractice and Legal Defense Considerations
In malpractice, divorce, custody, and other civil disputes, subpoenas and court orders most often seek the clinical chart (progress notes and medical record documentation) because it is the record used to evaluate diagnosis, risk assessment, treatment decisions, and standard of care. HIPAA allows disclosures in judicial and administrative proceedings, but the rules differ for a court order versus a subpoena or other lawful process and require specific safeguards.
Psychotherapy notes have enhanced protection under HIPAA and generally require a separate authorization for disclosure, which is one reason keeping them separate can better protect patients from unnecessary exposure of highly sensitive session content in adversarial contexts like divorce and custody disputes.
A practical caution is that producing chart notes with obvious blacked out sections can create the appearance that something is being hidden and can trigger follow up discovery disputes and added deposition time to explain redactions. Keeping psychotherapy notes out of the chart reduces the need for heavy redactions and can lower the odds of avoidable legal friction.
Why This Matters for PMHScribe Users
PMHScribe design choices are informed by clinical reality, audit experience, and regulatory interpretation. Our default separation of psychotherapy add-on documentation from E/M notes delivers:
Clinical clarity
Your therapeutic work is described in detail and recognized accurately.
Billing compliance
Supports AMA CPT and CMS documentation expectations for separately identifiable services.
Patient rights compliance
Supports HIPAA and Cures Act transparency while respecting note confidentiality when needed.
Audit resilience
Reduces ambiguity that can trigger unnecessary audits or compliance challenges.
This structure reflects how psychiatrists actually work, and why we believe documentation should support both the clinical narrative and the reimbursement structure.
Conclusion
While a separate note for psychotherapy add-on is not strictly mandated, it is best practice for clarity, compliance, risk mitigation, and patient rights management. That is why PMHScribe defaults to this approach. Our templates are built for psychiatrists and mental health professionals who want to document precisely, code confidently, and reduce the burden of retrospective documentation.
For practices seeking a documentation system optimized for real clinical workflows, regulatory compliance, and audit readiness, PMHScribe’s psychotherapy add-on template remains one of our most powerful and clinician-preferred tools.
Resources
U.S. Department of Health and Human Services (HHS), Office for Civil Rights
Court Orders and Subpoenas under HIPAA
Explains the legal distinction between court orders and subpoenas and when disclosure of medical records is permitted.
https://www.hhs.gov/hipaa/for-individuals/court-orders-subpoenas/index.html
U.S. Department of Health and Human Services (HHS)
Does HIPAA Provide Extra Protection for Psychotherapy Notes?
Authoritative guidance on the heightened protections for psychotherapy notes and requirements for disclosure.
https://www.hhs.gov/hipaa/for-professionals/faq/2088/does-hipaa-provide-extra-protections-mental-health-information-compared-other-health.html
Electronic Code of Federal Regulations (eCFR)
45 CFR § 164.512(e): Disclosures for Judicial and Administrative Proceedings
Primary regulatory source governing disclosures of protected health information in legal proceedings.
https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-C/part-164/subpart-E/section-164.512
Electronic Code of Federal Regulations (eCFR)
45 CFR § 164.501: Definitions (including “psychotherapy notes”)
Primary regulatory definition of psychotherapy notes under HIPAA (useful to support why keeping them separate matters).
https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-C/part-164/subpart-A/section-164.501
American Psychological Association (APA) Services
“Take Note: What Psychotherapy Notes Are and How They Are Protected”
Clarifies the definition, purpose, and legal protection of psychotherapy notes under HIPAA.
https://www.apaservices.org/practice/business/legal/professional/take-note
American Counseling Association (ACA)
Risk Management: Subpoenas, Court Orders, and Client Records
Discusses responding to subpoenas, protecting client confidentiality, and minimizing legal risk.
https://www.counseling.org/docs/default-source/risk-management/ct-risk-management-january-2017.pdf
Federal Bar Association
Document Production and Redactions in Civil Litigation
Addresses how redactions can become contested discovery issues and lead to motions, hearings, and depositions.
https://www.fedbar.org/wp-content/uploads/2012/12/focusondocprod-dec12-pdf-1.pdf
The Doctors Company (Medical Malpractice Insurer)
Medical Record Documentation: Tips for Reducing Risk
Risk-management guidance on how documentation is interpreted in claims and litigation, and why clarity reduces exposure.
https://www.thedoctors.com/articles/medical-record-documentation/
MedPro Group
Documentation and the Medical Record (Risk Management)
Insurer risk-management perspective on documentation in liability cases and legal review.
https://www.medpro.com/risk-management/patient-safety-and-risk-solutions/documentation
American Psychiatric Association (Psychiatry.org)
Confidentiality and Privacy (Legal and Practice Guidance)
Practice-facing legal/ethical guidance relevant to record requests, subpoenas, and protecting sensitive mental health content.
https://www.psychiatry.org/psychiatrists/practice/legal/confidentiality
U.S. Department of Justice (DOJ), Office of Information Policy
FOIA Guide: Redaction and Withholding Practices
General legal treatment of redactions and how they are evaluated and challenged (helpful analog for “appearance of concealment”).
https://www.justice.gov/oip/doj-guide-freedom-information-act-0
ONC HealthIT.gov
Information Blocking and the Cures Act Final Rule (Overview and Exceptions)
Primary federal resource on the access framework for EHI and the role of privacy exceptions, relevant to record-release workflows.
https://www.healthit.gov/topic/information-blocking
