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This memo provides clarification to licensed substance use disorder (SUD) programs regarding the co-occurring enhanced rate, including requirements for diagnostic assessments (DAs), what qualifies as a billable individual session and what providers should understand about electing this rate. This guidance applies to programs enrolled to receive the co-occurring enhanced rate under Minnesota Statutes 254B.0507, subd. 6. This guidance is specific to billing for recipients covered under Medical Assistance (MA) and the Behavioral Health Fund. Providers serving recipients enrolled in a Managed Care Organization (MCO) or other payers should consult directly with those payers regarding applicable billing requirements.
Important: The co-occurring enhanced rate is voluntary.
Programs are not required to seek this rate. Programs licensed to serve individuals with co-occurring disorders and receiving the rate enhancement are obligated to meet all applicable requirements, including employing qualified mental health professionals and completing required mental health screening and diagnostic assessments for clients. Providers must ensure they can meet these obligations before electing this rate.
What the Enhanced Rate Covers
The co-occurring enhanced rate is designed to reimburse the additional costs of:
- Employing qualified mental health professionals within the SUD program
- Completing required mental health screenings and diagnostic assessments (DAs) for clients
The enhanced rate applies to all SUD individual and group treatment services (codes H2035 and H2035 HQ) as well as SUD residential per diem, provided to any client when the program meets requirements identified in Minnesota Statutes 254B.0507, subd. 6, whether that service is delivered by a mental health professional or another qualified staff member. Programs must not bill for DA-related work; the enhanced rate is structured to cover those costs.
Diagnostic Assessment Requirements
Programs Must Complete DAs within their licensed SUD Program
Under Minnesota Statutes 254B.0507, subd. 6, programs receiving the co-occurring enhanced rate are required to provide co-occurring services, which include standardized mental health screening and mental health diagnostic assessment, when determined necessary. This is a program-level responsibility.
Programs may not refer clients to external providers to fulfill the DA requirement. Programs electing the enhanced rate must have the capacity—including qualified mental health staff— to complete DAs as part of their own service delivery. If a program cannot meet this requirement, it must not elect the enhanced rate.
Diagnostic Assessments Are Not a Billable SUD Service
Diagnostic assessments are not identified as a distinct treatment service in Minnesota Statutes 245G.07 and are not a covered MHCP SUD service. Programs must not bill DAs under any SUD billing code.
Additionally, SUD programs are not approved to use mental health billing codes, regardless of the credentials of the staff completing the DA. The cost of DA completion is incorporated into the enhanced rate.
What Qualifies as a Billable Individual Session
Billable Individual Sessions Require a Primary Treatment Purpose
Procedure code H2035 covers individual treatment services as defined in Minnesota Statutes 245G.07, specifically services such as counseling and education. To be billable as an individual session, the primary purpose of the contact must be the delivery of a treatment service.
DA Information Gathering Is Not Billable as an Individual Treatment Session
A session whose primary purpose is gathering information for a diagnostic assessment does not qualify as a billable individual treatment session. Gathering client information to complete a DA is an assessment activity, not treatment, and the cost of that work is covered within the enhanced rate.
If a session is primarily a counseling or education session and some DA-related information gathering occurs incidentally, that session may still be billed as H2035 based on its primary purpose. The determining factor is what the session is primarily for. Programs must document the specific treatment service provided according to Minnesota Statutes 245G.07.
Billing for Services Provided by Mental Health Professionals
This memo clarifies existing requirements and does not change how to bill for the co-occurring enhanced services.
Qualified mental health professionals working within an SUD program may provide individual and group treatment services as described in Minnesota Statutes 245G.07, such as individual counseling and education. The SUD program bills for those services using standard SUD billing codes (H2035 and H2035 HQ), not mental health procedure codes.
The enhanced rate applies whether the qualifying service is delivered by a mental health professional or another qualified staff member. For residential programs, services provided by qualified professionals, including mental health staff, may be included in the total count of skilled treatment services.
Summary of Key Requirements for Programs Receiving the Enhanced Rate
- The co-occurring enhanced rate is voluntary. By electing it, programs agree to meet all associated requirements.
- Programs must employ qualified mental health professionals and complete required screenings and DAs for clients within the program.
- DAs may not be referred to external providers to satisfy the program requirement.
- DAs may not be billed separately under any SUD billing code or mental health billing code.
- Billable individual sessions (H2035) must have treatment—counseling or education— as their primary purpose. Sessions used primarily to gather DA information gathering are not billable as individual treatment sessions.
- The enhanced rate applies to qualifying H2035 and H2035 HQ services and residential per diem regardless of whether the provider is a mental health professional or another qualified staff member.
For questions about this guidance, contact the DHS Behavioral Health Administration at sud.direct.access.dhs@state.mn.us. For questions about the MHCP provider manual or billing, contact the Provider Resource Center. For non-MHCP billing questions, consult your payer or legal counsel.
Additional information on covered services and procedure codes is available on the MHCP provider manual page for SUD Services.
About this Behavioral Health Administration e-memo
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For more information about behavioral health services in Minnesota, visit:
Children’s mental health / Adult mental health / Substance use disorder / Resources for partners and providers
For more information about this e-memo please feel free to contact us at youropinionmatters.dhs@state.mn.us.
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