Diagnosing for Accuracy vs. Diagnosing for Reimbursement

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The process of assigning mental health diagnoses can be influenced by more than observed clinical symptoms. Sometimes a diagnosis may be assigned even when the most correct diagnosis is ‘no diagnosis’. Here’s why it happens and why it carries important consequences for clinicians, research on prevalence rates, and the mental health system as a whole.

For some time now, researchers and clinicians, as well as various critics of the mental health care system in the US have questioned whether the published prevalence rates for certain psychiatric diagnoses are accurate. It’s really difficult to get an unbiased, objective assessment of actual prevalence rates, because there is no independent entity established to accomplish that very thing. For the most part, the data on prevalence rates comes directly or indirectly from the kinds of diagnostic codes clinicians and service institutions provide to third party payers. But professionals don’t always assign codes strictly on the basis of the most accurate assessment of the patient’s condition. That’s right. Sometimes the most accurate diagnosis is not the one put on paper. And this happens for a variety of reasons, far too numerous to address adequately in this article. But one factor contributing to the prevalence rate ‘inflation’ of certain clinical conditions might have to do with the fact that sometimes a mental health professional will confer a psychiatric diagnosis upon someone who is actually not ‘sick’ enough to warrant a diagnosis in the first place. In those cases, the most accurate diagnosis would be no clinical diagnosis at all.

Folks come to see psychiatrists, psychologists, clinical social workers, professional counselors, and a host of other mental health professionals for a wide variety of reasons. And, of course, many times these folks suffer from true clinical conditions and disorders. But sometimes the signs and symptoms associated with a person’s distress don’t really rise to the level where they meet the generally accepted criteria for a formal diagnosis. Other times, folks seek therapy not so much to treat an emotional problem but merely as a vehicle for personal growth. In such cases, the correct diagnosis would most likely be ‘no diagnosis.’ And in the official diagnostic scheme most professionals are trained to go by, there’s actually a diagnostic category and ‘code’ that accounts for this reality. Clinicians can delineate a concern that’s ‘the focus of treatment’ but still doesn’t merit a formal clinical diagnostic label. Many clinicians are hesitant to use this code, however, for a variety of reasons. For one thing, there’s a good chance that any service provided wouldn’t secure reimbursement from a third party payer. For another, it’s much more difficult to justify a particular type of intervention in the absence of a formal diagnosis typically associated with that intervention. So, generally speaking, a clinical diagnosis of some sort is given, even when it would be more accurate to make no formal diagnosis at all.

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Perhaps it would help to illustrate how this aforementioned type of diagnostic inaccuracy contributes to prevalence rate inflation. Let’s say that someone has experienced a stressful event such as the loss of a loved one or a change in employment status. And let’s say that this person wants to talk to someone about their circumstances. Perhaps they don’t want to talk to just anyone about things or perhaps they don’t have ready access to family or friends. Perhaps they simply prefer to get more professional guidance in ‘sorting out’ their issues of concern. Maybe they’re even be a little down in the dumps but still not actually suffering from even a mild degree of depression. And perhaps they’re experiencing some emotional turmoil, but not an abnormal degree of ‘post-traumatic’ stress or even an unusual degree of anxiety. Even the most benign of psychiatric diagnoses they could be given (i.e. an ‘Adjustment Disorder’ or ‘Adjustment Reaction’) might be inaccurate because they’re not experiencing either a level of distress or a departure from their usual level of functioning in excess of what one would reasonably expect, given their circumstances. Still, they want to work things out with a therapist and the professional also thinks they could benefit from a few sessions. But if no clinical condition is diagnosed, the visits might not be approved under the patient’s care plan, and there will likely be no reimbursement for the service either. And given the typical cost for the session, paying for it out-of-pocket would only add to the patient’s level of distress. It might even prompt a condition to develop that wasn’t there before. So, sometimes, the clinician will give a diagnosis that comes closest to describing the person’s state and circumstances, even though the more accurate diagnosis would be ‘no diagnosis.’ The patient might be perfectly comfortable with this, attaching no stigma to being assigned a diagnosis. But once a formal clinical diagnosis is assigned to the patient, it also becomes just one more bit of inaccurate data in the pool of information that provides researchers with prevalence rates for the various psychiatric disorders. And in the US, many believe this has become a very big issue, especially with respect to the prevalence of certain ‘popular’ diagnoses. As one researcher recently complained: “If we are to believe current reports, there are 12 times more children with Attention Deficit Hyperactivity Disorder (ADHD) in the US than in Europe, and within the US, there are almost 50 percent more children with ADHD today than a decade ago.” Similar complaints have been made about the prevalence rates of Bipolar Disorder, Depression, Anxiety Disorders, and a host of other clinical conditions.

In Argentina, where the overall cost of mental health services is lower, and the prevailing attitudes toward seeking such services is much more liberal (a higher proportion of people avail themselves of mental health services in Argentina, and the ratio of providers per capita is also higher than for any other advanced society), folks are much more inclined to see a therapist, even to work on relatively minor issues. Still, the prevalence rates of the clinical conditions under the most scrutiny in the US don’t seem to be as inflated there. That might be partly due to the fact that in a care system where coverage is more guaranteed, clinicians feel freer to assign the most correct diagnosis as opposed to the diagnosis most likely to be reimbursed. But perhaps it’s also in part because some services can be secured for as low as the equivalent of 10 US dollars per session, a very affordable amount for most, and when folks can afford to pay out-of-pocket for their sessions, there’s less pressure on providers to assign a clinical diagnosis essential for insurance reimbursement when in fact no diagnosis is warranted.

A much anticipated and highly revised edition of the Diagnostic and Statistical Manual (DSM) of the American Psychiatric Association debuts next month (the DSM-5). And concerns have already been raised about the statistical data it reports, some diagnostic categories it includes and their criteria, and some of the longstanding categories it deleted or relegated to a lesser status. Perhaps, as some researchers have suggested, it’s time for an independent, unbiased entity to tackle the task of validating the diagnostic categories, criteria, and prevalence data in the mental health practitioners’ ‘bible.’

All clinical material on this site is peer reviewed by one or more clinical psychologists or other qualified mental health professionals. This specific article was originally published by on and was last reviewed or updated by Dr Greg Mulhauser, Managing Editor on .

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