I code for Psychiatry and there is a Psychologist that just got back his external audit results and the auditor is telling him that for his individual psychotherapy visits that he must indicate the time of the visit in his documentation. I cannot find anything anywhere that specifies that time has to be documented for individual psychotherapy. Can you verify for me if time needs to be documented and if so, where I can find it in writing.

Anytime you are coding based on time you have to document the time spent during the visit.  Since psychotherapy visits are time based the only way it can be determined the correct codes are used is to be able to verify the time in the note.  Of course you also have to document to contents of the visit.  According the to E/M guidelines if you spend more than 50% of the time face to face with the patient counseling and coordination of care you can code based on time.  However, the only way this would be known is if the physician documents his time.