Medicare Bids to Fill Mental Health Coverage Gap After Hill Push

Credit Congress for Medicare’s recent move to fill a gaping hole in its behavioral health coverage next year.

Section 4124 of the Consolidated Appropriations Act of 2023 required Medicare to start covering “intensive outpatient” mental health and substance use disorder services in 2024. The coverage—which entails nine to 19 hours of treatment services per week—is part of a “continuum of care” developed by the American Society of Addiction Medicine.

Medicare now covers only the least intensive types of treatments on the continuum, namely, early intervention and outpatient services, along with the most intensive treatment types, or residential inpatient services and medically managed inpatient care.

The Biden administration’s recent proposal to add the missing intensive outpatient services—which calls for an individualized treatment plan, counseling, medication management, and even family therapy for people with substance use disorders—could go a long way in addressing Medicare beneficiaries’ untreated mental health and substance abuse problems that may have emerged or worsened during the Covid-19 pandemic and the ongoing opioid crisis.

Section 4121 of the appropriations act also directed Medicare to expand the types of providers that can deliver behavioral health services to beneficiaries. The proposed Medicare physician fee schedule from the Centers for Medicare & Medicaid Services would “allow marriage and family therapists and mental health counselors, including addiction counselors, to enroll in Medicare and bill for their services for the first time ever,” in 2024, said Meena Seshamani, the CMS’ deputy administrator, during an agency conference call on July 18.

If finalized, the proposal would help address a shortage of Medicare-eligible mental health providers. Mental health counselors and marriage and family therapists account for roughly 40% of the licensed mental health workforce. And while most private and public health plans—including Medicaid—recognize them as eligible providers, Medicare currently does not.

The proposal is expected to add over 200,000 mental health clinicians to the Medicare workforce.

Similar Medicare coverage expansions were implemented this year.

One allows additional types of clinicians to provide behavioral health services under general, rather than direct, supervision. And the CMS made permanent this year a provision that allows beneficiaries to receive behavioral health services remotely through hospital outpatient departments. That benefit was originally implemented on an emergency basis in response to the Covid-19 public health emergency.

Because the Mental Health Parity and Addiction Equity Act doesn’t apply to Medicare, the program isn’t required to offer substance use disorder and mental health benefits at the same level as medical and surgical care benefits. That’s unlike most private and job-based health insurance—and even Medicaid plans—that are covered by the law.

It helps explain why roughly 1.7 million Medicare beneficiaries had a substance-use disorder in 2021, a recent study estimated. And only 11% of these beneficiaries received treatment, even though they were much more likely to have had serious psychological distress and suicidal thoughts.

The proposed coverage of intensive outpatient services under Medicare would serve as an “in-between,” for these kinds of patients, said Seshamani, who’s also the director of the Center for Medicare at the CMS.

Currently, Medicare covers beneficiaries’ outpatient therapy visits once or twice a week. But if more treatment is needed, the next step “is a partial hospitalization program, which is basically a day psych hospital,” followed by inpatient care if needed, Seshamani said during a recent briefing with reporters.

“As you can imagine, that’s quite a big jump from having a therapist” maybe once or twice a week “to all of a sudden being in a day hospital situation. So, this intensive outpatient program is that in-between,” Seshamani said. It would provide more frequent treatment on a weekly basis “that does not rise to the level of a hospitalization, but is more than what someone might get in regular outpatient care,” she said.

Congress required these services to be covered in hospital outpatient departments, community mental health centers, federally qualified health centers, and rural health clinics, said Deborah Steinberg, a health policy attorney at the Legal Action Center, a nonprofit law and policy organization.

But the CMS proposal goes one step further, recommending that intensive outpatient services be covered when provided in opioid treatment programs as well. “We’re really excited about that,” Steinberg said.