March 2, 2023
Medicare’s Mental Health Coverage: What’s Included, What’s Changed, and What Gaps Remain
- About one in four Medicare beneficiaries live with mental illness — from depression and anxiety to schizophrenia and bipolar disorder — but only 40 percent to 50 percent receive treatment
- Medicare coverage for mental health services has expanded in recent years, but serious gaps remain, especially for people with chronic or serious needs
How prevalent are mental health issues among Medicare beneficiaries?
About one in four Medicare beneficiaries live with mental illness — conditions such as depression, anxiety, schizophrenia, and bipolar disorder — but only 40 percent to 50 percent receive treatment.1 The prevalence of mental illness is about equal among beneficiaries enrolled in traditional Medicare (31%) and those in Medicare Advantage plans (28%), although variation in data sources and measurement make comparisons difficult.2
Mental illness is experienced most by those beneficiaries under age 65 who qualify for Medicare via disability, as well as by low-income beneficiaries dually eligible for Medicare and Medicaid.3 It is also more pervasive in beneficiaries from American Indian/Alaska Native and Hispanic communities relative to other racial and ethnic groups.4
Which mental health services does Medicare cover?
Medicare covers both outpatient and inpatient services as well as prescription drugs to treat mental illness.5 Traditional Medicare and Medicare Advantage plans generally follow the same coverage rules, and some also cover additional services, like grief counseling, or offer other tailored benefits through special needs plans catering to beneficiaries with mental illness.6
Inpatient services. Medicare Part A covers inpatient mental health services in both general hospitals and psychiatric hospitals, but the latter is limited to 190 total days per beneficiary across their lifetime. Traditional Medicare beneficiaries pay a deductible and coinsurance for each benefit period, which, for hospital services, begins on the day of admission and ends after a beneficiary has had no inpatient care for 60 consecutive days. Cost-sharing requirements vary across plans for Medicare Advantage enrollees.
Outpatient services. Medicare Part B covers outpatient mental health services delivered by psychiatrists or other physicians, clinical psychologists, clinical social workers, clinical nurse specialists, nurse practitioners, and physician assistants. The services covered include standard services like psychiatric evaluation, individual and group therapy, and medication management. After paying their annual deductible, traditional Medicare beneficiaries pay 20 percent of the Medicare-approved amount for covered services. As with inpatient services, cost-sharing requirements vary across Medicare Advantage plans.
Medication. For traditional Medicare beneficiaries, mental health medications are covered by Medicare Part D. Beneficiaries in a Medicare Advantage plan also may have a Part D prescription drug plan or another drug plan that follows Part D rules. All Medicare drug plans are required to cover antidepressant, anticonvulsant, and antipsychotic medications, as well as a wide range of other psychotropic medications like anti-anxiety drugs. Specific medications covered and out-of-pocket costs vary by drug plan.
Do most mental health providers accept Medicare?
While Medicare beneficiaries in urban and rural areas experience mental illness at similar rates, rural beneficiaries have less access to services.7 This is predicted to only get worse over the next three years, as experts anticipate increasing shortages in psychiatrists, clinical and counseling psychologists, mental health social workers and counselors, and other specialists.8 One reason is the number of providers accepting Medicare, which has declined over time. In 2009–2010, less than 55 percent of psychiatrists accepted Medicare compared to 74 percent in 2005–2006. In contrast, more than 85 percent of other physicians accepted Medicare in both periods.9 While directly comparable statistics are not available, this downward trend continued throughout the period from 2011 to 2019.
Because of high demand for psychiatric care and low supply of psychiatrists,10 many psychiatrists, particularly solo practitioners, only accept patients who can pay by cash. Providers can charge cash-pay patients more than the amount that Medicare would pay while also avoiding the administrative burden of billing Medicare. Fifty-five percent of psychiatrists accept Medicare.11 Provider payment rates for in-network mental health services are higher in traditional Medicare than in Medicare Advantage.12
How has Medicare coverage for mental health services expanded in recent years?
Lower cost sharing for outpatient mental health services. The 2008 Medicare Improvements for Patients and Providers Act eliminated higher cost sharing for mental health services compared to general medical outpatient services. Following the end of the mandatory phase-out period in January 2014, coinsurance for both mental health and general medical care was capped at 20 percent. This change has been associated with increases in outpatient mental health follow-ups after psychiatric hospitalization.13
More consistent access to medication. The Medicare “donut hole” in Part D prescription coverage was closed in 2020. (Medicare had been covering medications only up to a certain limit; beneficiaries had to pay out of pocket until reaching the eligibility threshold for catastrophic coverage.) Evidence showed that beneficiaries had reduced their use of antidepressants upon entering the coverage gap, suggesting that this reform would improve continuity in access to mental health medications.14
Free wellness visits. The Affordable Care Act secured free annual wellness visits for all Medicare beneficiaries in 2011. Depression screening is a required part of the first annual visit and can be included in subsequent years. This could improve depression identification and treatment, though initial uptake has been low: the proportion of Medicare beneficiaries screened for depression only increased from 8 percent to 23 percent between 2016 and 2022.15
Integrated care billing. Integrating mental health care into general medical settings can improve mental health treatment delivery and outcomes. Historically, the care management processes central to this integration have not been reimbursed by Medicare. In 2017, the Centers for Medicare and Medicaid Services (CMS) introduced billing codes that allowed general medical providers to bill Medicare for mental health care planning and management services. Uptake, however, has been very low: only 0.1 percent of Medicare beneficiaries with mental illness received a service billed to one of the new codes in 2017–2018.16 The fiscal year 2023 omnibus appropriations package requires the U.S. Department of Health and Human Services to conduct outreach to health care providers, with the goal of increasing uptake of these billing codes.
Telehealth coverage. While Medicare has always covered mental health diagnosis, evaluation, and treatment delivered via telehealth technology, this coverage was significantly expanded through COVID-19 public health emergency rules and subsequently made permanent.17 Medicare beneficiaries must see their mental health provider in person in the six months prior to their first telehealth appointment and at least yearly thereafter for continued telemental health coverage.
Provider payment issues. Historically, Medicare has not reimbursed licensed professional counselors, but this is slated to change: beginning in 2024, Medicare will cover services by these professionals. There are more than 140,000 licensed counselors in the United States, and reimbursing their services could help address provider shortages.18 The Congressional Budget Office (CBO) has estimated the cost of doing so at $100 million over five years.19
What are the critical gaps in mental health coverage that remain?
Inpatient day limits. Medicare beneficiaries are limited to 190 days of inpatient psychiatric hospital care in their lifetime. People with chronic mental illness — particularly younger beneficiaries who qualify for Medicare because of disability — may exceed this limit, and they face high out-of-pocket costs for necessary inpatient care. This is predominantly an issue for Medicare beneficiaries who are not dually eligible for Medicaid, as state Medicaid programs pay for inpatient psychiatric facility services for most dual-eligible beneficiaries who have exceeded Medicare’s 190-day limit. The CBO estimated that eliminating the 190-day limit would increase federal spending by $3.0 billion over 10 years.20 Congress had been considering legislation to eliminate the 190-day limit, but its future is uncertain.21
Limited Medicare Advantage mental health provider networks. Research shows that Medicare Advantage beneficiaries often lack access to in-network mental health providers and instead must turn to more expensive out-of-network care. A 2015 analysis of physician networks in Medicare Advantage HMOs and local PPOs offered in 20 counties across the U.S. found that, on average, only 23 percent of psychiatrists in each county were in network, a lower share than for all the other physician specialties examined.22 In 2014, nearly 30 percent of all psychotherapy services received by Medicare Advantage beneficiaries were out of network.23
To be reimbursed in outpatient rehabilitation facilities, partial hospitalization programs, and other treatment settings outside of a psychologist’s own office, Medicare requires clinical psychologists to be supervised by a psychiatrist. This is a significant barrier to care delivery in regions with psychiatrist shortages. As of September 2022, Congress is considering legislation to remove this supervision requirement.24
Lack of coverage and Medicare Advantage plans for serious mental health needs. Medicare does not cover psychiatric rehabilitation, assertive community treatment, or peer support services — although Medicaid covers many of these services for dual-eligible beneficiaries. One way to add these services to Medicare coverage is through Medicare Advantage Special Needs Plans (SNPs), which tailor their benefits to people with certain characteristics. To date, only four of 1,200 SNPs focus on beneficiaries with serious mental illness.25 One study found that, compared to traditional Medicare, an SNP focused on people with serious mental illness improved management of chronic medical conditions for these individuals by reducing costs and inpatient care utilization and increasing primary care and home health utilization.26
What can be done to improve access to mental health care?
Removing insurance barriers to mental health services, including the 190-day limit on inpatient psychiatric care and requiring psychiatrist supervision of clinical psychologists in some settings, could expand treatment access, though spending would increase. To improve access to mental health treatment for Medicare Advantage beneficiaries, CMS could incentivize plans to make comprehensive, up-to-date mental health provider directories available by incorporating measures of directory availability and accuracy in their star rating system. Revising plan criteria for network adequacy, with the goal of improving access to in-network specialty mental health providers, also could improve access. In addition, technical assistance and practice transformation efforts could support the increased uptake of reimbursable depression screening and behavioral health integration services.NOTES
- Vicki Fung et al., “Assessment of Behavioral Health Services Use Among Low-Income Medicare Beneficiaries After Reductions in Coinsurance Fees,” JAMA Network Open 3, no. 10 (Oct. 8, 2020): e2019854; and Substance Abuse and Mental Health Services Administration, Key Substance Use and Mental Health Indicators in the United States: Results from the 2019 National Survey on Drug Use and Health, HHS Publication No. PEP20-07-01-001 (SAMHSA, Sept. 2020).
- Jose F. Figueroa et al., “Association of Mental Health Disorders with Health Care Spending in the Medicare Population,” JAMA Network Open 3, no. 3 (Mar. 19, 2020): e201210; Judy Ng et al., Racial and Ethnic Disparities in Mental Health Among Diverse Groups of Medicare Advantage Beneficiaries (Centers for Medicare and Medicaid Services, Office of Minority Health, Dec. 2017); and Medicare Payment Advisory Commission, A Data Book: Health Care Spending and the Medicare Program (MedPAC, July 2011).
- MedPAC, Health Care Spending, 2011; Centers for Medicare and Medicaid Services, Health Disparities in the Medicare Population: Stroke (CMS, Oct. 2015); Health Resources and Services Administration/National Center for Health Workforce Analysis, National Projections of Supply and Demand for Selected Behavioral Health Practitioners: 2013–2025 (HRSA/NCHWA, Nov. 2016); and John M. Roll et al., “Disparities in Unmet Need for Mental Health Services in the United States, 1997–2010,” Psychiatric Services 64, no. 1 (Jan. 2013): 80–82.
- Ng et al., Racial and Ethnic Disparities, 2017; and CMS, Health Disparities, 2015.
- Centers for Medicare and Medicaid Services, Medicare & Your Mental Health Benefits (CMS, Sept. 2022).
- Meredith Freed, Juliette Cubanski, and Tricia Neuman, FAQs on Mental Health and Substance Use Disorder Coverage in Medicare (Henry J. Kaiser Family Foundation, Jan. 2023).
- Roll et al., “Disparities in Unmet Need,” 2013.
- HRSA/NCHWA, National Projections, 2015.
- Tara F. Bishop et al., “Acceptance of Insurance by Psychiatrists and the Implications for Access to Mental Health Care,” JAMA Psychiatry 71, no. 2 (Feb. 2014): 176–81.
- Amo Cai et al., “Trends in Mental Health Care Delivery by Psychiatrists and Nurse Practitioners in Medicare, 2011–19,” Health Affairs 41, no. 9 (Sept. 2022): 1222–30.
- Bishop et al, “Acceptance of Insurance,” 2014.
- Daria Pelech and Tamara Hayford, “Medicare Advantage and Commercial Prices for Mental Health Services,” Health Affairs 38, no. 2 (Feb. 2019): 262–67.
- Amal N. Trivedi, Shailender Swaminathan, and Vincent Mor, “Insurance Parity and the Use of Outpatient Mental Health Care Following a Psychiatric Hospitalization,” JAMA 300, no. 24 (Dec. 24, 2008): 2879–85.
- Yuting Zhang et al., “Effects of Medicare Part D Coverage Gap on Medication and Medical Treatment Among Elderly Beneficiaries with Depression,” Archives of General Psychiatry 69, no. 7 (July 2012): 672–79.
- Kimberly E. Lind, Kerry L. Hildreth, and Marcelo Coca Perraillon, “Persistent Disparities in Medicare’s Annual Wellness Visit Utilization,” Medical Care 57, no. 12 (Dec. 2019): 984–89.
- Dori A Cross et al., “Use of Medicare’s Behavioral Health Integration Service Codes in the First Two Years: An Observational Study,” Journal of General Internal Medicine 35, no. 12 (Dec. 2020): 3745–46.
- Centers for Medicare and Medicaid Services, “Medicare Program; CY 2022 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment Policies; Medicare Shared Savings Program Requirements; Provider Enrollment Regulation Updates; Provider and Supplier Prepayment and Postpayment Medical Review Requirements,” Fed. Reg. 86, no. 221 (Nov. 19, 2021): 64996–6031.
- American Counseling Association, “We Did It! Medicare Reimbursement Now Law,” news release, Dec. 23, 2022.
- American Counseling Association, Medicare, Outpatient Mental Health Services, and Coverage of Licensed Professional Counselors — S. 562 and H. R. 3662 (ACA, 2022).
- Congressional Budget Office, “Direct Spending Effects of Title V of H.R. 2646, the Helping Families in Mental Health Crisis Act of 2015,” Nov. 3, 2015.
- “Medicare Mental Health Inpatient Equity Act of 2021,” H.R.5674, 117th Cong. (2021).
- Gretchen Jacobson et al., Medicare Advantage: How Robust Are Plans’ Physician Networks? (Henry J. Kaiser Family Foundation, Oct. 2017).
- Pelech and Hayford, “Medicare Advantage and Commercial,” 2019.
- “Medicare Mental Health Access Act,” H.R. 884, 116th Cong. (2019).
- Centers for Medicare and Medicaid Services, SNP Comprehensive Report, 2022 09 (CMS, Sept. 2022).
- Robert Myers, “Fully Integrated Medical Home for People with Severe and Persistent Mental Illness: A Description and Outcome Analysis of a Medicare Advantage Chronic Special Needs Program,” Mental Illness 10, no. 2 (Nov. 6, 2018): 7819.