The COVID-19 pandemic has taken a heavy physical and mental health toll on all ages, including older adults, heightening interest in strategies to improve access to mental health and substance use disorder (SUD) services generally, and in Medicare. In April 2022 – more than two years into the pandemic – one in six adults 65 and older (16%) reported anxiety and depression, according to KFF analysis of the Household Pulse Survey, somewhat lower than the quarter of older adults (24%) who reported anxiety and depression in August 2020, when the country was in still the midst of widespread lockdowns in the early stage of the pandemic. (Both estimates would likely be higher among the entire Medicare population because Medicare beneficiaries under age 65 with long-term disabilities report higher rates of anxiety and depression than older beneficiaries, according to unpublished KFF analysis of the Medicare Beneficiary Survey from 2019.) Additionally, nearly a third of adults 65 and older (32%) say that worry or stress related to coronavirus has had a negative impact on their mental health, according to KFF polling, a somewhat lower rate than reported among younger adults.
These FAQs review mental health and substance use disorder coverage and out-of-pocket costs in Medicare and discuss policy proposals related to coverage of mental health and substance use disorder treatments.
What mental health benefits and substance use disorder benefits does Medicare cover?
Medicare covers a range of mental health and substance use disorder services, both inpatient and outpatient, and covers outpatient prescription drugs used to treat these conditions. Medicare Advantage plans are required to cover benefits covered under traditional Medicare and most cover Part D prescription drugs as well, but out-of-pocket costs may differ between traditional Medicare and Medicare Advantage plans, and vary from one Medicare Advantage plan to another. (See below section “How are mental health benefits and substance use disorder benefits covered under Medicare Advantage plans?” for more detail.)
Medicare Part A covers inpatient care for beneficiaries who need mental health treatment in either a general hospital or a psychiatric hospital.
Medicare Part B covers one depression screening per year, a one-time “welcome to Medicare” visit, which includes a review of risk factors for depression, and an annual “wellness” visit, where beneficiaries can discuss their mental health status. Part B also covers individual and group psychotherapy with doctors (or with certain other licensed professionals, depending on state rules), family counseling (if the main purpose is to help with treatment), psychiatric evaluation, medication management, and partial hospitalization. Partial hospitalization is a more structured program of individualized and multidisciplinary outpatient psychiatric treatments that is more intensive than in a doctor or therapists’ office, as an alternative to an inpatient stay. Partial hospitalization programs are designed for patients with mental health conditions who do not require 24-hour inpatient care, but have not benefitted from a less intensive outpatient program.
Part B also covers outpatient services related to substance use disorders including opioid use disorder treatment services, which include medication, counseling, drug testing, and individual and group therapy. Medicare covers one alcohol misuse screening per year, and for beneficiaries determined to be misusing alcohol, four counseling sessions per year. Medicare also covers up to 8 tobacco cessation counseling sessions in a 12-month period.
The Medicare Part D program provides an outpatient prescription drug benefit to people on Medicare who enroll in private plans, including stand-alone prescription drug plans (PDPs) or Medicare Advantage prescription drug plans (MA-PDs). Medicare Part D prescription drug plans cover retail prescription drugs related to mental health and are required to cover all or substantially all antidepressants, antipsychotics, and anticonvulsants (such as benzodiazepines), as each is one of the six protected classes of drugs in Part D. Part D plans are permitted to impose prior authorization and step therapy requirements for beneficiaries initiating therapy (i.e., new starts) for each of these protected classes of drugs. Coverage of other prescription drugs is based on an individual plan’s formulary, and depending on a plan’s formulary, beneficiaries can also be subject to prior authorization, step therapy, and quantity limits.
How much do Medicare beneficiaries pay for mental health benefits and substance use disorder benefits?
Beneficiaries who are admitted to a hospital for inpatient mental health treatment would be subject to the Medicare Part A deductible of $1,556 per benefit period in 2022. Part A also requires daily copayments for extended inpatient hospital stays. For extended hospital stays, beneficiaries would pay a $389 copayment per day (days 61-90) and $778 per day for lifetime reserve days. For inpatient stays in a psychiatric hospital, Medicare coverage is limited to up to 190 days of hospital services in a lifetime. Most beneficiaries in traditional Medicare have supplemental insurance that may pay some or all of the cost sharing for covered Part A and B services.
For most outpatient services covered under Part B, there is a $233 deductible (in 2022) and 20 percent coinsurance that applies to most services, including physician visits. However, some specific Part B services have different cost-sharing amounts (Table 1):
Those with Part D coverage face cost-sharing amounts for covered drugs and may pay an annual deductible ($480 in 2022) and a monthly premium. For example, most Part D enrollees pay less than $10 for generic drugs, but many pay $40-$100 (or coinsurance of 40%-50%) for brand-name drugs. Beneficiaries with low incomes and modest assets are eligible for assistance with Part D plan premiums and cost sharing.
Which health providers can bill Medicare directly for mental health and substance use disorder services, and how much does Medicare pay for these services?
Medicare provides coverage and reimbursement for mental health services provided by psychiatrists or other doctors, clinical psychologists, clinical social workers, clinical nurse specialists, nurse practitioners, and physician assistants. Medicare does not provide coverage or reimbursement for mental health services provided by licensed professional counselors and licensed marriage and family therapists.
Medicare fees vary by type of provider, according to the Medicare Physician Fee Schedule (Table 2):
Are psychiatrists accessible to Medicare beneficiaries?
The majority of physicians, both primary care and specialists, report taking new Medicare patients, similar to the share who take new privately insured patients. Psychiatrists, however, are less likely than other specialists to take new Medicare (or private insurance) patients. According to a recent KFF analysis, 60% of psychiatrists are accepting new Medicare patients, which is just over 20 percentage points lower than the share of physicians in general/family practice accepting new patients (81%). However, the survey used to conduct the analysis does not distinguish among physicians seeing new patients covered under traditional Medicare or Medicare Advantage, so it is not clear whether physicians are more inclined to accept new Medicare patients in either Medicare Advantage plans or traditional Medicare.
Further, psychiatrists are more likely than other specialists to “opt out” of Medicare altogether. Providers who opt out of Medicare do not participate in the Medicare program and instead enter into private contracts with their Medicare patients, allowing them to bill their Medicare patients any amount they determine is appropriate. Overall, 1% of all non-pediatric physicians have formally opted-out of the Medicare program, with opt-out rates highest among psychiatrists: 7.5% of psychiatrists opted out in 2022. In fact, psychiatrists account for 42% of the 10,105 physicians opting out of Medicare in 2022.
The relatively high rate of psychiatrists not taking new Medicare patients, combined with relatively high opt out rates, could pose access issues for Medicare beneficiaries needing treatment for mental health needs. (For additional information on access to providers in Medicare Advantage plans, see “Provider Networks” in the section below: “How are mental health benefits and substance use disorder benefits covered under Medicare Advantage plans?”)
How has expanded telehealth coverage affected access to mental health benefits and substance use disorder benefits during the COVID-19 pandemic?
Prior to the COVID-19 pandemic, Medicare coverage of telehealth services was very limited. Before the COVID-19 public health emergency, telehealth services were generally available only to beneficiaries in rural areas originating from a health care setting, such as a clinic or doctor’s office. One exception, however, was the removal of the geographic and originating site (i.e., the health care setting where the beneficiary is located) restrictions for individuals diagnosed with a substance use disorder for the purposes of treatment of such disorder or co-occurring mental health disorder, as of July 1, 2019, based on changes included in the SUPPORT Act.
During the COVID-19 public health emergency, beneficiaries in any geographic area can receive telehealth services, and can receive these services in their own home, rather than needing to travel to an originating site. During the first year of the pandemic, 28 million Medicare beneficiaries used telehealth services, a substantial increase from the 341,000 who used these services the prior year. Beneficiaries used telehealth for 43% of all behavioral health services they received during the first year of the pandemic, including individual therapy, group therapy, and substance use disorder treatment, compared to 13% of all office visits. Behavioral health represented 12.4% of all telehealth services received during the first year of the pandemic.
These telehealth flexibilities under Medicare have been extended by the Consolidated Appropriations Act of 2022 for 151 days beginning on the first day after the end of the public health emergency, which was most recently renewed in April 2022 and is expected to be renewed again in July 2022.
Beneficiary cost sharing for telehealth services has not changed during the public health emergency. Medicare covers telehealth services under Part B, so beneficiaries in traditional Medicare who use these benefits are subject to the Part B deductible of $223 in 2022 and 20% coinsurance. The HHS Office of Inspector General has provided flexibility for providers to reduce or waive cost sharing for telehealth visits during the COVID-19 public health emergency, although there are no publicly-available data to indicate the extent to which providers may have done so. Some Medicare Advantage plans have reduced or waived cost sharing during the public health emergency, though these waivers may no longer be in effect.
What Medicare-covered telehealth mental health and substance use disorder benefits have been extended beyond the public health emergency?
Medicare has made permanent some changes to telehealth coverage related to mental health services. Based on changes in the Consolidated Appropriations Act of 2021, as implemented under the CY 2022 Medicare Physician Fee Schedule Final Rule, Medicare has permanently removed geographic restrictions for telehealth mental health services and permanently allows beneficiaries to receive those services at home. Also under the Physician Fee Schedule final rule, Medicare now permanently covers audio-only visits for mental health and substance use disorder services when the beneficiary is not capable of, or does not consent to, the use of two-way, audio/video technology.
There are some in-person requirements to receive these mental health services through telehealth, but they have been delayed for 151 days beginning on the first day after the end of the public health emergency. Once in effect, in order for a beneficiary to receive telehealth mental health services, there must be an in-person, non-telehealth service with a physician within six months prior to the initial telehealth service, and an in-person, non-telehealth visit must be furnished at least every 12 months for these services, though exceptions can be made due to beneficiaries’ circumstances. These requirements for periodic in-person visits (in conjunction with telehealth services) apply to treatment of mental health disorders other than treatment of a diagnosed substance use disorder. Recently, a group of Senators on the Senate Finance Committee has released a discussion draft that includes a proposal to remove the requirement for an in-person visit prior to the initial telehealth service.
How are mental health benefits and substance use disorder benefits covered under Medicare Advantage plans?
Medicare Advantage plans are required to cover all Medicare Part A and Part B services, but cost-sharing requirements for beneficiaries in Medicare Advantage plans vary across plans. Medicare Advantage plans can require provider referrals and/or impose prior authorization for Part A and B services, including mental health and substance use disorder services. Medicare Advantage plans also typically have networks of providers that can restrict beneficiary choice of in-network physicians and other providers, although plans must meet network requirements for the number of providers and facilities that are available to beneficiaries. Medicare Advantage plans also have different flexibilities for telehealth benefits.
Cost Sharing for Medicare-Covered Mental Health Benefits
Medicare Advantage plans have the flexibility to modify cost sharing for most Part A and B services, subject to some limitations. For example, Medicare Advantage plans often charge daily copayments for inpatient hospital stays starting on day 1, in contrast to traditional Medicare, where there is a deductible and no copayments until day 60 of a hospital stay. Medicare Advantage enrollees can be expected to face varying costs for a hospital stay depending on the length of stay and their plan’s cost-sharing requirements.
Prior Authorization and Referrals
In contrast to most services under traditional Medicare, Medicare Advantage plans can require referrals and/or prior authorization for Part A and B services, including mental health and substance use disorder services. In 2021, virtually all enrollees (99%) are in plans that require prior authorization for some services, including opioid treatment services (87%) and mental health specialty services (84%).
Unlike in traditional Medicare, where Medicare beneficiaries can see any provider who accepts Medicare, beneficiaries enrolled in Medicare Advantage plans are limited to receiving care from providers in their network or in most cases, must pay more to see out-of-network providers. In order to ensure enrollees have adequate access to providers, Medicare Advantage plans are required to meet network adequacy standards, which include a specified number of physicians and other providers, along with hospitals, within a particular driving time and distance of enrollees. However, prior KFF analysis showed that access to psychiatrists has been more restricted than for any other physician specialty: on average, plans included less than one-quarter (23%) of the psychiatrists in a county, and more than one-third (36%) of the Medicare Advantage plans included less than 10 percent of the psychiatrists in their county.
As of 2020, Medicare Advantage plans have been permitted to include costs associated with telehealth benefits (beyond what traditional Medicare covers) in their bids for basic benefits. The above-mentioned geographic and originating site limitations do not apply in Medicare Advantage plans, which have had flexibility to offer additional telehealth benefits outside of the public health emergency, including telehealth visits provided to enrollees in their own homes and services provided to beneficiaries residing outside of rural areas. In 2021, 94% of Medicare Advantage enrollees in individual plans had a telehealth benefit. During the first year of the COVID-19 pandemic, 49% of Medicare Advantage enrollees used telehealth services.
Do mental health and substance use disorder parity laws apply to Medicare?
Prior to 2010, Medicare beneficiaries paid a higher coinsurance rate (50%) for outpatient mental health services than for other outpatient services covered under Part B (20%). The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) phased in parity for cost sharing for all outpatient services covered under Part B between 2010 and 2014, so that as of 2014, cost sharing for outpatient mental health services is the same as for other Part B services.
Federal parity laws, including the Mental Health Parity Act of 1996 and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), do not apply to Medicare, however. The Mental Health Parity Act of 1996 requires parity in annual and aggregate lifetime dollar limits for mental health benefits and medical or surgical benefits in large groups plans, but not Medicare. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which expanded on the 1996 law, extends parity to substance use disorder treatments, and prevents certain health plans from making mental health and substance use disorder coverage more restrictive than medical or surgical benefits, also does not apply to Medicare. In 2016, some of these parity rules were applied to Medicaid Managed Care Organizations (MCOs) but not to Medicare benefits that are provided by Medicaid MCOs to beneficiaries dually enrolled in Medicare and Medicaid.
Because MHPAEA does not apply to Medicare, some mental health benefits can be more restricted than other health services. Some stakeholders have asserted that this lack of parity can be seen in the lifetime limit of 190 days on inpatient hospitalizations in psychiatric hospitals, because Medicare does not have any other lifetime limits on comparable inpatient services.
What policy approaches have been proposed related to coverage of mental health benefits and substance use disorder benefits under Medicare?
As part of the President’s FY 2023 budget, the Administration has made a number of recommendations to support mental health, including but not limited to Medicare enhancements. These include, for example: applying the Mental Health Parity and Addiction Equity Act to Medicare; requiring Medicare to cover three behavioral health visits without cost sharing; and authorizing licensed professional counselors and marriage and family therapists to bill Medicare directly.
Policymakers have also introduced legislation to improve mental health access in Medicare, including the Medicare Mental Health Inpatient Equity Act of 2021, which would remove the 190-day lifetime limit on inpatient psychiatric hospital services under Medicare, and the Mental Health Access Improvement Act of 2021, which would allow marriage and family therapists and licensed professional counselors to be reimbursed under Medicare.
While many of these proposals would increase access to mental health and substance use disorder treatment, there would likely be an increase in costs for the Medicare program. For example, eliminating the 190-day lifetime limit on psychiatric hospital services would be expected to increase Medicare Part A spending by $3 billion over 10 years, according to CBO. Other changes, such as requiring Medicare to cover three behavioral health visits without cost sharing would increase Part B spending by $1.4 billion over 10 years. Even with these proposed changes, there is some uncertainty over the extent to which they would remove potential barriers to care, including fewer kinds of mental health providers accepting Medicare, restricted networks of mental health providers in Medicare Advantage plans, and the availability of mental health and substance use disorder providers in underserved areas.
FAQs on Mental Health and Substance Use Disorder Coverage in Medicare
