Medicare’s Telehealth Decision Will Lead to Sweeping Changes for All of Behavioral Health

Recently announced changes to Medicare telebehavioral health coverage will impact the entire industry whether providers contract with the program or not.

The move from the Centers for Medicare & Medicaid Services (CMS) marks an acceleration of telehealth on top of staking out a point-of-no-return for the industry’s progression toward digital adoption.

CMS announced at the beginning of November that it would allow Medicare beneficiaries to originate telehealth visits for mental health services in their homes — with the home being loosely and inclusively defined — regardless of where they live. Also, Medicare will allow providers to use audio-only visits when a patient declines to conduct a video chat.


These changes come into effect on Jan. 1, 2022.

What Medicare’s shift means

This is a shift from the historical norms of what role telehealth played in health care, as far as Medicare approached it. For providers to bill Medicare for telehealth services, patients needed to leave their homes for a designated clinical setting, and such coverage was only available if the person lived in a rural area.

“I think that’s an important shift in the thinking about telehealth intending to be an easier way to access services,” Lori Oliver, a health care attorney and shareholder in national healthcare law firm Polsinelli P.C., said of CMS redefining how the agency approaches telebehavioral health.


The change to allow audio-only telehealth services reveals something about behavioral health itself.

“I think that’s an important recognition of the need for access to those services, and that the services are generally conversational,” Oliver said.

In fact, she added, in the process of changing the agency’s approach, CMS officials noted that video does not seem to add much benefit to these types of telehealth services.

“I think the recognition of that, when you think about the fact that we don’t have enough behavioral health providers, is a really important recognition of the practical realities that we’re facing as a country,” she said.

The federal government projects that there could be 20% fewer adult psychiatrists in the U.S. in 2030. The same report projects that the need for all types of mental health and behavioral health providers at all levels will only continue to increase.

An example of the workforce shortage: National behavioral health facility powerhouse Universal Health Services Inc. reported in its latest quarterly earnings call that it had to turn away business and pay top-dollar for contract work to fill shifts.

Medicare sends strong signals about what services are worth paying for, at least in part, because of just how much money Medicare puts out to cover beneficiaries’ health care.

Medicare accounted for about 22%, or $799 billion, of all money paid out for health care by any payer, government or private, in 2019. In federal fiscal year 2021, Medicare accounted for about 48%, or $731 billion, of all spending by the massive U.S. Health and Human Services Department (HHS). According to its recently released annual financial report, HHS’ total spending topped $1.51 trillion. When Medicare makes moves, it matters.

And while it’s legally separate from its sister program Medicaid, a federal safety net plan that partners with states to administer benefits for vulnerable populations, Medicare has a strong influence on how states think about their Medicaid programs.

Similarly, Medicaid has immense financial power in the behavioral health industry.

Medicaid is the largest payer of mental health services in the U.S. and accounts for as much as 25% of all the money spent on mental health. The Kaiser Family Foundation estimates that Medicaid covered 21% of adults with mental illness and 17% of adults with substance use disorders.

Within the Medicaid space, telehealth in behavioral health was underutilized before the pandemic, Yavar Moghimi, the chief psychiatric medical officer for AmeriHealth Caritas DC, said in an interview. But the use of telehealth as a way to address the pandemic elevated the profile of both telehealth and behavioral health.

Telebehavioral health saw exponential growth in usage during the pandemic. The nonprofit FAIR Health aggregates insurance claims data that shows telehealth claims made up 0.24% of all claims in January 2020. But in August 2021, telehealth claims made up 4.3% of all insurance claims, a 16.5X increase. Mental health claims dominate the usage of telehealth, according to the claims data.

The impact of Medicare on Medicaid is somewhat muted by the fact that there are more than 50 Medicaid programs in the nation that are administered independently of each other. Still, nearly all states have allowed behavioral health to be delivered via telehealth.

One estimate shows that combined, public insurance plans cover about 60% of all spending on behavioral health in the U.S.

Sweeping telebehavioral health changes could extend into private payer space

Outside of the public health plans, CMS’ decisions make waves among private payers as well.

Ashley Gibson, director of payer relations, contracts and utilization management at the Hazelden Betty Ford Foundation, said that most of her organization’s commercial payer partners follow the lead of Medicare when it comes to telehealth.

The Hazelden Betty Ford Foundation, the nation’s largest nonprofit provider of substance use disorder treatment, doesn’t contract with either Medicare or Medicaid. But Medicare’s decisions still often translate into impacts on the foundation.

Commercial payers tend to take some time to consider Medicare’s actions. But Medicare’s urgency around telehealth during the early days of the pandemic added to the momentum of telehealth adoption, Gibson said.

“This is all so new for everyone,” Gibson said in an interview. “I think that a lot of the commercial payers are just taking the lead of Medicare and saying, ‘Okay, if they feel like this is a service line that they’re comfortable with, or a service delivery method that they’re comfortable with, we should be comfortable with that too.’”

Telehealth allows Hazelden Betty Ford Foundation to get to patients that grapple with social determinants of health that might overwise keep them from getting care. Transportation access for example, a major social determinant of health, is overcome by telehealth if patients can use it in their homes.

A little less than a year before the pandemic, Hazelden Betty Ford Foundation ran a telehealth pilot in California, which increased access and inspired an expansion of the pilot to Oregon and Minnesota.

The moves by Medicare also validate investments in telebehavioral health, Gibson said.

“This move really gives us some level of confidence that virtual service delivery is here to stay,” Gibson said. “I also think it gives us a level of confidence because [Medicare does] so much work with value in their space, and because they do so much with regards to outcomes, that there is a proven efficacy. There must be some sort of proof there to show that virtual service delivery is effective.”

Geoffrey Boyce, CEO of a telepsychiatry provider Array Behavioral Care, has a different view of the regulatory environment around telebehavioral health. He has seen certain, but not all, private payers have been more progressive on paying for telehealth within behavioral health, independent of Medicare’s policies. But he did concur that many Medicaid programs take their cue from Medicare.

“I think CMS’ position does set a great standard, and for players that may not have embraced it, more of them I think are now embracing it because CMS is setting new standards,” Boyce said.

“I absolutely think that this is movement in a positive direction and represents the trend and momentum of telebehavioral health. There’s absolutely no going back in my opinion and we will see this continue to progress.”

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