CMS Looking to Establish New Behavioral Health Intensive Outpatient Medicare Program

The U.S. Centers for Medicare & Medicaid Services (CMS) revealed a series of important behavioral health proposals on late Thursday afternoon. 

First, in its proposed 2024 Medicare Physician Fee Schedule, the agency pitched changes that would allow marriage and family therapists (MFTs) and mental health counselors (MHCs), including substance use disorder (SUD) counselors, to enroll in Medicare and bill for their services. Among its other key changes, the proposed fee schedule also included provisions that would let certain practitioners bill for integrated behavioral health services in primary care settings.

Shortly after the proposed Medicare Physician Fee Schedule dropped, CMS also released its 2024 proposed rule on Medicare payment rates for hospital outpatient and ambulatory surgical center (ASC) services. In doing so, the agency said it was seeking to expand coverage of intensive outpatient services – an intermediate level of behavioral health care.


“In the CY 2024 OPPS/ASC proposed rule, CMS is proposing to establish the Intensive Outpatient Program (IOP) under Medicare,” CMS wrote in a fact sheet. “The proposed rule includes the scope of benefits, physician certification requirements, coding and billing, and payment rates under the IOP benefit.”

If the proposal is finalized, IOP services may be furnished in hospital outpatient departments, Community Mental Health Centers (CMHCs), Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs), according to CMS.

“These proposals address one of the main gaps in behavioral health coverage in Medicare and promote access to needed behavioral health care,” CMS noted.


Currently, Medicare covers and pays for various levels of behavioral health services, including inpatient psychiatric hospitalizations, partial hospitalizations services and outpatient therapeutic services. As payment policy stands today, though, there is a gap in coverage when people with Medicare require levels of services more frequent than individual outpatient therapy visits, but less intensive than a partial hospitalization program.

IOPs have traditionally had an important role in SUD treatment. Increasingly, the IOP level of care has gained traction in the mental health space as well.

Establishing a middle option between inpatient and outpatient is important for CMS in managing Medicare spend, as inpatient stays are extremely costly.

“If someone can be treated in an IOP setting versus an inpatient setting, on a per diem basis, it’s a fraction of the cost,” Terry Hyman, managing partner of Northwood Healthcare Partners, recently told Behavioral Health Business. “And if you can avoid that inpatient stay or a single ED visit, it is a highly economical alternative.”

CMS’ proposal included different payment and program requirements for the potentially new benefit across settings.

In the proposed rule, the agency is also looking to establish payment for intensive outpatient program services provided by opioid treatment programs (OTPs), effective Jan. 1, 2024. Such services, CMS proposed, should be made available for individuals with mental health conditions and for individuals with SUDs.

Companies featured in this article: