Thursday night, the U.S. Centers for Medicare & Medicaid Services (CMS) dropped a new proposed rule that would allow Medicare to cover intensive outpatient programs (IOPs) for mental health and substance use disorder (SUD) treatment.
The proposed changes could open the door for IOP providers to work with the Medicare population and give patients a step-down alternative. While many commercial payers flocked to cover IOPs to reduce costs and provide more appropriate treatment options, Medicare was a late adopter.
Industry insiders say this could be a step in the right direction to granting Medicare beneficiaries more access to the full continuum of behavioral health care.
“When you limit [coverage] to just the extremes, it’s inefficient, and then you’re missing out on everybody in the middle,” Michelle Guerra, a senior consultant in population health and health equity at RTI Health Advance, told Behavioral Health Business. “It’s much more cost-effective to give somebody the level of care they need at the time [they need it] rather than undershooting it or overshooting it. That’s where Medicare needs to go. This is where the industry has been for a long time.”
SUD and mental health concerns remain high in the Medicare population. Roughly 1.7 million Medicare beneficiaries have substance use disorder, according to a study published in the American Journal of Preventive Medicine. Yet only 11% of those with an SUD receive treatment for their condition.
“Most people think of seniors when they think of Medicare. However, about 10% of Medicare beneficiaries are individuals under 65 who are on disability,” Matt Boyle, co-founder and CEO of Landmark Recovery, told BHB. “This population disproportionately struggles with substance use disorder. Prior to today, their only options for care were psychiatric hospitals and outpatient therapy.”
Franklin, Tennessee-based Landmark Recovery offers inpatient, residential, outpatient, medical detox and medication-assisted treatment services.
The nuts and bolts
The potential change, part of the 2024 proposed rule on Medicare payment rates for hospital outpatient and ambulatory surgical center (ASC) services, would allow for IOP services in hospital outpatient departments, Community Mental Health Centers (CMHCs), Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs), according to CMS.
Although Medicare covers several behavioral health services, including inpatient psychiatric hospitalization, partial hospitalization and outpatient therapeutic services, there is a gap in intermediate service coverage.
“Sometimes patients need a more intense service than outpatient therapy, but less than the level of hospital-level care a hospitalization would provide,” Dr. Meena Seshamani, deputy administrator and director at CMS, and Dr. Douglas Jacobs, chief transformation officer at CMS, wrote in a blog post. “For example, a patient with debilitating depression, which causes them to struggle with daily tasks, but at the same time does not require hospitalization.”
Many providers use IOPs to help step-down patients from an inpatient setting or step-up for patients in a traditional outpatient setting. IOPs typically consist of at least nine hours of treatment a week for adults, according to the National Alliance of Mental Illness.
IOPs also tend to cost less than the inpatient alternative. The mean cost of a mental health inpatient stay was $7,100 in 2016, according to the Agency for Healthcare Research and Quality. In comparison, the average cost of IOP treatment is between $250 and $350 per day, according to American Addiction Centers.
What this means for IOP providers
The new proposal could allow IOP providers to expand into the Medicare market if passed.
“While there is still a lot to understand about this proposal, the IOP program could help to address key behavioral health coverage gaps in Medicare and expand access to behavioral care, creating potential new growth pathways for our covered behavioral health providers, [Acadia] and UHS,” private investment banking company Stephens wrote in an analyst note.
This could open up a new market opportunity for organizations that only provide IOP services. Still, it’s more likely that providers with PHP or outpatient services can now offer their patients with Medicare more options, according to Guerra.
While this is progress, some providers say there are still significant gaps in Medicare coverage. Specifically, Medicare still does not cover residential behavioral health care.
“Less than 5% of our IOP patients are from the community. The majority of patients step down from a residential level of care, which is still not covered by Medicare,” Boyle said. “Of course, all progress is good progress, but I would urge CMS to expand benefits to all [American Society of Addiction Medicine] ASAM levels of care, not just IOP.”
While Medicare is not subject to parity laws, Guerra notes that covering IOPs is a step towards covering services on par with commercial plans.
“Hopefully, in the future, adding residential would really bring them along to offering comparable services for their beneficiaries who are living with mental health and substance use disorder [conditions],” Guerra said.
IOP coverage was just one of the new changes CMS proposed on Thursday. In its proposed 2024 Medicare Physician Fee Schedule (PFS) marriage and family therapists (MFTs) and mental health counselors (MHCs), including substance use disorder (SUD) counselors, are allowed to enroll in Medicare and bill for their services.
The proposed fee schedule also included provisions allowing certain practitioners to bill for integrated behavioral health services in primary care settings.
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