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Medicare Mental Health Regulations

A broad range of mental health services are covered under Medicare; however, mental health services are subject to more regulations that limit coverage than are physical health services, according to National Health Policy Forum. Medicare coverage expansions implemented in the 2000s improved mental health service coverage for Medicare beneficiaries, although mental health advocates like the National Alliance on Mental Illness (NAMI) argue that further reform of mental health service coverage under Medicare is needed.

  1. Treatment Regulations

    • Medicare will pay for necessary in-patient psychiatric hospitalization for up to 90 days per benefit period. Psychiatric hospitalization coverage under Medicare is limited to a total of 190 days in a lifetime, according to the Center for Medicare Advocacy. Medicare covers most outpatient mental health treatments, including therapy and counseling. Per the Medicare Modernization Act of 2003, Medicare also covers a broad range of outpatient prescription drugs, including drugs to treat mental health. According to NAMI, regulations of the law exclude coverage of certain psychiatric medications, including benzodiazepines, which are commonly prescribed to treat acute mania in bipolar disorder and anxiety disorders.

    Reimbursement Regulations

    • According to the Center for Medicare Advocacy, reimbursement (co-payment) for certain psychiatric services differs from the usual Medicare reimbursement rules. Before 2010, regulations on mental health claims under Medicare limited patient reimbursement for mental health services to 50 percent, much more than the average 20 percent co-pay that Medicare beneficiaries are charged for non-mental health services. However, the Medicare Improvements for Patients and Providers Act of 2008 will gradually eliminate the discriminatory co-pay rates for Medicare outpatient psychiatric services. Beginning in 2010, Medicare increased the percentage that it will cover for mental health services to 55 percent of expenses incurred in 2010 or 2011; 60 percent in 2012; 65 percent in 2013; 80 percent (the amount reimbursed for non-mental health service claims) in 2014 or in any subsequent calendar year.

    Medigap Regulations

    • Regulations for mental health service coverage under Medicare supplemental insurance---also known as Medigap insurance---vary from state to state. These regulations are based on model rules issued by the National Association of Insurance Commissioners. The Center for Medicare Advocacy recommends that Medicare beneficiaries purchasing Medigap insurance should review their state's Medigap regulations on mental health services carefully before purchase to ensure that it covers the mental health services they need.

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