Reducing Out-of-Pocket Costs for Mental Health Services

Q. I thought Congress had changed the law on mental health coverage. But Medicare still charges me 50 percent to see my psychiatrist.

A. Congress did indeed pass a law in July 2008 that will eventually end Medicare’s discriminatory practice of charging beneficiaries a lot more for outpatient psychiatric treatment than other physicians’ services. But the reduction from the current 50 percent copayment will be phased in only gradually, starting in January 2010 and reaching 20 percent in 2014. At that point, Medicare will pay the same share of the cost (80 percent) that it pays for other Part B medical services.

Under the Medicare Improvements for Patients and Providers Act (MIPPA), a package that changed Medicare coverage and payments in a number of ways, beneficiaries’ copays for outpatient psychiatric services are scheduled to be lowered as follows:

2010 and 2011: 45 percent

2012: 40 percent

2013: 35 percent

2014 and later: 20 percent

Why will it take so long? In the process Congress uses to “score” legislation—that is, work out how much it will cost the federal government (or taxpayers)—postponing the mental health provision until 2010 and spreading the copay reduction over five years makes it less expensive, according to AARP legislative experts.

The MIPPA change affects only copayments for mental health therapy. Visiting a health professional for an initial diagnosis, for renewing or changing a psychiatric medicine or for monitoring its effects already carries a 20 percent copay. If you have supplemental insurance (medigap), your policy will cover your share of the cost, whether 20 percent or 50 percent.

This law does not change the current situation in which beneficiaries are limited to 190 days over their lifetime for receiving Medicare Part A coverage of inpatient treatment in psychiatric hospitals—those that specialize in mental health conditions. There is no such limit on Medicare coverage for care in general hospitals. So any days you spend in a nonpsychiatric hospital—even if you’re being treated for a mental health condition—do not count toward the 190-day lifetime limit. Out-of-pocket costs are the same in either type of hospital.

In some circumstances, Medicare covers “partial hospitalization,” which means receiving treatment at a hospital’s outpatient department or clinic or at a community mental health center during the day (but not spending the night there). Your charge for this type of service varies according to the treatment provided, but under Medicare rules it cannot be more than 40 percent of the Medicare-approved amount.

For more information on mental health coverage, go to Medicare’s website, click on “Find a Medicare Publication” and enter the name of the official booklet “Medicare and Your Mental Health Benefits” or its ID number, 10184. This publication can be viewed in English or Spanish.

Patricia Barry is a senior editor at the AARP Bulletin.