On November 13, 2009, the Centers for Medicare and Medicaid Services (CMS) released Medicare claims processing information on how mental health parity for outpatient mental health services will be phased-in. Before the Medicare Improvements for Patients and Providers Act (MIPPA) was signed into law on July 15, 2008, patients paid half the cost of Medicare-covered outpatient mental health services, but only 20% of the cost of Medicare-covered outpatient medical services. MIPPA equalized the coverage rates, so that as of January 1, 2014, Medicare Part B will pay outpatient mental health services at the same level as other Part B services. Outpatient mental health services are available for psychiatric diagnoses described in the International Classification of Diseases, 9th Revision (ICD-9), under the code range 290 to 319.

According to an October 30, 2009 CMS manual update to Medicare contractors, “Medicare Claims Processing Transmittal 1843: Outpatient Mental Health Treatment Limitation,” for outpatient mental health services provided before January 1, 2010, the pre-parity coverage rate will still be in effect. After meeting their deductibles, patients will pay 50% of the covered charges and Medicare will pay the other 50%. The phase-in process and percentages apply to claims for professional services provided by physicians, clinical psychologists, clinical social workers, nurse practitioners, clinical nurse specialists, and physician assistants. The phase-in process also applies to diagnostic psychological and neuropsychological testing to evaluate a patient’s progress during treatment.

To determine how much patients pay and how much Medicare pays, of the actual charges, the Medicare-approved amount will be multiplied by a limitation percentage to find the Medicare incurred expenses. The patient’s unmet deductible is subtracted, and the remainder multiplied by 80% to find the amount Medicare pays. The rest of the Medicare-approved amount is the patient’s responsibility. For the pre-parity coverage, the multiplier was 62.5%. The phase-in multipliers will be as follows:

* 68.75% as of January 1 (with an implementation date of January 4, 2010), through 2011; patients will pay 45% of covered charges; Medicare will pay 55% of the covered charges.
* 75% as of January 1, 2012; patients will pay 40% of covered charges; Medicare will pay 60%.
* 81.25% as of January 1, 2013; patients will pay 35% of covered charges; Medicare will pay 65%.
* 100% as of January 1, 2014; patients will pay 20% of covered charges; Medicare will pay 80%.

Two outpatient mental health services will be covered at the 2014 rate immediately. The phase-in process will not apply to brief office visits for monitoring or changing drug prescriptions used to treat a mental health disorder. These visits are reported using HCPCS code M0064. CMS instructed Medicare contractors that procedures identified as HCPCS code M0064 or any successor code will not be subject to the phase-in process. Diagnostic evaluations and tests to establish or confirm a patient’s diagnosis will also not be subject to the phase-in process. CMS instructed Medicare contractors to deem initial visits as diagnostic. In cases where a diagnosis takes more than one visit, the Medicare contractor may request documentation to justify the additional visit.