Does Medicare Cover Mental Health Services?

Medicare covers many services for people with mental illness or substance abuse disorders. However, there are special rules that limit the coverage and reimbursement. Medicare does not cover services for mental, behavioral and substance abuse disorders as well as other services.

Treatment of Substance Use Disorders and Alcoholism

Medicare will cover treatment for alcoholism and other substance abuse disorders in both outpatient and inpatient settings. Medicare Part A covers inpatient substance abuse treatment. Individuals will be responsible for the same copays as for other inpatient hospitalizations. Medicare Part B covers outpatient substance abuse treatment services provided by a clinic or hospital-outpatient department.

The following items and services are covered for treatment of alcoholism or substance abuse disorders:

  • Psychotherapy
  • Education for patients regarding diagnosis and treatment
  • Follow-up after hospitalization
  • Medicare Part D allows for out-patient prescriptions
  • Prescription drugs for inpatients, including Methadone
  • Structured Assessment and Brief Intervention

SBRIT is an early intervention strategy that targets people who are not yet diagnosed with a severe substance abuse disorder. When patients are showing signs of drug abuse and dependence, they can be provided in an outpatient setting, such as a primary care physician’s or outpatient hospital department. The public health approach to substance abuse treatment consists of three main components:

  • Screening: Screening patients for dangerous substance use using standard screening tools
  • Short Intervention: Engaging patients who are using dangerous substances
  • Referral to Treatment: Provides a referral for brief therapy or additional treatments to patients who require them.

Medicare also covers a preventive benefit that provides counseling and screening for those who aren’t alcohol dependent but show signs and symptoms of alcohol misuse.


Medicare covers specialized psychiatric hospital care that treats mental illness only when in-patient treatment is required for active psychiatric care. Medicare covers in-patient hospitalizations for up to 90 days. Medicare beneficiaries who are required to stay in hospital for longer than 90 days have 60 lifetime reserve days that can only be used once in their lives.

Care in a specialized hospital for psychiatric disorders is not as extensive as in general hospitals. It can only be used for a maximum of 190 days per lifetime. After this limit is reached, Medicare coverage for psychiatric hospitalization ends and can no longer be renewed. For those who require frequent or prolonged inpatient care in a specialized hospital, this restriction can be severe. They would not be limited in the number of hospitalizations they are entitled to if they need long hospitalizations due to physical ailments.

The 190-day limit is only applicable to specialty psychiatric hospital treatment. Individuals with a psychiatric condition that requires inpatient care may be treated at a general hospital. The coverage rules are the same as for general Part A hospitals.

Partial Hospitalization

Partial hospitalization programs provide intensive psychiatric care on an outpatient basis for psychiatric patients. These patients can expect to see improvements in their psychiatric health and functioning, which will prevent them from needing hospitalization. Partial hospitalization programs can be found in outpatient hospitals or community mental health centres. These programs offer diagnostic services, individual and group therapy, therapeutic activities, family counseling, patient education, and services by social workers, psychiatric nurse, and occupational therapists. Medicare doesn’t cover partial hospitalization patients’ transportation or meals. However, it does cover the services of other partial hospitalization providers, as we will discuss below.

Partial hospitalization must be under direct supervision of a physician according to an individual treatment plan. The services must be essential in the treatment of the patient’s conditions. Medicare may deny claims if the supervising doctor “ride circuit” between the hospital’s outpatient services department and the hospital. Individuals must prove that their treatment is provided under the direct supervision of a physician and in accordance to their individual care plans. (Medicare Intermediary Manual, SS 3112.4.

Outpatient mental health services and clinician coverage

Medicare covers medically required diagnostic and treatment services by doctors, including psychiatrists as well as social workers, clinical psychologists, psychiatric nurse specialist, nurse practitioners, and physicians’ assistants. Medicare does not cover professional counseling. To bill Medicare and receive reimbursements, clinicians must be registered in Medicare as providers.

Medicare covers brief visits to monitor the effectiveness of prescribed medication. Medicare also covers outpatient mental health services such as individual and group therapy, therapeutic activities programs, family counseling, and patient education services. It also covers drugs that a patient cannot self-administer, and diagnostic tests including laboratory testing.

As long as the services are medically necessary, Medicare does not limit clinician coverage. Many Part B carriers have Local Medical Review Policy (LMRPs), also known as Local Coverage Determinations or LCDs. These policies set out the maximum number of visits Medicare will pay for mental health services. These policies may mean that Medicare won’t pay for visits to the doctor or other medically necessary appointments. Any denial of coverage based on a LMRP should be appealed by the individual.

Home Health Services

Medicare covers home health services for those who need skilled care on an intermittent or part-time basis, and are not confined to their home. These eligibility criteria apply to people with mental health issues. They are eligible for home care even if there is no physical limitation. If an individual is unable to leave their home due to illness, or if they are unable to care for themselves, then they can be considered homebound. Medicare Benefit Policy Manual explains that home health psychological nursing is only medically justified and necessary when the patient poses a risk to themselves or others. The home health record must document the need for home psychiatric services. It must also include the responses of caregivers and patients to “any interventions”

Telehealth Services

Medicare covers a small number of Part-B services that are provided by physicians or practitioners to eligible beneficiaries via telehealth. Some services include pharmacologic management and individual psychotherapy, behavioral assessment and intervention, psychiatric screening and screening, annual depression screening, psychoanalysis and family psychotherapy, as well as specific behavioral and substance abuse disorder services such as smoking cessation, alcohol and/or drug abuse structured assessment, intervention services, annual alcohol misuse screening, and brief face-to–face counseling for alcohol misuse.

Telehealth services are only available to those who live in rural areas.

Reimbursement Limitations

Prior to 2010, certain psychiatric services were not covered by Medicare. The Medicare Improvements for Patients and Providers Act (2009, 2009) has increased the amount that Medicare will pay for mental health services. Medicare will reimburse mental health services at 80% of its approved rate in 2014 and thereafter, as it does for all other Part B claims.