CMS Expands Access to Behavioral Health Outpatient Services

Footnotes for this article are available at the end of this page.

The Centers for Medicare & Medicaid Services (“CMS”) announced it is expanding access to behavioral health services for Medicare beneficiaries through intensive outpatient services coverage. In general, Medicare will cover inpatient psychiatric admissions, partial hospitalization programs (“PHP”), and outpatient therapy for beneficiaries with behavioral health conditions. However, when a beneficiary requires more intense services than traditional outpatient therapy, but less than inpatient-level care that a hospitalization would provide, beneficiaries experience a coverage gap.

As a result, the CY 2024 Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgical Center (“ASC”) final rule (with comment period) implements the Consolidated Appropriations Act, 2023 provisions that create a new benefit category for intensive outpatient program (“IOP”) services for Medicare beneficiaries with acute behavioral health needs.1 CMS has published a fact sheet on the CY 2024 OPPS/ASC Payment System Final Rule. This article highlights some of the provisions found in the fact sheet.2

IOP Services

The final rule includes the scope of benefits, physician certification requirements, coding and billing, and payment rates under the IOP benefit. An IOP is a “distinct and organized outpatient program of psychiatric services provided for individuals who have an acute mental illness or substance use disorder, consisting of a specified group of behavioral health services paid on a per diem basis under the OPPS or other applicable payment system when furnished” in an appropriate setting.

IOP services can be furnished across various settings, including hospital outpatient departments, community mental health centers (“CMHCs”), federally qualified health centers (“FQHCs”), and rural health clinics (“RHCs”), effective January 1, 2024. The scope of IOP benefits and certification and plan of care requirements will be the same for RHCs, FQHCs, and hospitals. To be eligible for IOP services, at least every other month, a physician must determine that the patient needs a minimum of nine hours of IOP services per week. This requirement will be codified in the regulations for IOP provided in all settings.

Payment Rates for RHCs and FQHCs

CMS is finalizing a list of service codes to be included in IOP that have been and are paid for by Medicare as part of the PHP benefit or under the OPPS. In addition, for CY 2024, CMS is finalizing the hospital-based and CMHC IOP payment rates for three services per day and four or more services per day based on cost per day using a broad set of OPPS data that includes PHP and non-PHP days for the same services CMS is recognizing for PHP and IOP. Though there is currently no Medicare benefit for IOP, CMS intends to use the OPPS data set to review and capture data from hospital claims that include the service codes and intensity required for an IOP day. Payment for RHCs and FQHCs will be based on the hospital payment rate. RHCs will be paid the three services per day payment amount for hospital outpatient departments. FQHCs will be paid the lesser of a FQHC’s actual charges or the three services per day payment amount for hospital outpatient departments.

OTP Settings

Additionally, CMS is extending coverage for intensive outpatient services in opioid treatment programs (“OTPs”) for the treatment of opioid use disorder. CMS is revising regulatory definition of opioid use disorder (“OUD”) treatment services to include IOP services. CMS is establishing a weekly payment adjustment via an add-on code for IOP services furnished by OTPs for treating OUD. The payment adjustment will be updated annually based on the Medicare Economic Index and adjusted by the Geographic Adjustment Factor. Medicare will pay for IOP services provided by OTPs so long as each service is medically reasonable and necessary and not duplicative of any service paid for under any bundled payments billed for an episode of care in a given week. To receive the additional payment adjustment for IOP services, a physician or non-physician practitioner (e.g., physician assistant or nurse practitioner) must certify that the beneficiary requires a higher level of care intensity compared to existing OTP services, and that the certification, plan of care, and other relevant requirements are met.

For additional information, please contact AGG Healthcare attorneys Hedy Rubinger or Kadeja Watts.


[1] The CY 2024 OPPS/ASC Payment System Final Rule with Comment Period can be viewed here:

[2] To review the fact sheet on the CY 2024 OPPS/ASC Payment System Final Rule with Comment Period, please visit: