Intensive outpatient program (IOP), a service delivery model for behavioral health patients who need more intensive therapy than standard outpatient care, has been utilized as a clinically effective treatment modality since the 1980s. While Medicare Advantage plans have offered coverage of IOP for many years, the Centers for Medicare & Medicaid Services (CMS) has historically excluded IOP as a covered service under traditional Medicare (Part B).
That’s about to change.
To address the growing demand for behavioral health services in Medicare-eligible populations, CMS has announced coverage of IOP under Medicare part B starting January 1, 2024. This landmark change to behavioral health service coverage under CMS is a victory for all as we continue to navigate the evolving territory of post-pandemic behavioral health needs within the Medicare-eligible population and the nation as a whole.
What Is IOP?
Serving as a step between traditional outpatient therapy and higher levels of care such as partial hospitalization, IOP offers flexible and individualized programming to people with moderate-acuity mental health and substance use disorders. IOP can mitigate unnecessary utilization of more costly levels of care, making it a cost-effective solution to address the growing behavioral health crisis in the US.
How the Proposed Rule Would Work
The CY 2024 Proposed Rule states that IOP will be reimbursed on a per diem basis under the Outpatient Prospective Payment System (OPPS). Although specifics of IOP reimbursement are still in development, CMS pricing is considered the gold standard for rate setting and is utilized for reimbursement benchmarking across the entire healthcare industry. CMS’s establishment of an IOP reimbursement rate would enable providers to evaluate and identify payer contracts where reimbursement falls below regional market standards and initiate renegotiations with payers across all lines of business.
In addition to the inclusion of IOP under Medicare Part B, the CY 2024 Proposed Rule adds IOP to the list of covered services under opioid treatment programs (OTPs). Medicare patients receiving SUD treatment through an OTP and presenting with a need for more intensive therapy than standard counseling will be able to access IOP through their OTP. This change allows for increased individualization of services, continuity of care, and patient retention in lower levels of care. Per the proposed rule, an add-on code for IOP will be added to the OTP bundled payment arrangement.
What This Means for Providers
- Providers with existing commercial or Medicare Advantage payer contracts that include IOP should watch for CMS’s new per diem rate for IOP and then evaluate managed care contracts and reimbursement across all lines of business to determine relativity to CMS pricing. Based on the published Medicare rate, there may be opportunity to engage in rate negotiations.
- OTP providers with bundled payments should prepare to approach payers to determine whether they will be offering IOP as an add-on code for both commercial and Medicare LOBs.
- Providers who will become eligible for IOP reimbursement under Medicare Part B on January 1, 2024, should consider submission of a Medicare Enrollment Application and work with their regional Medicare Administrative Contractor to prepare to render and bill IOP services for traditional Medicare beneficiaries.
ECG has experience negotiating IOP reimbursement nationally. For assistance with benchmarking, managed care strategy, and payer negotiations, please contact ECG’s behavioral health experts in our Managed Care Services Division.
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Edited by: Matt Maslin
