Positive Approaches Journal, Volume 12, Issue 4

Volume 12 ► Issue 4 ► February 2024

Medicare and Coverage of Mental Health & Substance Use Disorders

Matthew Shepard and Kata Kertesz

Everyone has heard of Medicare, but very few people know the ins-and-outs of the program. This is especially true for those who are approaching Medicare eligibility and perhaps hadn’t considered how important the program will be to them. This article will provide some basics on Medicare, as well as discussing its coverage of mental health and substance use services.

What is Medicare?

Medicare is the national health insurance program to which all Social Security recipients who are either over 65 years of age or permanently disabled are eligible. In addition, individuals receiving railroad retirement benefits and individuals living with end stage renal disease are eligible to receive Medicare benefits.

Medicare for People with Disabilities

To qualify for Medicare by virtue of disability, before the age of 65, a person must have been eligible for Social Security Disability Insurance (SSDI) benefits for at least 24 months. The first 24 months is the waiting period for Medicare coverage. If the person returns to work, they can get up to 93 more months of premium-free hospital and medical insurance after the trial work period if they still have a disabling impairment. After the premium-free coverage ends, beneficiaries can purchase Medicare hospital and medical insurance if they continue to have a disability, but premiums can be prohibitively expensive.[i]

Medicare Versus Medicaid

“Medicare” is often confused with “Medicaid” – and some are eligible for both - but these are very different programs. Medicaid is an income-based program that is funded by the federal government but administered by individual states, and eligibility and coverage rules can vary greatly by state. A person’s income and assets are not a consideration for Medicare eligibility or benefit payment – though they can affect some cost-sharing. Medicare is a national program and rules should not vary significantly from state to state for those in the traditional program. Medicare coverage is similar to that provided by private insurance companies: it pays a portion of the cost of medical care. Generally, deductibles and co-insurance - which are partial payment of initial and subsequent costs - are required of the person receiving services.

The “Parts” of Medicare

Medicare has three substantive coverage components, Part A, Part B and Part D. Medicare Part A covers inpatient hospital care, hospice care, inpatient care in a skilled nursing facility, and home health care services. Part B covers medical care and services provided by doctors and other medical practitioners, durable medical equipment, and some outpatient care and home health services. Part D is prescription drug coverage, which was added to Medicare in 2006. Medicare drug coverage is only available through private plans – either a stand-alone Part D plan, or a private “Medicare Advantage” plan, discussed below.

Part A of the program is financed largely through federal payroll taxes paid into Social Security by employers and employees. Part B is financed by monthly premiums paid by Medicare beneficiaries and by general revenues from the federal government. In addition, Medicare beneficiaries themselves share the cost of the program through copayments and deductibles that are required for many of the services covered under both Parts A and B. Medicare Part C, the missing letter from the list above, is a bit different. An increasing number of beneficiaries (over 30 million nationwide)[ii] are receiving Medicare services through private, for-profit managed care plans. This is what Medicare Part C refers to – Medicare managed care.

As noted above, Medicare managed care is currently referred to as “Medicare Advantage” or “MA”. While it is different from the traditional Medicare program, by law MA plans must have coverage that is at least as good as that of traditional Medicare. In practice however, receiving that coverage is often more difficult, as MA plans often have limited provider networks, use strict requirements for coverage like Prior Authorization, and can terminate providers from their networks at will.

Medicare Coverage of Alcohol and Substance Use Disorders

Medicare covers certain screenings, services, and programs that aid in the treatment and recovery of mental health and substance use disorders (SUD):[iii]

Medicare Coverage of Mental Health Care

Conclusion

An estimated 1.7 million Medicare beneficiaries are living with a diagnosed substance use disorder (SUD) and one in four[x] Medicare beneficiaries are living with a mental health condition. While Medicare covers a broad array of treatment services for those with mental illness and substance abuse disorders, special rules limit coverage and reimbursement. Medicare’s coverage of services for mental health, behavioral health and substance abuse disorders is not as extensive as its coverage for other services. Medicare does not cover the full continuum of services recognized by the American Society of Addiction Medicine, nor the range of providers and settings needed for effective, evidence-based treatment. Medicare is not subject to the Mental Health Parity and Addiction Equity Act (Parity Act), which protects people with SUD and mental health conditions from insurance inequities. As a result, millions of Americans who depend on Medicare are unable to receive the life-saving treatment they need and deserve.

In 2022 the Center for Medicare Advocacy along with partners Legal Action Center and Medicare Rights Center released a set of principles to guide expansions in Medicare coverage.[xi] The principles would apply the Parity Act to Medicare Parts A, B, C and D, authorize coverage of the full continuum of evidence-based SUD treatment services, authorize coverage of community-based SUD treatment settings, authorize coverage of all licensed and certified mental health and SUD treatment providers, and establish adequate reimbursement rates. 

Biography