Congress Votes to Phase out Medicare's Discriminatory Higher Coinsurance Rate for Mental Health Care

On July 9 the U.S. Senate voted to pass H.R. 6331, a Medicare package endorsed by the House that brings to an end more than 40 years of discrimination against Medicare patients who need outpatient mental health care. Since the inception of the Medicare program in 1965, beneficiaries have been required to pay 50% coinsurance for such care rather than the 20% coinsurance applied to all other Part B services. The Medicare Improvements for Patients and Providers Act will phase out the higher rate by 2014. Passage of the bill came in dramatic fashion when Senator Edward M. Kennedy (D-Mass.) made his first appearance on the Senate floor since he was hospitalized for brain cancer to cast his vote in support of it.

The legislation also blocks a scheduled cut in payments to physicians and other health professionals. Some 600,000 physicians care for Medicare patients, and payment rates were set to drop by 10.6% on July 1 as a result of a formula that calls for cuts when Medicare spending exceeds established goals. In recent years heading off the cuts has been an annual task for Congress, which must find the money by trimming expenditures elsewhere in the Medicare program.

H.R. 6331 avoids the payment cuts by shaving $13 billion from Medicare Advantage. This program allows elderly persons and individuals with disabilities to obtain coverage through plans managed by private insurers that contract with the Medicare program. Medicare's subsidies to these insurers were backed by the Administration and by many Republicans, and reductions to them were a stumbling block in previous efforts to pass the bill. Less than a week after the Senate vote, President Bush vetoed H.R. 6331. However, the veto was overridden the same day by votes in both the House and the Senate.

The higher coinsurance rate for outpatient mental health care has long been regarded as a major barrier to obtaining needed services. Only half of older Americans with mental health problems receive treatment, according to a 2001 report by the Administration on Aging. Data also indicate that Medicare beneficiaries have an elevated need for mental health care: 26% have mental disorders compared with 21% of the general population.

Advocacy organizations, including the American Psychiatric Association (APA) have worked for many years to end Medicare's discriminatory coinsurance for mental health care. "The APA congratulates the Senate for putting politics aside and putting patients first," said APA President Nada Stotland, M.D., M.P.H. "This legislation will put an end to a system that forces medically vulnerable patients, including psychiatric patients, to pay two-and-one-half times more out-of-pocket costs for mental health services than for any other service under Medicare Part B."

The legislation also requires coverage of benzodiazepines and barbiturates under Medicare Part D and creates statutory protections for certain classes of medications, including antidepressants and antipsychotics, to ensure that beneficiaries will have access to "all or substantially all" such medications.