Home | Insights | Blog

Making Sense of State Medicaid IOP Coverage: An Interactive Map

Intensive outpatient programs (IOPs) are a highly utilized service in the behavioral healthcare continuum for both mental health (MH) and substance use disorders (SUDs). IOPs have long been reimbursed by commercial payers, but only recently achieved Medicare coverage through the 2024 CMS Final Rule.

Coverage for IOP services under state Medicaid plans, meanwhile, has historically been an optional benefit. The lack of clarity in state Medicaid coverage guidelines and reimbursement rates has limited providers from offering access to IOP services for Medicaid beneficiaries.

Over the last few years, however, several states have begun to better define their IOP coverage requirements and reimbursement rates, which is enticing more providers to establish IOP programs with Medicaid plan participation.

To better highlight the key differences in state-specific Medicaid IOP coverage, ECG studied 21 states and created a map (below) depicting:

  • Whether those states offer IOP coverage for MH or SUD service.
  • If the coverage exists through a waiver.
  • The state's fee-for-service reimbursement rates. 


Additionally, we identified four key takeaways across state Medicaid IOP coverage models:

1. Service Coverage

Of the states reviewed, 20 of 21 covered SUD IOP services for Medicaid beneficiaries; only 13 of 21 covered MH IOP services.¹ Of note, Montana covers MH IOP services, but only for children (<21) when they meet serious emotional disturbance (SED) criteria. Utah is also interesting because both MH and SUD IOP service coverage are actually established by county and by plan.

2. Reimbursement Rates and Methodology

We found that when states cover both SUD and MH IOP services (9 do²), more than half (5) do not impose a rate differential between MH and SUD. This differs from ECG's experience with most commercial payers' approach to IOP reimbursement

Additionally, only ten of the states we reviewed reimbursed IOPs based on a per diem payment; three of these only reimburse a per diem for MH IOP, not SUD. Three states—Alabama, Nebraska (SUD), and South Carolina (SUD)—reimburse by the hour. Pennsylvania and West Virginia reimburse based on 15-minute increments. Montana (SUD) reimburses on a per week cadence. One state, Oregon, reimburses on a per service basis. Massachusetts was the only state to offer a different per diem rate for children (<21). Louisiana offers a different per diem rate for prenatal or postpartum patients.

3. Billing and Coding Variability

When states cover IOP services under their fee-for-service Medicaid programs, IOP billing guidelines (i.e., CPT codes, allowable units) are consistent throughout managed Medicaid entities. There are two CPT codes commonly associated with billing IOP services for states’ FFS Medicaid and Managed Medicaid plans:

  • H0015, used to bill for IOP alcohol and/or drug services
  • S9480, used to bill for IOP psychiatric services

If a state's Medicaid program allows IOP services and explicitly defines these services as IOP, it is very likely using these codes.

Alternatively, if the state does not clearly define IOP, the CPT code for such service can vary. For example, Alabama does not explicitly cover IOP services; however, like services could be billed under H2012, behavioral health day treatment. In such instances, reimbursement may not be a defined per diem but rather a per time-based unit rate.

4. ILOS: States May Not Cover IOP but Allow MCOs to Do So

Over the last decade, demand for access to behavioral healthcare for Medicaid beneficiaries has increased significantly. Some states, acknowledging this demand but facing limitations in their Medicaid budget, have opted for an "In Lieu of Service" (ILOS) approach. Through this approach, private MCOs can offer medically appropriate and cost-effective behavioral health services that may not otherwise be covered by the state's Medicaid plan.¹

Of the 21 states reviewed, two employ ILOS to allow IOP coverage for their Medicaid beneficiaries: Texas and Florida. MCOs in these states can opt to provide IOP as an ILOS offering and set their own reimbursement for the service, as there is no state fee schedule to reference. Whether and where to offer this coverage in a given state is at the MCO's discretion. Florida is one example of this; coverage of IOP through ILOS varies across MCOs and, for a given MCO, can vary across networks and geography.²

Given the variability in Medicaid coverage guidelines by state, we advise any organizations contemplating expansion of existing IOP programs into new states to do their research before finalizing investment decisions. ECG's managed care experts in our Payer Strategy and Contracting division are always available to assist providers with market research, market expansion, and contract negotiations across all financial classes.


Contact our team for additional information regarding the source material for this blog post


Sources

Montana Medicaid Member Guide

Outpatient Behavioral Health Services Fee Schedule

Medicaid_AddendumB_October2024–final (2024.12.12).xlsx

Behavioral Health Service Rate Updates Effective January 1, 2024 | MES

NV_BillingGuidelines_PT17 Specialty 215

101 CMR 306

Service Description

2022 Audiology Fee Schedule

Supplement-24-05.pdf

SBH_FS.pdf

Medicaid Provider Rates and Fee Schedules

RBHS-DAODAS Provider – Rates Effective 10-1-2024.pdf

7.3G_Rehab_Option_Fee_Schedule_DHR_10-7-24.pdf

asam-provider-rates-january-1-2025.pdf

LBHC Rates as of 4.1.22_rev_b.pdf

Procedure

Oregon Health Authority : OHP Fee-for-Service Fee Schedule : Oregon Health Plan : State of Oregon

In Lieu of Services and Settings


Notes

Alabama hourly rate $21, multiplied by 4 hours for a "per diem."

Pennsylvania 15-minute rate $11.57, multiplied by 16 for a "per diem."

West Virginia 15-minute rate $32.38, multiplied by 16 for a "per diem." Max 60 units allowed per year, approximately 4 "days" of IOP.

SUD: Montana $386.57 per week rate, divided by 3 for a "per diem"; MH Adult: $21.33 per hour, multiplied by 4 hours for a "per diem."

Nebraska $38.69 per hour, multiplied by 4 hours for a "per diem."

South Carolina $51.88 per hour, multiplied by 4 hours for a "per diem."

Related services

authors

Kathryn Middleton

Manager

Jack Beston

Consultant

Manasi Singh

Senior Analyst

You Might Also Like

BLOG

Provider-Sponsored Health Plans Lean into Consumerism

BLOG

Price Transparency Data and Benchmarking for ASCs

BLOG

Advancing Community Health through Data-Driven Equity Solutions