People who are dually eligible for Medicare and Medicaid have complex needs, and their care also tends to be costlier compared to those with Medicaid-only coverage. Thirty-four percent of people who are dually eligible have five chronic conditions or more and nearly 50 percent have a substance use disorder (SUD) or mental health diagnosis. In 2021, the dually eligible population represented just 13 percent of Medicaid enrollment, but accounted for 27 percent of total Medicaid spending. As states face Medicaid cuts resulting from the recent passage of the 2025 budget reconciliation bill (H.R. 1), Medicare’s recent expansion of behavioral health care coverage to include intensive outpatient program (IOP) services and other behavioral health services could reduce state Medicaid costs for behavioral health services, as well as improve access to care for dually eligible individuals. Yet, to realize these potential benefits, states will need to educate their behavioral health care providers about Medicare’s new role in covering these services.

As of January 1, 2024, Medicare began covering IOP services, including individual and group therapy, as well as other services provided by social workers, psychiatric nurses, and other professionals trained to work with patients with serious mental health needs, including people with SUD. Because Medicare is the primary payer for dually eligible individuals, the program is now responsible for covering IOP for dually eligible individuals who are treated in a hospital outpatient department, community mental health center, rural health clinic, federally qualified health center, or opioid treatment program.

This Health Affairs Forefront blog post summarizes the Center for Health Care Strategies’ recent efforts to support Medicaid agencies to build knowledge among providers, health plans, and other key stakeholders about Medicare’s coverage of IOP services for dual eligible individuals.