Proposed Medicare codes could lift digital health sector

A new payment policy proposal released by the Centers for Medicare and Medicaid Services (CMS) this week covers digital tools used for behavioural health, which could be a boost for the digital health sector.

The Medicare Physician Fee Schedule (PFS) sets out the method of payment, rates, and codes for healthcare providers participating in Medicare, and is often used by the administration as an instrument to encourage some forms of healthcare intervention.

One part of the 2025 proposal zeroes in on behavioural health, which has become a priority for CMS as a way to tackle healthcare issues with a very large impact on society, namely mental health problems, chronic pain, and substance use disorders.

The draft PFS includes new payment and coding for the use of digital tools that further support the delivery of specific behavioural health treatments, alongside codes to make it easier for practitioners to consult behavioural health specialists.

There is a broad swathe of apps and other digital tools developed to provide a cognitive behavioural therapy (CBT) approach to these healthcare issues, although, some of the pioneers in the sector have struggled to build a sustainable business, even with proven technologies.

For example, Pear Therapeutics – a digital health pioneer that focused on CBT-based apps for substance use disorders – was driven into bankruptcy last year, blaming its demise on the ability of payers to deny coverage for its reSET range of apps, even though they were FDA-approved and “clinically necessary, effective, and cost-saving.”

Having Medicare codes can be a big help, although it may not be enough. Research conducted by Manatt Health on behalf of the American Medical Association (AMA) last year found divergencies in the adoption of 21 digital medicine services – covered by codes – between commercial insurers, Medicaid and Medicare, underlining the challenges facing the category.

Nevertheless, in the new proposal are plans to create three brand new codes for digital mental health treatment devices, such as digital therapeutics (DTx). While largely in line with existing codes for CBT, they explicitly refer to “digital mental health treatment devices” used in conjunction with ongoing behavioural healthcare treatment.

CMS said it also plans to monitor how digital mental health treatment devices are used as part of overall behavioural healthcare.

Telehealth changes

Along with the digital changes, CMS has also proposed to maintain coverage of telehealth services introduced during the COVID-19 pandemic, although, those are due to expire at the end of this year and after it will be up to Congress to agree to extend them further.

“Proposals in this year’s rule would allow CMS to maintain some important, but limited, flexibilities where possible and reflect CMS’ goal to maintain and expand the scope of and access to telehealth services where appropriate,” according to a statement by the agency.

That includes measures such as extending the use of telehealth in opioid treatment programmes, allowing audio-only communication if a patient is not capable of, or does not consent to, the use of video technology, and keeping a waiver on the requirement for an in-person visit for accessing mental health services remotely.

“The Biden-Harris Administration is committed to protecting and expanding Americans’ access to quality, affordable healthcare,” said CMS Administrator Chiquita Brooks-LaSure.

She added that the proposed rule “supports physicians and other practitioners in delivering care that meets the needs of people with Medicare, including through telehealth flexibilities, strengthened primary, behavioural, and oral healthcare, and improved access to caregiver training services.”

The draft PFS now goes to a 60-day comment period that will conclude on 9th September.