Medicare could soon start covering digital mental health therapies

For the first time ever, the federal government is seriously considering covering digital therapy tools through Medicare.

The Health Department’s Centers for Medicare and Medicaid Services (CMS) announced last week a proposal to reimburse doctors for subscription costs and app fees related to digital mental health treatments. The proposal, which is intended to cover fees on programs “used in conjunction with ongoing behavioral healthcare treatment,” would be a big win for health-tech companies that have struggled in part because of a lack of insurance coverage options. If accepted, the new policy would go into effect in 2025.

“[It is] a big step forward, especially for people over 65 who have become more savvy using some of these tools on the internet,” says Dee Chaudhary, a strategy consultant at Clarivate. “It gives them that added assistance that the doctors just simply have not had the opportunity to offer.”

The proposal from CMS includes three new payment codes that would reimburse mental health providers for incorporating digital tools into their care. This does not include independent usage from those on Medicare; the digital therapy tool needs to be “furnished incident to or integral to professional behavioral health services,” per CMS.

The scope of the coverage would be narrow, applying only to products approved by the Food and Drug Administration. CMS also committed itself to monitoring the usage of these digital tools in behavioral healthcare, providing room for change.

“Products need to have a high degree of clinical data to support their claims, so it won’t help typical ‘wellness’ products, but is great for those with solid clinical research supporting their medical claims,” says Raj Amin, cofounder and CEO of Arcade Therapeutics.

The health-tech industry has recently been dogged by controversy and data breaches. BetterHelp, one of the biggest online mental health services, settled with the Federal Trade Commission in June to pay $7.8 million for leaking “sensitive health data” to third parties. A 2022 report from Stat and The Markup found that dozens of telehealth startups had sent client health information to Big Tech companies like Meta and Google.

While the scope of the new codes remains small, the tech-health industry is buzzing with the opportunities it could lead to.

“The right science-backed digital mental health tools offer tremendous potential to improve care, provide support between sessions, and help patients proactively develop and practice new skills that lead to better outcomes,” says SuperBetter CEO Keith Wakeman.

Health-tech developers are hoping the Medicare proposal will usher in an era of expanded access. Some cited Pear Therapeutics, the first service to receive FDA approval—which declared bankruptcy soon after—as an example of the infeasibility of running a digital mental health care tool without insurer coverage. Medicare’s reimbursement proposal could make these businesses more scalable, providing a consumer base that does not need to pay out of pocket.

Ultimately, the industry has its eyes set on private insurance. Insurers have been reluctant to cover these digital tools; now, with the signal from Medicare, they could move to incorporate these apps into their policies. “Medicare’s bar of acceptance is a little higher,” says Clarivate’s Chaudhary. “Generally [private insurance] will follow.”