I very nearly didn’t write this article. It actually sat in draft form for 3 months while I (deeply) procrastinated over whether to give it the light of day. So here goes…
We have become very good at saying that mental health matters. We say it in boardrooms. We say it in political speeches. Employers say it during Mental Health Awareness Month. Health plans say it in annual reports. Clinicians dedicate their careers to it. Society has finally accepted something those working in behavioral health have known for decades: mental health is health. But if you really want to know what we value, don’t listen to what we say —–
look at how we compensate. In healthcare, reimbursement is how we assign value. And by that measure, outpatient mental health care is still treated as second-class medicine.
The crisis is real, the data backs it up
We all know that mental health is not a niche issue affecting a small proportion of the population. Every day, more than 130 Americans die by suicide. Suicide remains one of the leading causes of death among young people. People living with serious mental illness die, on average, 10 to 20 years earlier than the general population. Mental health conditions increase the likelihood of developing chronic physical illnesses, reduce workforce participation, contribute substantially to disability, strain families, and profoundly affect quality of life. Mental health doesn’t just influence one aspect of our lives. Arguably, it influences them all.
The evidence for treatment is equally compelling. Psychotherapy is one of the most extensively studied interventions in healthcare. Thousands of randomized controlled trials and hundreds of meta-analyses have demonstrated its effectiveness across depression, anxiety, trauma and many other conditions. Last year, JAMA published the largest meta-analysis ever conducted on cognitive behavioral therapy, synthesizing evidence from 375 randomized controlled trials. Their conclusion? Therapy and medication work.
So, we know we don’t have an awareness or evidence problem. Instead, we have a valuation problem. The uncomfortable reality is that mental health outpatient reimbursement bears little relationship to the value it creates
How we pay tells us what we value
Mental health occupies a strange place within healthcare economics. We readily acknowledge that untreated depression worsens diabetes outcomes. We know anxiety increases emergency department utilization. We understand that behavioral health affects medication adherence, cardiovascular disease, chronic pain, maternal health and countless other medical conditions. Yet reimbursement is telling us a very different story
Across healthcare, commercial reimbursement is typically negotiated well above Medicare rates. Milliman and other sources estimate that commercial insurers reimburse approximately 140% to 190% of Medicare rates, with some specialties, such as Cardiology, routinely reimbursed at 200 to 300%. Yet for mental health outpatient talk therapy, reimbursement often remains only marginally above Medicare, with negotiations frequently centering on small percentage increases from the Medicare fee schedule rather than the substantially higher commercial multiples we see in other medical specialties.
In other words, while commercial reimbursement generally reflects a meaningful premium over Medicare, mental health provider groups are too often asked to accept payment that looks much more like a government program than a commercial insurance contract. And while we are discussing government programs… to bring this into stark light, the state Medicaid fee schedules for the CPT code 90937 (53 to 60 minutes of therapy) pay $52.00 in Pennsylvania and $50.03 in Illinois, respectively. Approximately $50 for life-changing therapy.
The uncomfortable truth: mental health is commoditized
I believe this has happened because outpatient behavioral health has become increasingly commoditized. Rate transparency data has exposed what many provider groups have long understood. In some markets, reimbursement varies considerably across organizations delivering remarkably similar services; up to sevenfold differences in some instances. In others, rates have remained stubbornly low and haven’t been adjusted in years
Would we accept this in Cardiology, Oncology or Orthopedics? Consider what we’ve built in those fields: as I mentioned above, Cardiologists are routinely reimbursed at 200 to300% of Medicare rates. Oncologists benefit from robust, outcome-linked reimbursement models. Orthopedic surgeons negotiate at substantial premiums above Medicare. In each case, we’ve structured payment to recognize the value being delivered and the complexity of care. Would there ever be a conversation between a health plan and transplant surgeon where the plan is saying “sorry you’re doing a great job, but utilization is up, so can you just perform fewer transplants?” I’m clearly being facetious, but if we genuinely believed mental health was as important as every other part of medicine, would we pay for it this way?
Reimbursement shapes the entire ecosystem
The problem with universally low reimbursement is that it’s not only a mechanism for paying claims; it drives and shapes our entire healthcare ecosystem. It determines where organizations invest, it decides how and where we measure outcomes, it determines whether we build innovative integrated care models, and it determines whether clinicians can afford to stay in-network. Reimbursement doesn’t just pay for healthcare – it determines what kind of healthcare system we build
Before anyone reaches for their keyboard to call for my dismissal, let me acknowledge something. I have worked for a payer and a managed behavioral health organization. Today, I work for one of the nation’s largest outpatient behavioral health provider groups. I’ve therefore sat on different sides of the table, and I have genuine empathy for the challenges health plans and MBHOs face
Healthcare costs have risen dramatically since the pandemic, placing real financial pressure on health plans. In 2020, health expenditures increased by 9.7%, the largest annual increase in nearly two decades. Mental health spending, however, has grown even faster. Spending on mental health services increased 53% to 62% between 2018 and 2024, far outpacing growth in overall medical spending during the same period. This surge reflects both increased demand for care and improved access to treatment. Health plans are right to acknowledge the pressure these trends have placed on medical costs and reserves. Those financial realities are real.
There is a large body of evidence that effective therapy and medication reduce downstream medical costs. It improves the management of chronic diseases and ultimately reduces the total cost of care. However, potential savings are often realized over a medium-to-long-term period. Payers, working from fiscal quarter to fiscal quarter, have often struggled to reconcile savings over a 3 to 5 year time trajectory when more than 20% of members disenroll each year on average; a figure which is much higher for the national payers.
Why I remain optimistic
Despite everything I’ve written here, I do remain optimistic. Over the course of my career, regardless of the side of the table I’m sitting on, one thing has been abundantly clear: this industry is full of thoughtful, committed people trying to solve the same problem from different perspectives. We all want people to live healthier lives. We all want better outcomes. We all want healthcare dollars spent wisely. That gives me hope
We are seeing increasing innovation across the mental health sector by provider groups offering unique services, solving real patient needs and partnering across organizational boundaries. We have also seen innovative payment models and a focus on paying for value, although these are still the exception, and not the norm
I think it’s time we asked ourselves a more fundamental question. Not: “Can we afford to invest more in behavioral health?” but: “What does it say about our healthcare system if we don’t?”.
For me, the question isn’t whether mental health creates value. The evidence has answered that. The real question is whether our payment system has caught up to what we claim to believe. Today, our reimbursement system continues to tell patients, clinicians and providers that behavioral health is worth less than physical health. I don’t believe that’s where this industry wants to end up.
What needs to happen next
If we genuinely believe mental health is healthcare, the path forward is clear, and it requires action from multiple stakeholders
Health plans need to move beyond rate compression. This means negotiating behavioral health contracts that reflect the clinical complexity and outcomes of the value of the work, similar to other medical specialties. It also means building payment models that reward quality and outcomes over volume,
and accepting that effective behavioral health reduces total cost of care even if those savings unfold over years rather than quarters
Provider groups must continue innovating, not just in service delivery, but in demonstrating outcomes rigorously. The more we can quantify the value we create (reduced ER utilization, improved medication adherence, decreased disability days), the harder it becomes for payers to justify underpaying for it
The industry also needs clearer benchmarking. Transparency around reimbursement rates – what Cardiologists earn for a complex consultation versus what therapists earn for equivalent time – should become standard. That visibility creates accountability
None of these requires reinventing healthcare. We know how to pay for value in other specialties. We know how to measure outcomes. We know how to build integrated care. The question is whether we’re willing to apply those same standards to behavioral health that we’ve already applied elsewhere
