Reimbursement for a Broader Array of Services in Coordinated Specialty Care for Early Psychosis

A robust international body of literature demonstrates the effectiveness of a multimodal, recovery-oriented, and team-based treatment model—referred to as coordinated specialty care (CSC) in the United States (1, 2)—for addressing the complex needs of individuals with early psychosis. Findings from multiple studies suggest that patients engaged in CSC have decreased impairment and improved clinical outcomes, compared with patients receiving treatment as usual (3). However, CSC remains out of reach for many individuals who would benefit from it. One major barrier to access in the United States is financial restrictions: CSC programs often struggle to receive compensation for nonbillable but essential patient-specific services (such as occupational and educational guidance, peer support, and community outreach), and patients with commercial insurance may need to pay for some or all CSC services out of pocket (4, 5).

CSC programs typically rely on the use of federal block grant funds earmarked for mental health or state- or county-level grants, which exclude commercially insured patients in some states (e.g., in California). Even when programs successfully bill for reimbursable services, the administrative burden of selecting among a vast array of billing codes is significant and may affect clinical care. Two of us (K.A., S.O.) are members of the leadership team of Aldea Children & Family Services, a Northern California–based CSC provider. We estimate that we can receive compensation from Medi-Cal (California’s Medicaid program) for only about 30%–40% of the work included in CSC. Similarly, a study of 75 randomly selected Medicaid patients within 13 CSC programs in New York State in 2017 found that even under “optimal billing conditions,” Medicaid would reimburse only 48% of patient-specific costs (6). The fee-for-service payment model is problematic for many other CSC programs, which struggle to cover the diverse costs of these multimodal interventions (7).

A recent decision by the Centers for Medicare and Medicaid Services (CMS) could help bolster the financial viability of this intensive set of interventions, thereby ensuring the longevity and continued growth of current CSC programs and incentivizing the development of new programs. In the summer of 2023, CMS made the bold step of authorizing two Healthcare Common Procedure Coding System (HCPCS) level II team-based billing codes specifically for CSC (8). The two team-based codes—one designated “per month” and the other “per encounter”—may permit eligible CSC programs to bill for a combination of CSC services (9). The codes notably do not specify the exact services that compose “coordinated specialty care, team-based, for first episode psychosis,” although the National Association of State Mental Health Program Directors specified the services and features that generally define CSC in its application to CMS (8). Importantly, although the Medicare program will recognize these codes, state Medicaid programs and commercial insurers are not currently mandated to do so.

Even considering these caveats, the CMS decision could have profound implications for the treatment of patients with early psychosis in the United States. First, adoption and widespread use of these codes may reduce administrative burden and associated costs and could more reliably ensure reimbursement for rendered services. Currently, billing for most CSC programs involves segregating individual reimbursable elements such as psychiatric medication-management encounters; group, individual, and family therapy encounters; and peer support services. Additionally, the various HCPCS codes that CSC programs commonly use are not uniformly accepted and reimbursed by all payers. Ideally, this piecemeal billing strategy, which not only leads to significant administrative burden and costs but also risks omitting essential CSC services, could be replaced, at least in part, with a single team-based code that incorporates the clinically indicated CSC services rendered. For example, critical nonclinical program components, including supportive education and employment and case management, are frequently not fully compensated (or not compensated at all) in the current commercial billing structure (4, 5).

Second, widespread use of team-based billing codes may allow more programs to offer all core CSC services. CSC involves multiple team members (e.g., educational and occupational coaches, therapists, and physicians) and multidisciplinary components (e.g., case management; individual, group, and family therapy; family education and support; educational and employment support; and medication management) (9). However, given scarce funding, many programs have been unable to provide the full set of CSC components (7, 9), paring down offerings to those for which they can be consistently reimbursed or have reimbursement rates commensurate with the associated costs (10).

If carefully implemented, CSC programs that successfully use team-based billing could more easily receive reimbursement for—and thereby offer to patients—a wider variety of clinical services. Implementation of the new team-based CSC codes may pave the way for more equitable care across programs, especially for those that predominantly serve individuals whose insurance accepts the new codes. Many of the currently nonreimbursable CSC activities, such as community outreach, cannot be directly funded via the team-based billing codes because these activities are not associated with an individual patient or direct team-related costs; however, more reliable funding of patient-specific services such as occupational and educational counseling may improve the financial viability of CSC programs and allow them to engage in these important activities. Federal block grant funds can be used to develop new programs rather than subsidizing unfunded aspects of existing programs.

Third, gradual replacement of individual codes with the team-based codes would incentivize CSC programs to innovate and adapt to changing needs and evidence. Specifically, team-based billing would permit programs to quickly evolve and adapt to the specific needs of their patient populations and respond to new research and guidelines. CSC providers could adjust the variety and intensity of their services nimbly without the burden of accounting for numerous service-specific billing codes.

Fourth, team-based billing has potential implications for patients receiving CSC services. If commercial and public payers broadly adopt the two HCPCS codes, current disparities between publicly and commercially insured patients’ access to CSC could decrease if CSC programs could be reimbursed for services from a wider variety of payers. The downstream benefits and cost savings from enhancing current programs and creating new ones may be seen in the positive outcomes of appropriately treated psychosis: reductions in need for disability payments; reduced rates of incarceration, homelessness, psychiatric hospitalizations, mental health–related emergency department visits, and substance use; increased educational attainment and rates of employment; and increased quality of life.

Finally, use of the two CSC-specific billing codes will aid in identifying and tracking CSC programs and patients. Specifically, federal and state agencies as well as public and commercial payers could use administrative data to examine trends in CSC use and identify potential geographic and socioeconomic disparities in access to and participation in these programs. Policy makers can then use these data to strategically deploy funds to address gaps in care and help underserved populations.

Before any widespread use of team-based billing for CSC, logistical issues must be resolved, including verifying programs’ adherence to the CSC model. Specifically, CSC delivery varies widely for many reasons, including insurance-related reimbursement issues, clinician shortages (e.g., inability to recruit and retain therapists), and use of different CSC models. Therefore, different programs likely offer slightly different variations of CSC components, some of which may be deemed ineligible for reimbursement via the new codes. Policy makers should collaborate with experts in the field to determine eligibility criteria that account for current situational limitations while anticipating the capacity for programs to increase their offerings when consistent funding is secured. Similarly, programs and payers will need to define what specific clinical and support services should be included in team-based CSC care. A New York City–based research team has already begun addressing a similar question by proposing a decision-support tool for CSC providers and payers to design customized bundled case rate payments and optional outcome-based payments for CSC (5). That study could serve as a foundation on which to build a decision-support tool for defining reimbursable team-based CSC services.

Clearly, team-based billing for CSC is not a panacea. Other barriers will likely persist, including a shortage of qualified staff and clinicians who can deliver this specialized service. Interventions such as increasing the number of mental health training programs and recruitment of clinicians from diverse backgrounds will be vital. Also, making this billing option available does not necessarily mean that all insurance providers will reimburse for this service. Several of us (M.E.H., B.S., S.B., K.A., S.O., T.E., T.A.N.) are involved in a pilot program for a small cohort of Kaiser Permanente Northern California patients to receive CSC at Aldea Children & Family Services to examine the feasibility of providing CSC to commercially insured patients in California. We anticipate that the results of this ongoing study will inform other commercial insurers as they consider whether (and to which providers) to reimburse for CSC.

Additionally, legislation in Illinois currently requires commercial insurers to cover the cost of CSC services (minus supported employment and education programs), and other states are considering legislation to mandate coverage. Federal and state parity laws may also be used to increase access. Last, CSC is an evolving framework that is most effective when tailored to the target population, available resources, and new research findings (11). It is vital that eligibility criteria for using the CSC team–based billing codes are not so rigidly defined that they stifle the evolution, supplementation, and stratification of CSC programs and services. In that context, the learning health care system associated with CSC proposed by NIMH’s Early Psychosis Intervention Network (12) could provide a framework for the continued evolution of a standardized CSC model.

We conclude that the approval of CSC team–based reimbursement codes by the CMS has the potential to improve outcomes in early psychosis care at the individual, community, and societal levels. We hope that implementation of the two new billing codes will spread rapidly for the benefit of individuals with early psychosis nationwide.