Mental Health Payment Parity: The Fight for Fair Medicare Reimbursement

In a health care system increasingly strained by rising costs and growing demand for mental health services, counselors often face an uphill battle for fair compensation. To meet this challenge, NBCC has intensified its advocacy for higher payment rates for counselors, particularly through the reintroduction of two bills in this congressional session:

1. The Improving Access to Mental Health Act would include mental health counselors—as well as social workers—and increase Medicare payment rates to 85% of the Physician Fee Schedule. 

2. The Strengthening Medicare for Patients and Providers Act would replace the separate conversion factors in the Physician Fee Schedule for qualifying Medicare providers with a single conversion factor and provides for an update that is equal to the annual percentage increase in the Medicare Economic Index (MEI). (The MEI is a specialized index generally used to determine allowed charges for provider services based on annual inflation changes.)

The Current Medicare Payment Landscape

Recent recommendations from the Medicare Payment Advisory Commission (MedPAC), an independent, nonpartisan agency that advises Congress on Medicare, highlight a growing recognition that provider payments must keep pace with rising practice costs. In its March 2025 report to Congress, MedPAC called for Physician Fee Schedule updates tied to the MEI minus 1 percentage point, resulting in a projected 1.3% increase for 2026.

Though this modest increase addresses concerns that “input costs are outpacing what clinicians would expect to receive,” it underscores a larger issue: Counselors receive even less favorable reimbursement than other mental health providers under Medicare.

MedPAC reports over the past year collectively highlight a need for Medicare payment reforms to address the unsustainable nature of the current system and ensure that providers are adequately compensated for providing care to Medicare beneficiaries. The emphasis is on linking payment updates to inflation, reforming budget neutrality rules, and potentially adjusting bonuses for Alternate Payment Model participation. These changes are seen as crucial for maintaining patient access to quality mental health care and ensuring the long-term sustainability of the Medicare program.

Supporting Mental Health Payment Reform

Multiple sources have confirmed the urgent need for mental health payment reform:

• GAO (2024) identifies inadequate reimbursement as a primary barrier to workforce recruitment and retention in Medicare.
  
  
• Bipartisan Policy Center recommends establishing payment equity between mental health counselors and other providers.
  
  
• SAMHSA’s Workforce Report links payment disparities to critical provider shortages.
  
  
• Mental Health America directly connects Medicare payment policies to provider availability.

NBCC’s Advocacy Efforts

NBCC has positioned the Improving Access to Mental Health Act as a critical solution that would set counselor payment rates at 85% of Physician Fee Schedule rates for comparable services to psychologists and implement annual adjustments that maintain this percentage relationship. It is now expected to be reintroduced this legislative session with the inclusion of mental health counselors. The Strengthening Medicare for Patients and Providers Act is being considered as part of an overall budget reconciliation bill winding its way in Congress.

NBCC advocacy recognizes that mental health access depends on viable Medicare reimbursement systems. The timing is particularly critical, as baby boomers aging into Medicare have higher expectations for mental health care, and rural areas continue to struggle with provider shortages that counselors could help address. Beyond the obvious access benefits, there’s a compelling economic case for NBCC’s position, as studies consistently show that appropriate mental health intervention reduces overall health care costs.

Supporting Mental Health Payment Reform

Advocacy Actions for Counselors:

• Support reintroduction of the Improving Access to Mental Health Act to include counselors and the Strengthening Medicare for Patients and Providers Act (provides inflation adjustments).
• Share client stories about Medicare access challenges.
• Partner with local/state organizations to amplify Medicare payment parity advocacy.

NBCC’s Commitment:

We are working to ensure payment equity for counselors in Medicare through targeted legislation that builds on Medicare provider recognition of counselors while addressing the payment gap. These efforts aim to create sustainable access to the full range of the mental health counseling profession for Medicare beneficiaries, thereby strengthening the workforce for decades to come.