How Medicare Sets the Price It Will Pay for Mental Health Counseling

What the Medicare-approved amount means

The Medicare-approved amount is the maximum price Medicare will pay for a mental health service. It is not the price your provider charges — it is the ceiling Medicare recognizes as reasonable for that specific service in your geographic area. If your provider charges more, you may owe the difference.

Medicare sets these amounts differently depending on whether your provider is in-network (accepts Medicare assignment) or out-of-network. An in-network provider agrees to accept the Medicare-approved amount as full payment for the service, minus your share of the cost. An out-of-network provider can charge more, and you become responsible for the overage.

The approved amount varies by location, service type, and provider credentials. A psychiatrist's approved amount for a 30-minute therapy session differs from a licensed clinical social worker's approved amount for the same session in the same town. These amounts change each year.

Key Takeaways

The Medicare-approved amount is what Medicare will pay toward a mental health service, set by location and service type, and it changes yearly.
In-network providers must accept this amount as full payment (except your copay or coinsurance); out-of-network providers can bill you for amounts above it.
You can find the approved amount for a specific service and provider by using the Medicare Physician Fee Schedule lookup tool or calling Medicare directly.
Your actual out-of-pocket cost depends on whether you have met your deductible and whether the provider is in-network or out-of-network.
The approved amount does not include your copay, coinsurance, or deductible — those are separate costs you owe on top of what Medicare pays.

How Medicare calculates the approved amount

Medicare uses a system called the Relative Value Unit (RVU) to set approved amounts. Each mental health service has an RVU code — for example, a 30-minute therapy session with a psychiatrist has a different code than a 60-minute session with a licensed professional counselor. The RVU reflects the time, skill, and resources required to deliver that service.

Medicare multiplies the RVU by a conversion factor (a dollar amount set by Congress) and adjusts for your geographic location. A therapy session in rural Montana has a different approved amount than the same session in New York City, because the cost of living and provider expenses differ. These geographic adjustments are called Geographic Practice Cost Indices (GPCIs).

The result is the approved amount for your area. This amount is published in the Medicare Physician Fee Schedule, which updates every January. Your provider's specialty, credentials, and whether they work in a hospital or private office can also affect the approved amount.

Finding the approved amount for your provider and service

The fastest way to find the approved amount is to use the Medicare Physician Fee Schedule lookup tool on the Centers for Medicare & Medicaid Services (CMS) website. You enter the provider's National Provider Identifier (NPI), the service code (called a CPT code), and your state. The tool returns the approved amount for that combination.

If you do not have the provider's NPI, you can search for it on the NPPES NPI Registry, also run by CMS. Search by the provider's name and city. Once you have the NPI, go back to the Physician Fee Schedule tool.

You can also call Medicare directly at 1-800-MEDICARE (1-800-633-4227) and ask for the approved amount. Have the provider's name, location, and the type of service ready. Medicare will tell you the approved amount and whether the provider is in-network.

The difference between approved amount and what you pay

The approved amount is not your bill. It is the amount Medicare recognizes as reasonable. Your actual cost depends on three things: whether you have met your deductible, whether the provider is in-network, and what your plan's copay or coinsurance is.

If you see an in-network provider and have met your deductible, you typically pay a copay (a flat fee, often $15 to $50 per visit) or coinsurance (a percentage of the approved amount, often 20 percent). Medicare pays the rest of the approved amount. If you have not met your deductible, you pay the full approved amount until the deductible is satisfied, then your copay or coinsurance kicks in.

If you see an out-of-network provider, the approved amount still applies to what Medicare will pay, but the provider can charge you more. You owe the difference between what the provider charges and what Medicare pays. This is called balance billing. Some mental health providers are out-of-network by choice; others are not in the Medicare network at all.

How approved amounts differ by provider type

Medicare sets different approved amounts for different types of mental health providers. A psychiatrist (a medical doctor) has a higher approved amount than a licensed clinical social worker or licensed professional counselor for the same service, because psychiatrists have more years of training and can prescribe medication. A psychologist's approved amount falls between the two.

The service itself also matters. A 15-minute medication management visit has a lower approved amount than a 60-minute therapy session. A psychiatric evaluation (which is longer and more complex) has a higher approved amount than a follow-up visit. Group therapy has a lower approved amount per person than individual therapy.

If your provider is a nurse practitioner or physician assistant working under a psychiatrist's supervision, their approved amount may be lower than the psychiatrist's, even for the same service. Always confirm your provider's credentials and specialty with Medicare before your first visit.

What happens if your provider charges more than the approved amount

If your provider is in-network and accepts Medicare assignment, they cannot charge you more than your copay or coinsurance, even if they normally charge higher rates. This is required by law. If they do charge you more, you can file a complaint with Medicare.

If your provider is out-of-network, they can charge more than the approved amount. You are responsible for the overage. Before your first visit, ask the provider whether they accept Medicare assignment and what their actual charge is. Compare it to the approved amount using the fee schedule tool. The difference is your responsibility.

Some out-of-network providers will give you a superbill (an itemized receipt) after your visit so you can submit it to Medicare yourself and request reimbursement. Medicare will reimburse you based on the approved amount, not the provider's charge. You then owe the provider the difference between what they charged and what Medicare paid.

Approved amounts and your Medicare plan type

Original Medicare (Part A and Part B) uses the approved amounts described above. If you have a Medicare Advantage plan (Part C), your plan may use different approved amounts or may not cover certain mental health services at all. Call your plan to ask what the approved amount is for your provider and service.

Some Medicare Advantage plans have lower approved amounts than Original Medicare, which means you may pay more out of pocket. Others have higher approved amounts or lower copays. The plan's formulary or provider directory will list what mental health services are covered and what you pay.

If you are considering switching plans, compare the approved amounts and copays for the mental health services you use. A plan with a lower premium may have higher copays for therapy or psychiatry, which could cost you more over the year.

Frequently Asked Questions

Can a mental health provider charge me less than the Medicare-approved amount?

Yes. Some providers charge less than the approved amount, especially if they are building their practice or want to serve lower-income patients. If they do, you pay what they charge, not the approved amount. This is always better for you — you pay less, and Medicare still pays its share based on the approved amount.

Does the approved amount include my copay?

No. The approved amount is what Medicare recognizes as reasonable for the service. Your copay or coinsurance is your share of that approved amount. If the approved amount is $100 and your copay is $20, Medicare pays $80 (after your deductible is met) and you pay $20.

What if I cannot find my provider in the Medicare network?

Call Medicare at 1-800-MEDICARE and give them the provider's name and location. They can tell you whether the provider is in-network and what the approved amount is. If the provider is not in the Medicare network, ask whether they accept Medicare assignment anyway — some do, even if they are not officially listed.

Do approved amounts change during the year?

The main approved amounts are set in January each year. Mid-year changes are rare but can happen if Congress passes new legislation. Check the Medicare Physician Fee Schedule in January to see if your provider's approved amount has changed, especially if your copay or coinsurance is based on a percentage of the approved amount.

Is the approved amount the same in every state?

No. The approved amount for the same service and provider type varies by state and sometimes by region within a state. This is because the geographic adjustment factors (GPCIs) account for differences in cost of living and provider expenses. Always look up the approved amount for your specific state and provider location.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.