Although care provided to patients in nursing homes is coded using inpatient CPT codes, it is reimbursed as outpatient care. Thus, most psychiatric care provided to residents of nursing homes is subject to Medicare's outpatient mental health treatment limitation. Instead of being reimbursed at 80 percent, with the patient responsible for the other 20 percent, Medicare pays 50 percent, and the patient is responsible for the other half. Exceptions to this limitation are the initial psychiatric evaluation (90801) and medication management (90862) for Alzheimer's and other dementia patients, both of which are supposed to be paid at 80 percent.

Since many residents of nursing homes are indigent and dually eligible for Medicare and Medicaid, applying the outpatient mental health treatment limitation for nursing home care means that the psychiatrists who treat these patients often receive only half of the fee to which Medicare says they are entitled because Medicaid does not pick up the copay for the remaining amount. The result is that many psychiatrists cannot afford to see patients in nursing homes, and patients are deprived of care that could improve the quality of their lives. ▪