Most therapists spend years building a caseload before they ever sit down and actually calculate what they're making per hour after insurance adjustments. When they do, the number is usually lower than expected — and often shrinking.
The Medicare Physician Fee Schedule gets updated every year and drives another round of adjustments that ripple through commercial reimbursement contracts, credentialing expectations, and the math behind whether a new behavioral health practice is viable. Centers for Medicare & Medicaid Services (CMS) Physician Fee Schedule If you're a clinician in private practice, or someone building or buying a behavioral health program, these numbers matter more than most people realize.
2026 Medicare Reimbursement Rates for Psychotherapy CPT Codes
Medicare sets its rates based on the Physician Fee Schedule (PFS), which CMS updates annually. CMS Physician Fee Schedule The conversion factor — the dollar amount multiplied by Relative Value Units (RVUs) — has hovered in the low 30-dollar range in recent years and has seen repeated cuts after budget-neutrality adjustments and congressional “fixes.” CMS CY 2024 PFS Final Rule Fact Sheet
For 2026, assume a conversion factor in that same ballpark (low $30s per RVU) unless Congress makes a major structural change. That’s the baseline most commercial payers quietly build from.
Here are the key psychotherapy CPT codes and their approximate 2026 national Medicare non-facility rates, based on current RVU structures and recent fee schedule trends (your actual locality rates will differ):
CPT CodeDescription2026 Medicare Rate (approx.)90837Individual psychotherapy, 60 min~$130–$13890834Individual psychotherapy, 45 min~$103–$11090832Individual psychotherapy, 30 min~$72–$7890847Family therapy with patient, 50 min~$120–$12790846Family therapy without patient, 50 min~$113–$12090853Group psychotherapy~$35–$4290791Psychiatric diagnostic evaluation~$165–$17599213 + 90833E&M + psychotherapy add-on (30 min)~$145–$155 combined
Rates vary by geographic locality because Medicare applies different Geographic Practice Cost Indices (GPCIs) to each area, so urban markets like New York, Los Angeles, and San Francisco sit above the national average while many rural areas land below it. CMS Medicare Claims Processing Manual, Ch. 12
These figures reflect the non-facility rate. In a facility setting — for example, a hospital outpatient department — the professional rate is lower because the facility bills its own claim separately under the Outpatient Prospective Payment System. CMS Medicare Benefit Policy Manual, Ch. 6
How Commercial Payers Benchmark Off Medicare
Commercial insurers don't pull their rates from thin air. In most markets, they still use Medicare as a benchmark and then apply a percentage multiplier. MedPAC Report to the Congress: Medicare Payment Policy, 2023
It’s common for commercial rates for 90837 to land somewhere between roughly 120% and 200% of the local Medicare rate, depending on:
The payer
The market and competition
The provider's credential level
Whether you've negotiated or just accepted a standard fee schedule
In broad strokes, many practices see:
Medicaid managed care: often around 80–100% of Medicare in many states, sometimes lower in fee‑for‑service carve‑outs, reflecting tighter state budgets. KFF Issue Brief on Medicaid Physician Fees
Large commercial payers (BCBS, Aetna, Cigna, UnitedHealthcare): frequently somewhere in the 120–170% of Medicare range for common outpatient mental health CPT codes, with wide variation by region and product line. Milliman Report on Commercial Payment Rates
Out-of-network / self-pay: often 200–400%+ of Medicare equivalent, though actual collections depend heavily on patient ability to pay and out-of-network benefits.
For a solo therapist in a mid-sized metro billing 90837 through a typical commercial contract, it’s realistic to see allowed amounts in the $160–$200 range per session in 2026 in many urban and suburban markets, with some areas higher and some lower. This is based on publicly reported ranges and market surveys summarized in payer and provider association reporting, not any single fixed schedule. Milliman Commercial Payment Rates Report
After denials, no-shows, coordination of benefits issues, and billing lag, many practices find that effective collections end up 15–25% below the contracted rate unless they have a very tight denial management and patient collections workflow. Medical Group Management Association (MGMA) Data Report on Collections
Reimbursement by Provider Credential
One of the most common surprises for new practice owners: credential type affects your reimbursement rate, not just your licensure.
Under Medicare, the same CPT code can pay differently depending on the provider type billing the claim:
Psychiatrists (MD/DO): generally paid at the full Medicare physician rate for covered services, including E/M codes and psychotherapy add-on codes. CMS Medicare Claims Processing Manual, Ch. 12
Psychologists (PhD/PsyD): paid at 100% of the physician fee schedule amount for covered psychological services under Part B. Social Security Act §1833(a)(1)(L)
Licensed Clinical Social Workers (LCSW): paid at 75% of the physician fee schedule amount for their services under Medicare. Social Security Act §1833(a)(1)(F)
Licensed Professional Counselors (LPC) and Marriage and Family Therapists (MFTs): historically not recognized as independent Medicare Part B providers, though recent legislation has begun to add some non-physician mental health professionals. As of now, you should confirm the most current status with CMS and your MAC, because rules have been evolving. CMS CY 2024 PFS Final Rule Fact Sheet – Behavioral Health Section
That 75% factor for LCSWs adds up quickly. On a 90837 claim where the psychologist rate might be around $135, the LCSW allowed amount is closer to $100, which can easily translate into tens of thousands of dollars in annual revenue differences when multiplied across a full caseload. Social Security Act §1833(a)(1)(F)
For group practices and IOPs, this is one reason why having the right mix of licensed providers — and billing under the appropriate taxonomy and NPI — directly shapes your revenue per clinical hour.
IOP and PHP Reimbursement: A Different Framework
If you're scaling beyond individual therapy into intensive outpatient programs (IOP) or partial hospitalization programs (PHP), the reimbursement model changes substantially.
IOP and PHP are usually billed using per-diem or per-service rates under H-codes or revenue codes rather than individual psychotherapy CPT codes for each service rendered. CMS Medicare Benefit Policy Manual, Ch. 6 – Partial Hospitalization
Common billing codes include:
H0015: Alcohol and drug treatment services, intensive outpatient, per day. Many state Medicaid programs publish fee schedules that place this code in the low-to-mid hundreds of dollars per diem, with commercial rates often higher. (Example: state Medicaid behavioral health fee schedules in the $100–$250/day range.) Check your state’s published schedule for exact amounts.
H2036 / H2014: Intensive outpatient or SUD services billed per hour or per diem, frequently used in Medicaid and some commercial arrangements. State fee schedules often show IOP daily rates in the $200–$400+ range, varying widely. [Example: State Medicaid Behavioral Health Fee Schedules via State Medicaid Agencies]
S9480: Intensive outpatient psychiatric services, per diem. Many commercial payers treat this as their standard psychiatric IOP per diem code.
PHP per diem (Revenue Code 0912/0913): For Medicare, PHP days are billed using revenue codes under a hospital or CMHC claim, and commercial PHP per diems commonly sit well above standard outpatient rates due to the higher intensity of service. CMS Medicare Benefit Policy Manual, Ch. 6
Commercial IOP authorizations typically require multiple days per week of structured programming (often around 9–20 hours per week), while PHP authorizations usually require a higher daily intensity (commonly 20+ hours per week spread over several days). These ranges are based on how levels of care are defined in ASAM criteria and payer medical necessity policies, but specific thresholds vary by payer. American Society of Addiction Medicine (ASAM) Criteria
Payers scrutinize level-of-care placement heavily. Without strong utilization review documentation tying symptoms, risk, and functional impairment to IOP or PHP criteria, denials and early step-downs are common.
What's Driving Reimbursement Pressure in 2026
The conversion factor problem.
Congress has repeatedly relied on short-term fixes rather than a permanent solution to the Medicare conversion factor, and the base rate has been cut several times in recent years after budget-neutrality adjustments. For example, the 2024 conversion factor decreased by about 3.4% compared to 2023, from $33.89 to $32.74. CMS CY 2024 PFS Final Rule Fact Sheet When commercial contracts tie to a percentage of Medicare, those reductions tend to ripple into private reimbursement with some lag.
The parity enforcement gap.
The Mental Health Parity and Addiction Equity Act (MHPAEA) requires that financial requirements and treatment limitations for mental health and substance use disorder benefits be no more restrictive than for medical/surgical benefits. U.S. Department of Labor MHPAEA Guidance In 2024, federal agencies finalized new regulations strengthening MHPAEA enforcement, including requirements that plans conduct and maintain detailed comparative analyses of nonquantitative treatment limitations (NQTLs) such as prior authorization and network adequacy. National Law Review Summary of MHPAEA Final Regulations For IOP and PHP operators, that increased scrutiny on prior auth, step therapy, and other NQTLs may eventually translate into more consistent access and coverage, though the impact will vary by plan.
Telehealth reimbursement stabilization.
During and after the COVID-19 public health emergency, Medicare and many commercial payers expanded telehealth coverage, allowing most psychotherapy codes to be billed via audio-visual telehealth from any location and paying them at the same rate as in-person visits. CMS Telehealth Services Fact Sheet Congress and CMS have extended key telehealth flexibilities for Medicare through at least the end of 2026, including the removal of geographic and originating site restrictions for many mental health services, though some requirements (like periodic in-person visits) still apply. Consolidated Appropriations Act, 2023 Summary – Telehealth Provisions If you're running a hybrid practice, telehealth remains a viable revenue channel — but you still need to confirm your specific state Medicaid and commercial plan policies, since some have tightened coverage or added in‑person preference rules as emergency waivers expired.
What These Numbers Mean If You're Opening a Practice or Program
Let’s put some of this into rough, back-of-the-envelope math. These are examples, not guarantees.
A solo therapist billing 25 sessions per week of 90837 through commercial insurance at an average allowed amount of $175 per session:
$175 × 25 sessions/week × 52 weeks ≈ $227,500 in gross annual collections, assuming full attendance and payment.
From there, you subtract overhead (rent, staffing, software), billing or RCM fees (often in the 5–10% range of collections), and uncollected claims or patient balances. MGMA Financial Benchmarks for Medical Practices
An IOP running 15 patients per day at a blended commercial/Medicaid per diem of $350:
$350 × 15 patients/day × 5 days/week × 52 weeks ≈ $1.365M annualized.
If the program instead runs closer to 20 patients/day on average, that same math pushes closer to $1.8–$1.9M in annual gross revenue at similar rates.
These examples aren’t “normal” or guaranteed — they’re just a way to sanity‑check whether your payer mix, schedule, and staffing model actually align with your revenue goals.
Understanding these benchmarks before you negotiate a payer contract — or before you sign an MSO agreement or acquisition — is non‑negotiable. Many operators only realize how much was left on the table after they see a competitor’s upgraded fee schedule or a partner’s renegotiated contract.
FAQ
What is the 2026 Medicare rate for CPT 90837?
Exact 2026 Medicare Physician Fee Schedule rates aren’t published until CMS releases that year’s final rule, but based on current RVUs and the 2024 conversion factor, many practices can expect the non-facility national rate for 90837 to land somewhere in the low- to mid-$100s, with actual payment varying by locality. CMS CY 2024 PFS Final Rule Fact Sheet LCSWs are paid 75% of the physician fee schedule amount, while psychiatrists and psychologists are paid at 100% for covered services. Social Security Act §1833(a)(1)(F)
Can LPCs and MFTs bill Medicare directly in 2026?
Federal rules for which non-physician mental health professionals can enroll in Medicare have been changing, and recent legislation has begun to add some counselor and therapist categories to Part B. CMS CY 2024 PFS Final Rule – Behavioral Health That said, coverage and enrollment details depend on CMS implementation and your Medicare Administrative Contractor, so it’s important to check the latest CMS guidance and your MAC’s enrollment policies for 2026 before assuming you can bill directly.
How do commercial insurance reimbursement rates compare to Medicare for therapy?
Most commercial payers set allowed amounts for common psychotherapy codes as a percentage above Medicare, often in the 120–170% of Medicare range in many markets, with out‑of‑network and self‑pay rates higher but less reliably collected. Milliman Commercial Payment Rates Report Actual numbers vary significantly by payer, region, line of business, and your contract negotiation.
What CPT or HCPCS codes should an IOP use for billing in 2026?
IOPs commonly bill per-diem or per-hour services using HCPCS codes such as H0015 (intensive outpatient SUD, per day), H2036 or H2014 (intensive outpatient psychiatric or SUD services), or S9480 (intensive outpatient psychiatric services, per diem), depending on payer and state guidelines. State Medicaid Behavioral Health Fee Schedules; CMS Medicare Benefit Policy Manual, Ch. 6 Some facility‑based programs also bill using revenue codes under a facility claim, so your actual code set will be defined in your state Medicaid manual and your commercial contracts.
Why are my insurance reimbursements lower than the contracted rate?
Effective collections often end up 15–25% below contracted rates once you factor in denials, write‑offs, and uncollected patient balances, especially when practices lack robust denial management and follow‑up workflows. MGMA Financial Benchmarks Common culprits include timely filing issues, coordination of benefits adjustments, non-covered modifiers, credentialing lapses, and missing authorizations.
How do I negotiate better reimbursement rates with insurance companies?
Volume and data matter. Large group practices and programs that submit high claim volumes, demonstrate strong clinical outcomes, and have low denial rates tend to have more leverage in fee schedule negotiations than solo providers. National Association of ACOs Contracting Best Practices Going into negotiations with clear knowledge of your current utilization, denial trends, and market benchmarks puts you in a far better position than simply asking for an across‑the‑board increase.
Working With the Numbers — Not Against Them
Reimbursement rates are one of those things that get treated as fixed when they're actually somewhat negotiable — and as straightforward when there's real complexity underneath. Whether you're running a solo practice or building a multi-site behavioral health program, knowing what the market pays, what you're actually collecting, and where the gaps are is foundational to making the finances work.
ForwardCare is a behavioral health MSO that partners with clinicians, sober living operators, healthcare entrepreneurs, and investors to launch and scale behavioral health treatment centers. They handle the business infrastructure — licensing support, insurance credentialing, billing, compliance, and operational systems — so partners can focus on clinical quality and growth.
If you're serious about opening or expanding a behavioral health program but don't want to figure out the business side alone, ForwardCare is worth a conversation.
