Electronic Fall 2026 | Issue 68
State Legislative Update
By: Mark Peysakhovich, IPS Legislative Consultant
MHSUD Reimbursement Rates Poised to Go Up in 2027
Many mental health providers in Illinois will soon see a much-needed increase in the low reimbursement rates set by commercial health insurance companies. A new law establishing a reimbursement rate floor for all mental health and substance use disorders (MHSUD) services will finally kick in at the beginning of 2027. The law requires commercial insurance plans to reimburse all mental/behavioral health services at a reimbursement rate at least equal to 141.7% of what Medicare would pay for the mental health or substance use service provided. (FYI, the Illinois Department of Insurance recently published an industry bulletin on the new law.)
This will be a welcome change. As psychiatrists know only too well, for a long time MHSUD services have been reimbursed at unequal, lower rates when compared to other health care payments. Implementation of the new law is expected to reduce the disparity between MHSUD and other healthcare reimbursement.
According to information provided by state Rep. Lindsay LaPointe and state Sen. Karina Villa, the bill’s lead sponsors in the Illinois General Assembly, here are some (not all) of the key provisions of the new law being implemented next year:
Reimbursement Rate Floor Set by a Formula - The rate floor of 141.7% of the Medicare rate is set by a formula in the law. This formula does not change unless altered by a new law.
Reimbursement Rate Floor Applies to All MHSUD Services Covered by Commercial Insurance Plans - The reimbursement rate floor applies to all inpatient, outpatient, hospital, and residential MHSUD services. No MHSUD service that is covered by a commercial insurance plan is excluded from the rate floor.
Publication of Reimbursement Rate Floor - The Illinois Department of Insurance (IDOI) will publish the reimbursement rate floor on its website prior to January 2027. IDOI will have the authority to monitor and enforce the reimbursement rate floor.
Requires Equal Coverage - Insurers are required to cover 60-minute psychotherapy (90837) and cannot impose more onerous documentation requirements than is required for other psychotherapy CPT codes and cannot audit the use of CPT Code 90837 more frequently than audits for other psychotherapy CPT Codes.
Shorter Timeline to Become an In-Network Provider - Insurers must complete the contracting process with a MHSUD provider or facility to become a participating provider (i.e., in-network) within 60 days from the date of a provider/facility’s completed application to the insurer. This includes the verification of the provider’s credentials.
Plans Covered by the New Law - The law covers fully funded state regulated plans (individual, small, and large group plans), and plans purchased on the Marketplace.
Plans Not Covered by the New Law - Self-insured plans are regulated by the federal government and are not covered by this law. State employee health plans, and all HMO plans are also excluded.
WANT TO KNOW MORE?
In collaboration with mental health advocates and community groups, Rep. Lindsay LaPointe and state Sen. Karina Villa will be sponsoring two webinars to provide information and answer questions about the law’s implementation. Both sessions will cover the same material.
Here’s how you can participate:
First Session: Friday, September 25th, 11am-12:15pm -- Registration Link
Second Session: Friday, October 2nd, 1pm-2:15pm -- Registration Link