Intensive Outpatient Program (IOP) Details Proposed

New Treatment Category Billable in RHCs Beginning January 1, 2024

Sarah Hohman, Director of Government Affairs


The CY 2024 Medicare Hospital Outpatient Prospective Payment System (HOPPS) Proposed Rule implements provisions from the Consolidated Appropriations Act of 2023 passed by Congress in December regarding the new treatment category “Intensive Outpatient Program (IOP)” services.

RHCs, as well as hospital outpatient departments, community mental health centers, and FQHCs, can begin billing for these services on January 1, 2024, and RHCs will be reimbursed under a special payment rule.

CMS is currently accepting comments on this proposed rule. Over the coming weeks, NARHC is interested in hearing from RHCs who are heavily engaged in behavioral health services as to if the proposed details of Intensive Outpatient Program services are feasible for implementation in your RHCs as well as any questions you may have that we can relay to CMS for clarification.

What are Intensive Outpatient Program Services?

Intensive Outpatient Program (IOP) services are behavioral health services provided through an outpatient setting, i.e., not an inpatient or residential setting, nor the patient’s home, that provides less than 24-hour per day care. The psychiatric services provided through IOP are for those individuals with an acute mental illness such as substance use disorders, depression, schizophrenia, and others. IOP is a distinct program from partial hospitalization programs (PHPs) and is understood to be less intensive than PHP; however, IOP is for patients requiring a higher level of care than isolated outpatient visits with a behavioral health provider.

CMS specifies that the services eligible to be provided under the IOP benefit include:

  • Individual and group therapy with physicians, psychologists, and other mental health professionals as authorized by state law
  • Occupational therapy
  • Furnishing of drugs and biologics for therapeutic purposes that are not self-administered
  • Family counseling (as part of treatment of the patient’s condition)
  • Patient training and education
  • Individualized activity therapies
  • Diagnostic services
  • Other related services for diagnosis and active treatment intended to improve or maintain the patient’s condition and function

Patient Eligibility

In order for a patient to qualify for IOP services, a physician must certify that a patient needs behavioral health services for at least 9, but no more than 19 hours per week. The certification of eligibility must be done by the physician at least once every other month. The patient’s plan of care must adequately demonstrate that the individual:

  • Requires at least 9 hours of therapeutic services per week
  • Is likely to benefit from these coordinated services more than they would individual sessions of outpatient treatment
  • Does not need 24-hour care
  • Has a separate support system outside of the IOP
  • Has received a mental health diagnosis
  • Is not a danger to themselves or others
  • Has the cognitive and emotional ability to tolerate the IOP

Billing and Reimbursement

As explained above, IOP services are at a level above isolated behavioral health encounters between qualified practitioners and patients. Therefore, these services are not to be billed as RHC encounters. Instead, as CMS has done with other services including care management, telehealth, etc. RHCs are eligible for reimbursement under a special payment rule.

RHCs will receive a flat payment per day which CMS is proposing as $284 in 2024. This corresponds to an anticipated 3 separate qualifying services per day. CMS is proposing to require that RHCs report condition code 92 to identify IOP services.

The 3 services per day would be any of those found in Table 43: Proposed HCPCS Applicable for PHP and IOP (page 364 of the HOPPS Proposed Rule). In order to qualify for payment, at least one of the three services must be from Table 44 Proposed Partial Hospitalization and Intensive Outpatient Primary Services (page 367).

CMS is seeking comment on whether the above payment rate should be adjusted by geographic area and also if RHCs should be eligible to bill for the equivalent of “4-service days,” reimbursable in the hospital-based provision of IOP services at $368.18 per day, as opposed to just the “3-service days” reimbursement of $284.00.

As these services are mental health services, an IOP service and a separate mental health encounter would not be eligible for same day billing (RHC All-Inclusive Rate reimbursement plus $284). However, RHCs could bill for IOP services and a separate medical visit for the same patient on the same day. Finally, costs associated with IOP services will need to be carved out of an RHC’s cost report as to not impact the All-Inclusive Rate.

Please contact Sarah Hohman, NARHC Director of Government Affairs at with any questions or other feedback, and don’t forget to register for NARHC’s August 30th webinar on these CMS proposed rules here.