Will Health Insurance Providers Cover Psychedelic-Assisted Therapy?
Fact checked by Nick Blackmer
Key Takeaways
The American Medical Association (AMA) recently approved insurance billing codes for psychedelic therapy.
The new codes will take effect in 2024, but the approval does not mean insurance companies will provide coverage for psychedelic therapy.
Experts say that Food and Drug Administration (FDA) approval of psychedelics will be key for insurance companies to consider reimbursement.
In the United States, some states have legalized or decriminalized some psychedelic substances and are creating safety frameworks to allow the drugs to be used as treatments for certain mental health conditions.
While progress is being made in the hurdles of legalization and approval, there’s still the issue of who will pay for the treatments. For patients and providers, one of the biggest questions is whether insurance providers will agree to reimburse providers who prescribe psychedelic therapy to patients.
A recent decision by the American Medical Association (AMA) has provided a clue about the future of psychedelics: The AMA’s approval of a Current Procedural Technology (CPT) III code for psychedelic therapies has advocates and experts in the field encouraged that answers to the coverage question are on the way, but there’s still a long road ahead.
Here’s what advocates and experts say is necessary for insurance providers to consider and eventually commit to covering psychedelic treatments.
Related: Researchers Are Closer to Explaining How Ketamine Treats Depression
Will Codes Lead to Coverage?
CPT codes are numbers assigned to the different procedures, diagnostics, and other services healthcare providers can give to patients, and they’re a key part of the medical billing and payment process.
The CPT codes the AMA recently approved for psychedelic therapies were CPT III codes. Category III CPT codes are a set of temporary codes that help track the use of emerging technologies, services, and procedures. The codes for psychedelic therapies will be published and go into effect in January 2024.
Codes Do Not Equal Coverage
On its website, the AMA states that the “inclusion of a descriptor and its associated code number does not represent endorsement by the AMA of any particular diagnostic or therapeutic procedure or service. Inclusion or exclusion of a procedure or service does not imply any health insurance coverage or reimbursement policy.”
The new codes will allow qualified healthcare providers to ask a patient’s insurance to reimburse them for the psychedelic treatment they prescribe. However, the approval or publishing of the CPT III code set does not automatically mean that insurance companies will agree to reimburse for psychedelic therapies.
Sherry Rais, MSc, cofounder and CEO of Enthea (a third-party administrator of health-plan benefits), tells Verywell that the creation of CPT codes “is really important,” but it “still doesn’t mean that large insurance carriers will cover it just because there’s a CPT code.”
Related: Psychedelic Drug May Help Rewire the Brain to Treat Depression
The Legal Status of Psychedelics
Advocates have been a key part of getting these new codes for psychedelic treatments in place. For example, COMPASS Pathways and MAPS Public Benefit Corporation collaborated on the application for the CPT III codes.
COMPASS and MAPS
COMPASS Pathways is the company behind the synthetic psilocybin COMP360, which is being used in clinical trials. MAPS Public Benefit Corporation is a subsidiary of the nonprofit Multidisciplinary Association for Psychedelic Studies (MAPS), which has been working toward legal pathways for psychedelics, particularly MDMA.
CPT codes are a step forward, but it’s still just one step on a long road ahead.
The FDA has not yet approved psychedelics but it has given a “Breakthrough Therapy” designation to two specific drugs—MDMA and psilocybin—in certain medical cases.
The Drug Enforcement Administration (DEA) currently lists psilocybin and MDMA (ecstasy) as Schedule I substances under the Controlled Substance Act. That means the DEA defines most psychedelics as “drugs with no currently accepted medical use and a high potential for abuse.”
“FDA approval has to happen and DEA rescheduling,” Rais said. “They go kind of hand in hand.”
While they’re illegal at the federal level in the U.S., some states (Oregon, Colorado) and municipalities (Washington, D.C., and Ann Arbor, Michigan) have legalized or decriminalized some psychedelic substances in certain situations. That said, full FDA approval is still going to be an important step toward insurance reimbursement for psychedelic therapy.
Related: 3 Surprising Conditions Psychedelics Might Be Used For
Laying the Foundations for Coverage
Despite the current FDA and DEA status of psychedelics, several companies and organizations are working to lay the groundwork for potential insurance coverage of MDMA and psilocybin.
Enthea
Enthea provides benefit plans employers can offer employees for psychedelic therapy. Rais said that Enthea “works kind of the same way employers choose other ancillary benefits, like dental and vision.”
Psilocybin, MDMA, and other psychedelics are currently being studied in clinical trials. Experts such as Rais think MDMA will become FDA-approved in some capacity before psilocybin—simply because clinical trials for MDMA are further along.
“Essentially, once MDMA gets approved, our network will already have MDMA providers,” Rais said.
Do People Support Psychedelic Legalization?
The University of California Berkeley Center for the Science of Psychedelics recently released its Psychedelic Survey which showed that more than half of the 1,500 respondents strongly support (28%) or somewhat support (27%) FDA approval of psychedelics.
Related: No, Psychedelic Treatment Doesn't Look Like 'Nine Perfect Strangers'
Currently, Enthea’s framework only includes ancillary benefits for ketamine therapy. Ketamine, a Schedule III controlled substance, is an FDA-approved dissociative anesthetic. Another drug that is a derivative of it—esketamine—is already FDA-approved (as Spravato) for use in adults with treatment-resistant depression.
Even though it’s a hallucinogen, ketamine acts differently than classic psychedelics like MDMA and psilocybin do. Since it is FDA-approved, it could be an example of whether insurance companies will agree to cover psychedelic therapy.
According to Rais, even though ketamine therapy is available larger insurance companies “are not covering it.” Though Rais said they “think they will eventually” and hopes that in the future, insurers will “cover it all.”
Dr. Bronner’s Psychedelic Pilot Program
Enthea ran a pilot program with Dr. Bronner’s, an organic personal care product company. Through the arrangement, Rais said that the company “offered ketamine therapy to their employees, and that got a lot of press. When that happened, so many employers were reaching out to us.” In fact, Enthea now has 50 signed letters of interest from a mix of small and large companies.
“There are huge incentives for employers in terms of increased retention, reduced absenteeism, reduced medical spending, [and] more productivity,” Rais said. “It’s also a cool thing for an employer to say, ‘Hey, we’re one of the first companies that offer this. We care about our employees’ mental health.’”
Related: What Is Ketamine?
Numinus
Numinus is an integrative mental health services provider that focuses on psychedelic therapy. It also is a contract research organization that’s helping with ongoing clinical trials to study the safety and effectiveness of psychedelic drugs—both of which will be key indicators for getting insurance companies on board with reimbursement.
Payton Nyquvest, co-founder, chair, and CEO of Numinus, tells Verywell that ketamine has been an interesting first test.
“You’ve seen quite a bit of adoption within the mainstream healthcare system, inclusive of insurance coverage. About 80% of our ketamine services get covered under insurance,” he said.
Related: Will We Turn to Psychedelics for Mental Health Treatment After the Pandemic?
The Costs of Psychedelic Therapy
According to Nyquvest, the substances themselves are not very expensive. Most of the cost of psychedelic therapy is the long-term, ongoing talk therapy that’s needed after a psychedelic-assisted therapy session.
A key part of psychedelic therapy is what’s called “integration”—or, the time following a psychedelic experience. Integration has many definitions, but psychedelic therapy practitioners and researchers generally consider it to be “the participant implementing and incorporating the key insights and awareness gained in the psychedelic experience into their life.”
"MDMA therapy is anticipated to cost somewhere in the neighborhood of probably $10,000 to $15,000 for that whole protocol."
Payton Nyquvest
Integration can include tasks like journaling, engaging in mindfulness practices, working with an integration support group, or continuing talk therapy—the part that can get expensive.
“MDMA therapy is anticipated to cost somewhere in the neighborhood of probably $10,000 to $15,000 for that whole protocol,” Nyquvest said. “So, when we think about access, insurance coverage is going to be an extremely, extremely important part of that.”
Insurance coverage also provides reassurance to patients—and not just financially. Nyquvest thinks “a lot of people will wonder, ‘If there’s not insurance coverage, then is this a safe, viable opportunity for me?”
In addition to evidence from clinical trials, practitioner training is also necessary for safe psychedelic therapy and will be another important factor for insurance companies that are considering providing coverage.
“Making sure that models are being informed by people who really understand what these experiences are and what really goes into them is going to be crucial,” Nyquvest said.
Related: Psychedelics May Be As Effective as Antidepressants
Where Do Psychedelic Practitioners Stand?
On its website, the American Psychedelic Practitioners Association (APPA) states that its “mandate is to safely integrate psychedelic-assisted therapy into the US healthcare system.”
APPA serves as an accreditation association for practitioners in the field. General Stephen Xenakis, MD, now retired from the Army, serves as APPA’s executive director. Xenakis told Verywell that the association is intended to operate like others in healthcare, such as the AMA or APA.
The organization is only two years old.
“We’re going to really set it up in a way that it can do what it needs to do.” Xenakis said. “So, that there’s legitimacy in the clinical world and patients have confidence that clinicians are trained. And then as you go down the road with certification and reimbursement, this serves as the foundation.”
A lot of work needs to be done before psychedelics are fully accepted in the mainstream healthcare system, but Xenakis said change is occurring—albeit slowly. But that’s where he believes APPA comes in—as a “seal of approval” with accreditation.
“We have a CPT code, but if somebody’s going to use that code and bill for it, insurance carriers and the government want to know that these people are trained and certified,” he said.
What This Means For You
Advocates and experts are hopeful that insurance companies will offer coverage for psychedelic therapies in the future. CPT codes are just one step on a long road ahead, and progress like full FDA approval is still needed before insurance providers will be likely to reimburse for the treatments.
