Rate setting for behavioral health providers is largely defined by the setting in which the service is performed: hospital or community. The regulatory systems in place are unique for each service setting and payor type.

  • Psychiatric Hospitals have a unique set of rules which goven rate setting efforts. Medicare reimburses inpatient providers on a Diagnostic Related Grouping (DRG) Prospective Payment System (PPS) for inpatient care and Ambulatory Payment Classification (APCs) for outpatient care. Generally, Medicaid reimburses private psychiatric facilities at FFS rates and public facilities receive cost based rates. Managed Care and Commercial payors usually reimburse providers utilizing FFS, cost based, and/or Pay-for- Performance (PFP) options.
  • Community Based Providers (Community Mental Health Centers, Psychologists, etc.) follow a separate reimbursement system. Medicare reimburses providers according to the Medicare Physician fee schedule (CPT and HCPCS codes). Medicaid will often mirror the structure of the Medicare Physician Fee Schedule, but often times will adapt the schedule for state-specific service and budget restrictions. 
  • Managed Care and Commercial payors often use the Medicare Physician fee schedule (CPT and HCPCS).

Rate setting can be complex and cumbersome. It requires

  • A comprehensive understanding of the Medicare principles of reimbursement established in Provider Reimbursement Manual (PRM) 15-1;
  • Knowledge of Medicaid State Plan section (Section 4.19);
  • Knowledge and understanding of all costs, utilization, productivity standards, and/or efficiency factors which affect the rate calculations.

PCG Health™ Expertise

PCG Health has provided rate setting services to behavioral health care clients since 1987. Our consultants have extensive experience with behavioral health care rate setting and reimbursement services, including

  • Review of Medicaid Rate Setting Methodology and Available Public Expenditure Data;
  • Cost Reports or Survey(s) for Rate Setting;
  • Complete Regulatory Analysis related to Rate Setting environment;
  • Risk Assessment of Rate Changes;
  • Calculation of Baseline Revenue Estimates with Updated Rates;
  • Presentation of findings to State Agency/Provider/Insurer for Review;
  • Rate Adjustments, including Retroactive Rate Increases; and
  • Calculation of Cost Settlement Payments (if applicable).

Among our clients

  • State of Alaska
  • State of Florida
  • State of Illinois
  • Commonwealth of Massachusetts
  • State of Missouri

More Information

For more information about PCG Health's Rate Setting Services please contact us at
info@publicconsultinggroup.com or 1-800-210-6113.