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A Word (or Many Words) About Insurance and Ketamine

Updated: Oct 16, 2023

More and more clinics offering ketamine infusions are opening. More and more discussion about successes with ketamine are being told and published. All of this means that more and more people are exploring ketamine infusions in search of relief from the deepest of depressions. And, of course, TAFI is receiving more and more applications for financial assistance with the cost of infusions.

Our number one task, here, is to help prevent suicides. That should be the goal of every insurance company, every state Medicaid program, and Medicare. But we all read the stories or watch the reports that, almost uniformly, tell us that "insurance doesn't pay for ketamine infusions." We wanted to offer a fuller discussion about that, because some people give up when they hear or read those words. People who have insurance or state Medicaid should know that ketamine infusions really are still an option. I'll explain why.

Firstly, ketamine is an FDA-approved pharmaceutical. It has been used as an anesthetic drug for many decades. It is widely used, not only in hospitals, but in Emergency Medical Services and medical helicopter transport systems every single day. The issue is that it is not approved specifically for Major Depressive Disorder (also called treatment-resistant depression or TRD) and suicidality. Thus, it is used for this treatment "off label." Such off-label use of medications is not rare, nor is it unusual. Every day, millions of Americans take medications that are being prescribed to treat conditions other than those the FDA has specifically approved.

For instance, a drug called gabapentin is FDA-approved for neuropathic pain and as an "add-on" drug for partial seizures. Yet, it is used every day to treat conditions for which it does not have specific FDA approval, such as chronic pain, anxiety, bipolar disorder, and insomnia. This is but one example with only a few of the off-label uses. There is nothing unusual about these off-label uses, and, in fact, insurance companies, Medicare, and Medicaid covers these prescriptions routinely and without batting an eye. Centers for Medicare and Medicaid Services Position In a letter from Daniel Tsai, Deputy Administrator and Director of Centers for Medicare and Medicaid Services, he wrote the following:

"Racemic ketamine (Ketalar®) is a COD (Covered Outpatient Drug) manufactured by Par Pharmaceuticals who currently has a signed NDRA (National Drug Rebate Agreement) (with the Secretary of the US Department of Health & Human Services)."

Tsai wrote that "Coverage of these drugs includes FDA approved uses, as well as medically accepted indication supported by one or more citations included or approved for inclusion in" one of the major drug compendia noted in federal statute. In that regard, he continued, "The American Hospital Formulary Service (AHFS) Drug Information is one such compendia which does include a citation for the use of racemic ketamine in treatment-resistant depression and suicidality." You can read the monograph from the AHFS here.) (emphasis added)

The bottom line about ketamine for treatment-resistant depression and suicidality is that this use does meet the federal statutory definition for "medically accepted" use, despite the fact that it is not approved by the FDA for that purpose. This has been more of a deep dive than is necessary for the balance of this article, but we want a full and complete picture. So, What's the Deal with Coverage?

Now that we've resolved the question of "Is ketamine for TRD medically accepted?" with a resounding "Yes!" we will move on to coverage by insurance and Medicaid. TAFI does more than just offer financial assistance to those who qualify. We also assist folks (for free) who do not qualify for our program. Specifically, we help them file claims for reimbursement from their insurance carrier for ketamine infusions. And we have seen many successes in that regard. So, let's talk about that.

Many claims will be questioned because the ketamine is not covered by the plan. While there is argument that it should be covered, we generally skip over that part. Why? Because the actual cost of the drug - ketamine - is around $2 per infusion! That $2 simply is not worth the effort. Insurance (and Medicaid) do routinely cover "therapeutic infusions." Think of receiving an IV infusion of a strong antibiotic or antiviral drug. Yes, insurance and Medicaid covers those infusions!

Clinics use a coding system (CPT) to generate your invoice, or "superbill." Each part of the treatment has its own billing code. For instance CPT code 96365 is for "Intravenous infusion, for therapy, prophylaxis, or diagnosis." (Note that the codes a particular clinic bills under may vary.) Make sure your clinic breaks down the infusion into its various CPT code components with each component's charge.

The real problem is that ketamine infusions are much different than your typical "therapeutic" or "prophylactic" infusion. Ketamine infusions have much higher costs, not because of the $2 worth of ketamine but, rather, because of the way the drug works. It elevates blood pressure and heart rate, for example, and renders the patient to a state of heavy sedation. This means that the clinic must have Advanced Cardiac Life Support equipment and ACLS trained staff. The infusion takes around 40 minutes, but close monitoring is required during the recovery period after the infusion to ensure that the vital signs return to normal and the patient is able to walk safely. These are not factors in typical therapeutic or prophylactic infusions. And, sadly, they are the reason insurance companies and Medicaid do not actually cover the real cost of the ketamine infusion. They are the main reason that most ketamine clinics do not accept any insurance plans or Medicaid. The reimbursement they would receive simply wouldn't come near to covering their costs. That doesn't mean the covered patient can't or shouldn't seek reimbursement themselves. Some reimbursement is better than none. Since the clinic is not "in-network," the reimbursement will be even lower. There is one potential caveat here, though.

Documentation by the referring mental health provider AND by the ketamine clinic itself are key. I have seen patients who were at or near suicidal crisis when they received their infusions receive either full reimbursement or reimbursement at "in-network" rates if it is clearly established (and sometimes argued on appeal of a denial) that the infusion was given on an emergency basis, which is to say it was necessary to avert or curtail a suicidal crisis. Ketamine infusions are a whole lot less expensive than inpatient stays under an emergency detention. And, they are a whole lot better than losing the patient to suicide.

The Bottom Line: File Your Claim

All of this is to say that the blanket assumption or statement that "Insurance and Medicaid doesn't cover ketamine infusions" is not entirely correct. In most instances, there will be some level of reimbursement. Any denial of claim should be appealed, and, as stated above, documentation by the referring mental health provider and the ketamine clinic is key. Get your infusions and file your claims. As long as time permits, we are happy to work with any patient and even to work with their providers (with authorization) to have the best chance at receiving some reimbursement.

Working on Solutions

Until insurance companies and state Medicaid programs establish reimbursement rates commensurate with the costs of providing ketamine infusions, the number of clinics accepting insurance or Medicaid will be few. The added administrative time for handling claims, coupled with not even covering the infusion costs, will keep clinics from enrolling. So we continue to encourage the Wisconsin Department of Health Services to recognize ketamine infusions as "medically accepted" and establish a reimbursement rate that will encourage clinics to enroll.

As Daniel Tsai - from CMS - wrote in his letter, "CMS will continue to work with states to help them better understand the benefits of covering these drugs for their beneficiaries to offer multiple treatment options." CMS "gets" it. We continue to try and get insurers and Medicaid to "get" it.

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