Medicare codes for digital mental health treatments were used for 99 patients across 184 visits in Q1 2025, according to a new report on this multibillion-dollar industry.
The report—shared exclusively with Healthcare Brew by analytics firm Komodo Health—analyzed deidentified data from more than 330 million patients, looking at the use of three new codes introduced on Jan. 1. The codes allow providers to bill Medicare for the cost of supplying and treating a patient with one of seven FDA-cleared digital therapeutics (DTx) for conditions like anxiety and depression.
This is the first year Medicare has offered coverage, and experts previously told us the DTx industry’s success hinges on whether providers use it. If they do, other payers may also finally get on board.
Slow growth. Without widespread payer coverage, device makers are struggling to profit off their products. Insurance denials fueled the 2023 bankruptcy of DTx company Pear Therapeutics, its CEO said on LinkedIn at the time. That same year, digital medicine company Akili Interactive switched from a prescription to over-the-counter model following its own failed battle for payer coverage.
The good news is that while uptake may seem low, it’s growing.
The number of visits associated with the codes jumped from 48 in January to 85 in March, Evan Woodward, MD and senior clinical product manager at Komodo Health, told us.
“The limited uptake likely reflects ongoing confusion around code applicability and reimbursement pathways—common barriers we see with new digital tools in clinical practice,” Woodward said.
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Industry reacts. Andy Molnar, head of digital health at the American Telemedicine Association’s advocacy organization ATA Action, told us this is a promising start.
“We continue to be excited about the movement,” Molnar said.
David Cooper, executive director of professional group Therapists in Tech, told us he wishes uptake was higher, though he noted that, like all new concepts, there’s a learning curve. Most of this software requires prescriptions from people not used to prescribing, like psychologists or social workers.
Cooper added these codes also use a “buy-and-bill” model, meaning providers pay up front and are reimbursed only after submitting a claim to Medicare.
Medicare hasn’t set one national rate for these devices yet. The rate is decided by Medicare’s local contractors in each region, meaning providers in different parts of the country may be reimbursed at different rates or may not know what they’ll be paid at all when they submit codes.
If Medicare eventually sets a generous national rate, Cooper expects DTx to “boom.” If not, he expects more companies to declare bankruptcy or choose not to go the DTx route at all.
“The reimbursement piece is the make-or-break for digital therapeutics,” he said. “Why would a company go through all of the extra work of FDA [clearance] if there is not equivalent reward for that?”