Briefing · October 8, 2026

Illinois sets a floor under therapy reimbursement starting 2027

Illinois plans covered by a new state law must pay in-network mental health and substance use services at least 141.7% of the Medicare amount for the same code, starting with policies issued or renewed on or after January 1, 2027, according to the state Department of Insurance. For a 60-minute psychotherapy session (90837), the department's reference to the Medicare rate "for medical/surgical clinicians" points to a floor of roughly $232 to $240 at 2026 rates. Applied instead to the 75% amount Medicare pays master's-level therapists, the same percentage gives about $174, the figure in earlier vendor coverage.

The law

House Bill 1085 passed the Illinois Senate 48-10 and the House 86-19 on October 30, 2025, and was signed December 12, 2025, as Public Act 104-0446 (bill status). It adds Section 370c.4 to the Illinois Insurance Code. The reimbursement provision requires that payment for each in-network mental health and substance use service "must be equal to or greater than the dollar amounts applicable under this subsection on the date of service for the geographic location."

The statute sets the floor by formula. It takes the average reimbursement percentage for Illinois medical and surgical clinicians from a 2024 RTI International study, adds half the gap to the 75th percentile, and applies the result to "the same source of the benchmark rate." The statute itself never names Medicare or a percentage.

What the insurance department says the formula means

The Illinois Department of Insurance supplied the numbers in Company Bulletin 2026-12, issued September 11, 2026. It reads the RTI figures as 132.0% plus 9.7%, so "the applicable percentage is always 141.7%," and it identifies the benchmark as the Medicare fee-for-service allowed amount "for medical/surgical clinicians" for the same code, date of service and location. The department also stated that it does not intend to publish a complete set of floor amounts. Insurers are expected to do the calculation.

Two further rules follow from the bulletin. The floor applies only to services Medicare pays on a fee-for-service basis, so codes without a Medicare rate fall outside it. If Medicare's rate drops, the floor stays at the prior year's level, per Section 370c.4(b)(2).

What the floor works out to for 90837

Medicare pays clinical social workers, marriage and family therapists and mental health counselors 75% of the physician amount. The bulletin ties the Illinois floor to the rate for medical and surgical clinicians, which is the full 100% amount. Read that way, the floor for a master's-level therapist in Illinois appears to be 141.7% of the physician rate.

Calculated by this site from the CY2026 final-rule RVUs for 90837 (work 3.78, non-facility practice expense 1.20, malpractice 0.02), the 2026 Illinois GPCIs in CMS Addendum E, and the $33.4009 conversion factor. The floor uses the Medicare amount on the date of service, so 2027 sessions will use 2027 rates. Under the proposed 2027 fee schedule, the same calculation gives roughly $252 to $265, though those proposed values may change in the final rule.

Some published estimates are lower. A billing vendor's June 2026 analysis put the 90837 floor at $174.18, which is 141.7% of $122.92, the 75% amount for the Rest of Illinois locality. That estimate predates the department's bulletin. Therapists comparing their own contracts should check which base their insurer applies, since the two readings differ by about $58 a session.

For comparison, the site holds 19 Illinois reports for 90837, with a median of $131 and a highest report of $194.14. None reaches $232. Those reports span payers, plan types and service dates the law does not reach, so they describe the starting point rather than a violation. The Illinois rate page updates as reports are added.

Who is covered, and who is left out

The floor applies to group and individual accident and health policies and managed care plans, and to any third party administering an insurer's behavioral health benefits. The act extends it to self-insured plans for Illinois counties, municipalities and school districts. The department reads it as applying to PPO-type policies.

Several large groups fall outside it:

• HMOs. The bulletin states that "Section 370c.4 does not apply to HMO health care plans."
• Medicaid. Section 370c.4(j) excludes plans serving Medicaid and CHIP populations.
• Most employer self-funded plans. The department excludes any self-funded group plan other than those for Illinois local governments and school districts.
• Federal programs and out-of-state policies. Medicare, Tricare and federal employee plans are excluded, as are group policies issued outside Illinois.

The 90837 and credentialing provisions

The act carries three protections specific to 60-minute psychotherapy. Covered plans must cover medically necessary 90837 sessions, may not impose more onerous documentation for 90837 than for other psychotherapy codes, and may not audit 90837 more often than other psychotherapy codes. Plans must also finish contracting and credentialing within 60 days of a completed application and pay retroactively from that date, under Section 370c.4(f). Violations carry a civil penalty of $1,000 each after notice and hearing.

What it means for platform and direct contracts

The act reaches "any contracted third party administering the behavioral health benefits for the insurer." Whether that language reaches billing platforms such as Headway, Alma or Grow Therapy, which hold contracts with payers and pay therapists a separate rate, is not addressed in the statute or the bulletin. Therapists paid through a platform for covered Illinois PPO members may want to ask the platform in writing how it will apply the floor to their payout.

How to read this briefing

This briefing has several limitations. First, the dollar figures are this site's calculations from CMS files, and the department did not publish floor amounts. Second, the 141.7% figure and the Medicare benchmark come from the department's interpretation, which could change through rulemaking or litigation. Third, whether a given member's plan is a covered PPO, an HMO or a self-funded employer plan is often unclear from the insurance card. Nevertheless, the act creates a written, enforceable minimum for a defined group of Illinois plans, and the department accepts complaints when payment falls below it.

Every statutory and regulatory statement cites the act or the Department of Insurance bulletin. Dollar calculations are this site's. Corrections via the form.