State Leadership Conference

A proposed decrease in Medicare reimbursement following payment cuts made in 2007 may be making it difficult for many psychologists to continue to treat Medicare beneficiaries, Diane Pedulla, JD, director of regulatory affairs for APA's Practice Directorate said at the 2008 State Leadership Conference.

"Now more than ever, I hear psychologists questioning whether they can continue to be Medicare providers," she noted.

However, efforts by APA's Practice Organization (APAPO) and other health-care organizations to fight upcoming reductions in Medicare payments and to increase reimbursement for psychologists and other health-care providers may bring some relief.

The problems

When psychologists and other health-care professionals treat patients covered by Medicare, the amount of money they receive for various services is set by the Centers for Medicare and Medicaid Services (CMS). Every year, CMS is required by law to apply a formula that determines reimbursement for all Medicare services. The formula involves factors previously set by Congress and annual adjustments reflect changes in the delivery of health-care services as well as the nation's economy.

The budget for 2008 would have resulted in payments that were 10.1 percent lower than those in 2007. APAPO and other organizations blocked that cut on Jan. 1, Pedulla noted. However, the current block only lasts until June 30; APAPO will try to stall the cut for at least another six months.

In 2007, CMS raised payments for the evaluation and management codes--codes that physicians use to bill services such as establishing medical diagnosis and treatment options and providing inpatient and outpatient consultation services--and a handful of other codes in 2008.

However, because Medicare's payments must remain budget-neutral, any addition to one area must be compensated for in another area. So, Medicare cut reimbursement for work values across all providers by 10 percent in 2007 and by an additional 1.8 percent for 2008.

Although these cuts were not aimed at psychology, they affect psychologists disproportionately because psychologists don't generally have many of the other costs for which other health-care providers are paid, said Pedulla. For instance, physicians' offices may receive reimbursement for medical equipment such as blood-pressure cuffs or echocardiogram machines. That means that a larger percent of psychologists' fees are tied to the work values compared to other providers, added Kimberley Moore, federal regulatory affairs officer for the Practice Directorate.

CMS is also changing how it calculates practice expenses, resulting in a net loss of 2 percent of practice expense reimbursements for psychologist services each year until 2010.

Possible relief

In anticipation of these losses, APAPO has been advocating for Congress to grant additional Medicare funds for psychotherapy. If it doesn't, CMS will jeopardize its ability to meet the needs of Medicare beneficiaries, said Pedulla.

In response, the U.S. House of Representatives granted psychologists an additional $30 million of Medicare funds annually for four years, and similar action is expected from the Senate.

In another search for relief, APA and many other health and medical organizations are gathering data on their fields' practice expenses. The CMS currently uses old data that don't accurately reflect the cost of office space, supplies, equipment and clinical staff, says Pedulla. APA, the American Medical Association and other groups will present their findings to CMS in the hope that it will use the information when determining practice expenses in the 2010 Medicare fee schedule.

Another way that health and medical professionals can challenge prohibitively low reimbursement rates is the Medicare five-year review process. Established in 1990 as part of the Omnibus Budget Reconciliation Act, it requires CMS to review all of the work-relative values--a key component of the yearly formula that determines the Medicare payments for every five years, explained James M. Georgoulakis, PhD, MBA, JD, APA's representative to the American Medical Association's Relative Value Update Committee. Relative values are calculated by assessing how much time, technical skill and mental effort is required to provide a medical or psychological service.

If a profession believes that its services are being undervalued, representatives can first present their case to the American Medical Association committee, which then presents it to CMS, which, based on the evidence, may increase the values it assigns to the services provided by that profession.

APAPO believes that the work associated with providing psychotherapy services has increased since the last review, likely due in part to practitioners seeing more patients with co-morbid disorders, who are more difficult to diagnose or require more effort to treat. Psychologists will also argue that the values assigned to psychotherapy are out of sync with values assigned to cognitive services provided by other health-care providers, continued Georgoulakis.

Evidence for these arguments will come from surveys distributed to practitioners and from consultations with leaders of state psychological associations, he said. State psychological associations will also assist the APAPO in developing vignettes--descriptions of typical patients for various services--in the Practice Directorate's effort to get the psychotherapy codes' work values reviewed.

By bringing Medicare reimbursement in line with the realities of clinical practice, APAPO can enable psychologists to remain Medicare providers and continue to serve people with disabilities and the growing group of adults over 65, Georgoulakis concluded.

-L. Meyers