How much to charge a Medicare beneficiary, how much Medicare reimburses, and how much psychologists may collect from Medicare beneficiaries are questions often asked. Regardless of Medicare's reimbursement rate, you should bill Medicare beneficiaries your regular fees (this is called your "actual charge"). You are not allowed to collect it all, but it is important that psychologists not lower actual charge profiles to match up with Medicare fees. Comparative studies of professional reimbursement would be artificially lowered for psychologists' services if you lower your fees.
Collect only Medicare's "approved amount" (see glossary) if you are a "clinical psychologist" and only up to Medicare's "limiting charge" (see glossary) if you are a non-participating 'independently-practicing psychologist'. 'Independently-practicing psychologists' who sign agreements of participation (meaning they choose to accept assignment) may not collect above Medicare's approved amount.6
Billing Forms
To receive payment from Medicare for services rendered, psychologists must submit a HCFA 1500 claim form to the local Medicare Carrier. Billing forms are available through the Government Printing Office in Washington, D.C. Single sheet and carbon sheet forms come in packs of 100. Continuous feed forms are also available. To order by credit card, call 202/512-1800 and expect to wait approximately 3 weeks for delivery. To order by mail, send request and check or money order to Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Mail orders take approximately 3 weeks for delivery.
Place of Service Codes
The HCFA 1500 billing form requires service providers to record the setting in which a service was rendered. It is important to note that the individual psychotherapy code descriptors distinguish between inpatient and outpatient settings. The "inpatient" individual psychotherapy codes may only be used when services are furnished in the following facilities: Inpatient Hospital, Skilled Nursing Facility, Nursing Facility, Inpatient Psychiatric Facility, Psychiatric Facility Partial Hospitalization, Intermediate Care Facility/Mentally Retarded (ICF/MR), Community Mental Health Center, Residential Substance Abuse Treatment Facility, Psychiatric Residential Treatment Center, Comprehensive Inpatient Rehabilitation Facility, Hospice. Psychotherapy furnished in all other places of service should be billed using outpatient codes.7
Medicare Summary Notices (MSNs)
Individuals receiving health services must be notified of actions taken on their behalf by the agencies administering the Medicare program. The Health Care Financing Administration (HCFA), Part A intermediaries, Part B carriers, and managed care organizations are required to send Medicare Summary Notices (MSNs) to beneficiaries informing them as to whether the services they received were covered by the program, whether the provider or physician, etc., has been paid for these services, and the status of the beneficiary's deductible and coinsurance. MSNs replaced the former Explanation of Medicare Benefits (EOMB) form in 1997.
Every notice sent to a beneficiary, whether it be one explaining the benefits received or a total or partial denial of benefits, sets forth an explanation of the reason for the decision and the beneficiary's right to appeal if he or she believes that the determination is incorrect. The beneficiary must request a reconsideration or review within 60 days of the date appearing on the notice. The notices also serve as an aid in applications for supplementary insurance.
MSNs are normally sent to beneficiaries and providers using benefits at least once a month. All claims processed during the period are accumulated and entered on a single notice.
Outpatient Mental Health Treatment Limitation
Although the formula for determining actual payment amounts for outpatient therapy is lengthy and confusing, in practice it is simple. It is important to note first that, by law, Medicare must reduce its payment for outpatient therapy services by 62.5%. This is known as the outpatient mental health limitation.8 This outpatient mental health treatment limitation does not reduce your reimbursement. In effect, it shifts payment responsibility from Medicare to the beneficiary. The beneficiary portion of the payment is called the "copayment." The simple explanation is that, for outpatient therapy services, Medicare will pay 50% of the approved amount and the beneficiary must pay the remaining 50% of the approved amount.9
Inpatient therapy services and all diagnostic services (which includes the initial diagnostic interview examination - CPT code 90801) fall under the regular 80%-20% copay. There is no mental health treatment limitation applied to these services. However, testing services performed to evaluate a patient's progress during treatment are considered part of treatment and are subject to the limitation.10
An example and explanation of the formula for payment for outpatient therapeutic services follows:
A clinical psychologist submitted a claim for $200 for outpatient treatment of a beneficiary's mental health problem. The Medicare approved amount was $180. Since clinical psychologists must accept assignment, the beneficiary is not liable for the $20 in excess charges. The limitation reduces the amount of incurred expenses to 62.5% of the approved amount. After subtracting any unmet deductible, Medicare pays 80% of the remaining incurred expenses. In this scenario, the beneficiary previously satisfied the $100 annual Part B deductible. The Medicare payment and beneficiary liability are computed as follows:
-
Actual charges .......................................................................... $200.00
- Medicare approved amount .................................................... $180.00
- Medicare incurred expenses (0.625 x line 2) ........................ $112.50
- Unmet deductible ............................................................................ 0.00
- Remainder after subtracting deductible (line 3 minus line 4) $112.50
(Medicare allowed amount)
- Medicare payment (0.80 x line 5) ............................................ $ 90.00
- Beneficiary liability (line 2 minus line 6) .................................. $ 90.00
Confusion is rampant for several reasons. The terms "approved amount" and "allowed amount" are usually interchangeable when there is no special limitation placed on the reimbursement. Even when there is a payment limitation, carriers may still interchange these terms. Another problem is caused by the Medicare Summary Notice (MSN) which may mention the 80-20 copay, but neglect to mention the beneficiary's additional responsibility of paying the difference between the approved amount and the allowed amount represented by the 62.5% outpatient mental health treatment limitation. This differs from other covered services which have a simple 80%-20% copay and thus beneficiaries often do not understand why they must pay a larger share for outpatient therapy services. Finally please remember that you may never collect over Medicare's approved amount. The difference between your actual fee and Medicare's approved amount is uncollectible.
Diagnostic Services
Diagnostic services fall under Medicare's normal 80%-20% copayment scenario. This means that the beneficiary is required to pay 20% of the approved charges under most circumstances. For diagnostic services, "clinical psychologists," because they must accept assignment, may not collect above the approved amount. 'Independently-practicing psychologists' collect the 20% copayment and may also collect an additional amount to bring them to their actual fee or to the limiting charge, whichever is less. Like all other Medicare providers not under assignment, "limiting charges" (see glossary) could prevent 'independently-practicing psychologists' from collecting their full fees.
'Independently-practicing psychologists' who sign an agreement of participation with Medicare have opted to accept Medicare's approved amount as payment in full. Therefore they may collect only the 20% copayment from the Medicare beneficiary.
Collecting the Copayment
The beneficiary's portion of the bill is called the copayment. Routine waiver of deductibles and copayments is unlawful because it results in false claims, violations of the anti-kickback statute, and excessive utilization of services paid for by Medicare. All Medicare providers are obligated to collect copayments from Medicare beneficiaries except in unusual circumstances. The federal government acknowledges that some beneficiaries are indigent and cannot make a payment, but routinely waiving the copayment is a serious violation of the law. The office of Inspector General, Department of Health and Human Services, has released a "special fraud alert" announcing its active investigating of providers who "routinely waive (do not bill) Medicare deductible and copayment charges to beneficiaries."11 Providers must make a "good faith" effort to collect these fees.
Psychologists should forgive the copayment only in unusual circumstances and should document the circumstances surrounding the non-collection. Do not routinely use "financial hardship" forms. Not collecting the copayment on a regular basis is considered, by the Inspector General, equivalent to submitting false claims.
Return to Top
Return to Table of Contents
