CMS proposes cuts to mental health services reimbursement

The Centers for Medicare and Medicaid Services (CMS) recently published its proposed rule on the 2011 Medicare fee schedule, and our regulatory team has completed an analysis of the lengthy and complex regulation. In addition to reflecting an expected cut to all services as a result of the Sustainable Growth Rate (SGR) formula and changes to the Physician Quality Reporting Initiative (PQRI) payments, the rule would significantly negatively impact psychological and other mental health services due to revisions to the medical economic index (MEI).

Specifically, CMS is proposing to “rebase” the MEI by linking it to data from the 2006 physician practice survey and “revise” it by making changes to nine expense categories such as medical equipment, chemicals, materials and supplies. The changes would result in an increase in practice expense values. However, because the agency is required to remain budget neutral in its rulemaking, CMS would impose a 4% across the board reduction to the work component for all services. CMS would not change the work values assigned to each code but instead lower the payment by reducing the conversion factor that the work value is multiplied by. The net result is that work-intensive specialties would see a decrease, while practice expense-intensive specialties would see an increase.

Psychologists and social workers would experience the deepest projected average cut of 5% because mental health services are most heavily weighted toward work values. Psychiatrists, emergency medicine doctors and anesthesiologists would each face a 3% cut. Radiation therapy centers (+8%), portable x-ray suppliers (+6%) and diagnostic imaging centers (+6%) would see the greatest increases because of their reliance on costly technology and overhead. In addition, psychology and social work are already scheduled to receive an additional 2% cut due to the second year implementation of 2009 practice expense adjustments, through which practice expense was also increased at the expense of mental health and other work-intensive specialties.

CMS has repeatedly made changes to Medicare formularies that have significantly devalued and reduced reimbursement for the time and expertise of health care professionals. It is simply wrong for CMS to continually cut reimbursement for cost-effective services to boost payment for expensive equipment and overhead that are driving the inflation of health care costs. Patients and providers cannot afford for the federal government to fail to address this recurring problem.

Since our primary opportunity to influence the rule is through the regulatory rulemaking process, APA first submitted a comment letter objecting to the cuts and arguing that psychologists should not be penalized for providing cost-effective services with minimal overhead.

Second, taking advantage of the Practice Organization’s lobbying presence and relationships on the Hill, we reached out to key allies and persuaded members of Congress to weigh in directly with CMS. Citizen psychologists worked quickly to signal grassroots support and were able to ensure the letter sent a strong message with an impressive bipartisan list of 22 signers. The Representatives have pressed Administrator Donald Berwick, M.D. to prevent an access crisis in Medicare mental health services by taking into consideration the disproportionate impact on mental health and more fairly apportioning the burden.

We are hopeful that CMS will reconsider the revision before the rule is finalized in November. However, if CMS refuses to recognize the disproportionate impact on mental health, we will not give up the fight. We will need your help and that of our allies to persuade Congress to step in.

Thanks for your ongoing support. While we face significant challenges in our efforts to ensure fair reimbursement for psychological services, we will continue to work together in a deliberate manner combining direct lobbying, grassroots mobilization and political giving to increase the prospects for the best possible result for psychologists and the patients you serve. We will keep you posted.