Historic law includes psychotherapy payment restoration

by Government Relations Staff

March 31, 2010 — As part of the health care legislation President Obama signed into law on March 23, Congress approved extending the 5 percent Medicare psychotherapy payment restoration for all of 2010 retroactive to January 1. This is an important victory on a payment issue critical to practicing psychologists.

The Centers for Medicare and Medicaid Services (CMS) engages in a process known as the five-year review where the federal agency looks at certain codes and determines whether they are overvalued or undervalued. As a result of the last five-year review in 2007, CMS made steep cuts in payment levels for psychotherapy and other psychological services in order to offset increases in payment for evaluation and management services.

In 2008, the American Psychological Association Practice Organization (APAPO) successfully persuaded Congress to restore payments for psychotherapy: the only codes that received legislative relief. The 2008 Medicare law increased payments for psychotherapy by $45 million for 18 months, from July 1, 2008 to December 31, 2009.

In the months ahead, APAPO will continue to push for Congress to extend our payment restoration provision through the end of 2011 in Medicare legislation.

Further postponement of SGR cut on hold

Meanwhile, the House and Senate adjourned for the two-week April recess without sending legislation to President Obama to continue a temporary postponement of the scheduled 21.2 percent Sustainable Growth Rate (SGR) cut for 2010. The SGR payment formula ties Medicare payments to factors related to the national economy. In recent years, the formula has resulted in scheduled reductions in most provider payments.

A law that temporarily postpones the 21.2 percent SGR cut expires on March 31.

On March 17, the House passed by voice vote the Continuing Extension Act of 2010 (H.R. 4851), which includes a provision to postpone the SGR cut through April 30. Senate leaders sought unanimous consent to pass the measure on March 26, but they were unable to move forward in the midst of objections related to the deficit impact of other items in the legislation, such as unemployment insurance. The Senate has scheduled an April 12 vote to end debate on the bill.

As a result, the SGR payment cut takes effect for a short time beginning on April 1 until Congress returns and seeks retroactive action after April 12. CMS has instructed its contractors to hold claims containing services paid under the Medicare Physician Fee Schedule for the first 10 business days of April. This means that the Medicare Administrative Contractors (MACs) will not begin processing claims until after April 14, giving Congress a couple days to take further action on the SGR cut.