2012 Medicare Reimbursement Update

December 29, 2011 — After a highly contentious week of political wrangling, Congress passed and President Obama signed legislation (HR 3765) that blocks two key Medicare payment cuts from taking effect on January 1.

The new law enacted on December 23 prevents the 27.4 percent Sustainable Growth Rate (SGR) cut and extends the 5 percent psychotherapy payment restoration through February 29, 2012. Legislative leaders also agreed to appoint conferees to expedite negotiations between the House and Senate toward a measure addressing the payroll tax and Medicare reimbursement for the remainder of 2012.

Based on earlier action by the Centers for Medicare and Medicaid Services (CMS), a 3 percent payment cut due to changes in the “practice expense” portion of Medicare reimbursement is scheduled to take effect on January 1. This previously announced reduction is not addressed in HR 3765 and remains in place.

HR 3765 marks the thirteenth time Congress has blocked the SGR cut since 2001 and the fourth time the APA Practice Organization (APAPO) has secured the psychotherapy extender since 2008. Practitioners faced a particularly challenging climate this year in light of Congress’s unprecedented focus on deficit reduction and the broadening divide between legislative leaders.

But professional psychology argued successfully that the psychotherapy payment extension is needed in light of the current CMS Five Year Review of psychotherapy codes, which continues into 2012.

The battle is not over. Even with Congress on recess until January, the APA Practice Organization is urging continued advocacy by practicing psychologists to prevent drastic reductions in Medicare reimbursement beyond the current two-month reprieve in payment cuts.

More on Medicare Payment

The SGR payment formula ties Medicare provider payments to factors related to the national economy. In recent years, the formula would have operated automatically to cut most provider payments if Congress had not acted to postpone the scheduled payment cuts. With Congress having blocked the SGR cut several times over the past decade, the recurring postponement has resulted in an ever-increasing percentage by which provider payments would drop if the SGR cut took effect (now up to 27.4 percent).

As a result of ongoing APAPO advocacy, Congress passed the Medicare psychotherapy extender three times prior to 2011 for a total of $105 million in Medicare payments for psychotherapy services, two-thirds of which went to psychologists.

Sustained Advocacy in 2011

Throughout the year, seeking appropriate Medicare reimbursement levels for psychological services has remained a top priority of APAPO. Professional psychology has employed a combination of direct lobbying by our Government Relations team, grassroots mobilization of practitioners through the Federal Advocacy Network, and participation in political giving facilitated by AAP/PLAN, psychology’s national political action committee.

Grassroots psychologists were instrumental in helping to secure the recent blockage of Medicare payment cuts by working tirelessly throughout the year. Psychologists used the online Legislative Action Center at our Practice Central website to send more than 34,000 messages in 2011 urging members of Congress to reject steep Medicare cuts.

Hundreds of psychology leaders advocated for appropriate Medicare reimbursement in meetings with their members of Congress during the APA Practice Organization’s 2011 State Leadership Conference. And this fall, on Capitol Hill and in districts across the country, psychologists participated in meetings with key members of Congress who served on the Joint Select Committee on Deficit Reduction and additional House leaders to win support for the Medicare psychotherapy extender.

We will continue to keep members apprised of further developments related to Medicare reimbursement in the PracticeUpdate e-newsletter from the APA Practice Organization.

Please email us or call toll-free at 1-800-374-2723 with any questions.