Replace SGR with a System that Values Cost-Efficient Psychological Services
Congress must replace the flawed Medicare Sustainable Growth Rate (SGR) formula and alter the existing favoritism of expensive technology-based specialty services over lower-cost mental health and primary care. Psychologists will be hit with a devastating reimbursement reduction unless Congress halts a 32% cut scheduled for January 1, 2013.
Costs Must Be Controlled. Our nation must find a way to control Medicare costs while still meeting beneficiary needs. However, the SGR formula that drastically cuts provider payments across the board is not the answer and is flawed.
Existing System Penalizes Psychologists and Other Lower-Cost Providers. Medicare over the years has incentivized greater spending leading to an explosion of costs. It has favored higher cost, technology-dependent, specialties while undermining and undervaluing low-overhead psychologists and primary care doctors. Whatever replaces the SGR should not harm these cost-efficient providers.
New System Should Be Fair. The American Medical Association proposes to repeal the SGR and implement a five-year period of stable, positive Medicare payments. It envisions transitioning to an array of new payment models designed to enhance care coordination, quality appropriateness and costs. This is an appropriate proposal with which to start the discussion.
Psychology Has Been Cut Repeatedly. Despite Congressional restoration of 5% for psychotherapy services, since 2008 psychologist reimbursement has fallen by 3% for the most frequently billed psychotherapy codes (50 minute therapy). While these cuts are related to practice expense reductions and Medicare Economic Index adjustments, they are in addition to cuts made in previous years. Now psychologists face still lower payments with Congress’s failure to extend the 5% restoration “mental health add-on” in the Middle Class Tax Relief and Job Creation Act of 2012. This extender was intended to last until the next CMS “Five-Year Review” rates for psychotherapy become effective in January 2013.
Effect on Beneficiaries. Halting cuts to psychologist payments is crucial to protecting access to Medicare mental health services. Psychologists and social workers provide almost all of the Medicare psychotherapy and testing services, but many have indicated that they may have to reduce their caseloads or leave Medicare if they are faced with further reimbursement cuts.
Psychologists Will Leave Medicare. About 28,000 psychologists are Medicare providers but another 3,000 who once participated have left the program due largely to low reimbursement rates.
February 2012
