New Medicare Law Benefits Practitioners

by Government Relations Staff

January 28, 2004 -- In addition to including a prescription drug benefit for seniors and problematic efforts to increase privatization in Medicare, the Medicare Prescription and Reform Act of 2003 helps psychologists who treat Medicare beneficiaries in several ways:

An adjustment to the formula used to determine payment under the physician fee schedule saved psychologists and other practitioners from the 4.5 percent decrease in reimbursement originally expected for 2004. The immediate result of the revision made by Congress is that psychologists will receive increased payments of 1.5 percent in both 2004 and 2005. The APA Practice Organization worked with AMA and many other health associations to promote the fee schedule change.

In the future, psychologists will see less volatility as the fee schedule will be calculated using a 10-year average of the country's gross domestic product. The new method of calculation will make reimbursement rates less sensitive to yearly changes in the nation's economic health.

Geographic adjustments have been made to bring reimbursement levels for practitioners in rural areas closer to the national average. This adjustment, which applies through 2006, will supplement the 1.5% increase in overall reimbursement rates. Practitioners in Alaska will receive the highest increases as a result of changes to the geographic price cost index.

The law requires the Centers for Medicare and Medicaid Services (CMS), along with local carriers, to develop a process that allows practitioners to correct minor errors or omissions in claims without having to file an appeal.