by Government Relations Staff

December 11, 2006 — As its last act before adjourning for 2006, Congress passed the Tax Relief and Health Care Act (H.R. 6111) on December 9. The massive bill included a section eliminating the 5 percent sustainable growth rate (SGR) Medicare cut that would have been imposed on all Medicare providers beginning on January 1, 2007. The scheduled SGR cut resulted from a controversial automatic annual payment formula for Medicare services designed to contain program costs.

“Preventing the SGR cut is an important victory for psychology and the other provider groups that worked on the issue in the closing hours of the 109th Congress,” says APA Executive Director for Professional Practice Russ Newman, PhD, JD.

Psychology helped stopped similar cuts in 2003 and again in 2005. Yet, Newman observes, practitioners will face future reductions unless federal legislators change the provider reimbursement formula. There are signs that the 110th Congress will look closely next year at ways to improve the Medicare program. “We will be suggesting that having annual across-the-board reimbursement cuts to contain program costs is not a good way to operate the system,” Newman says.

In addition to halting the SGR payment cut for 2007, the Tax Relief and Health Care Act also allows for a 1.5 percent bonus-incentive payment for providers who voluntarily report quality measures from July 2007 through 2008 in a process outlined in the bill. Psychologists are among the Medicare providers who will be eligible for these payments.

Reporting for 2007 will involve quality measures now being used in the CMS Physician Voluntary Reporting Program (PVRP). Although many of the measures were developed by a physician consortium, non-physicians will be able to report data under any measure that applies to their services. APA is reviewing the PVRP measures now in place to determine how psychologists could use them. For 2008, the program will involve quality measures established through a consensus-based process. APA will closely monitor the process to ensure that appropriate measures are developed for psychology.

Despite considerable effort, psychology was unable to gain inclusion in this legislation a provision to block the additional 9 percent Medicare payment cut for mental health services effective January 1. This reduction is part of a federal regulation resulting from a “five-year review” of Medicare payment that the Centers for Medicare and Medicaid Services (CMS) published in mid-2006. “We knew from the start that turning back the five-year review cut prior to Congress adjourning was an uphill battle,” explains Dr. Newman.

As a result of its review, CMS scheduled an across-the-board cut for 2007 in one component (the work relative value unit) of Medicare reimbursement for all provider services in order to enable the federal agency to increase payment for evaluation and management (E & M) services. The E & M payment hike is intended to increase physician “face time” with patients.

By law, CMS must maintain budget neutrality in the Medicare program. So in order to increase reimbursement for E & M services, CMS is decreasing payment for other Medicare services.

“While it is of little comfort, all Medicare providers — not just psychologists — are facing these cuts to varying degrees,” explains Doug Walter, JD, legislative counsel for the APA Practice Organization. Unfortunately, the effect may extend beyond Medicare. Walter says that because many commercial health plans follow Medicare’s lead, payments for psychologists who don’t treat Medicare patients could also be lowered.

Although the proposal for E & M payment increases originated with CMS, legislators are poised to take up the issue. “This gives us an opportunity to work with key members of the new Congress to advocate for either taking psychologists out of the E & M cut since we cannot currently use the E & M codes, or granting psychologists access to these codes,” observes Dr. Newman.

Psychologists perform many E & M functions now, including establishing diagnosis and treatment options, analyzing tests and coordinating care. Yet CMS thus far has barred psychologists from receiving payment for E & M services. Its argument: since psychologists cannot bill for each and every E & M code that exists, they should not bill for any of these codes.

Removing mental health service providers — psychologists and social workers — from the 5-year review cut of 9 percent would have a negligible effect on Medicare outlays, reducing by only $30 million the $4.5 billion that CMS must make up in budget neutrality dollars to allow for the E & M reimbursement increase.

According to Walter, the APA Practice Organization already has gained congressional support to stop the Medicare cuts that apply to mental health. “We’ve met with many members of key committees to assist us in this effort. We’re building bipartisan support for 2007.”

Grassroots activity also remains vital to the profession’s advocacy efforts. Psychology advocates are emphasizing the adverse effect on Medicare patients if their access to mental health care is reduced because of steep cuts in payments for mental health services. From the summer of 2006 through November, psychologists sent approximately 20,000 emails to their Members of Congress using the online Legislative Action Center.