Government Relations and Communications Staff

February 8, 2007 — The APA Practice Organization’s top legislative priority for 2007 is reversing the steep cuts in payment for Medicare mental health services that took effect on January 1. This article provides psychologists with the latest developments.

Q. Why are psychologists experiencing a large cut in Medicare payments for 2007?
A. In November 2006, the Centers for Medicare and Medicaid Services finalized a proposal to increase Medicare payment for “evaluation and management” services (E & M) services effective January 1, 2007.

By law, changes in Medicare payment procedures must be neutral in budgetary impact. To fund the E & M reimbursement increases, CMS decided to cut work relative value units (work RVUs) for all Medicare services and to change the methodology for calculating practice expense RVUs. The result was a 9 percent decrease in Medicare payments for mental health services that took effect on January 1.

CMS boosted E & M reimbursement to encourage physicians to spend more time interacting with patients. E & M services include functions such as establishing diagnosis and treatment options and coordinating care. Psychologists are not eligible to bill using the E & M codes, even though we have argued to CMS for years that psychologists are well qualified to provide an array of E & M services.

Q. What is the APA Practice Organization doing to fight these cuts?
A. It is wrong to reduce mental health services reimbursement to pay for E & M increases. We are working on both the legislative and regulatory fronts to achieve our top legislative goal of reversing the 2007 cuts in Medicare payment for psychological services.

Our key messages: The steep Medicare cuts create a tremendous hardship for consumers and providers of psychological services and should be reversed. Further, psychologists should be made eligible to bill for E & M services.

We will seek a payment change that is retroactive to January 1, 2007.

Ongoing advocacy efforts include:

Taking our message directly to the chairs of congressional committees with Medicare program oversight. This advocacy builds on the APA Practice Organization’s efforts to build bipartisan congressional support in 2006 for psychology’s case.

Seeking a legislative vehicle to achieve the necessary fix, whether a freestanding bill or a portion of a legislative proposal. We expect that to occur no later than midyear 2007 when Congress revisits the annual payment formula for Medicare.

Preparing more than 300 psychology leaders to press for changes in Medicare payment when they meet with their Senators and Representatives during the APA Practice Organization’s March 2007 State Leadership Conference.

Marshalling further support from grassroots psychologists. Throughout the summer and fall of 2006, psychologists sent nearly 21,000 emails and letters to Members of Congress encouraging them to stop the Medicare cuts slated for 2007. We are renewing our grassroots advocacy with the 110th Congress and will intensify this effort once a suitable legislative vehicle is available.

Dialogue with CMS. Representatives of the APA Practice Organization (APAPO) met with CMS officials in late January. The discussion focused on issues that APAPO raised last summer shortly after CMS proposed the payment cuts that ultimately took effect in 2007. Psychology’s representatives once again asserted psychologists’ qualifications for using many of the E & M codes. While CMS is listening, timely resolution of this matter is more likely to result from a congressional directive.

Q. How are Members of Congress responding to psychology’s message?
A. Members are sympathetic to the need for Medicare beneficiaries to have adequate access to outpatient mental health services. Some have begun to appreciate the injustice of decreasing payment for psychological services to offset an increase in E & M services. These legislators realize that psychologists are being required to finance Medicare services that they are excluded from providing.

Q. Are psychologists the only Medicare providers whose payments have been cut?
A. No. Provider payment cuts scheduled for 2007 came from two sources: the regulatory action that CMS took in 2006, and the application of an annual payment formula used to determine Medicare payment levels. Psychologists originally faced 14 percent in total cuts for 2007 — 9 percent attributable to the CMS action, and 5 percent attributable to application of the annual payment formula. In December 2006, legislators passed a bill that eliminated the 5 percent portion of cuts resulting from the payment formula — leaving the 9 percent portion for mental health services that took effect on January 1.

Psychologists and social workers experienced the deepest cuts in Medicare payments for 2007 resulting from CMS’ action. But other providers also have experienced a drop in reimbursement. For example, Medicare payments to pathologists dropped by 6 percent for 2007, while chiropractors are receiving 8 percent lower reimbursement for their Medicare services.

Q. Did the APA Practice Organization help eliminate the 5 percent portion of the Medicare cut for 2007?
A. Yes. The APA Practice Organization was among the numerous health associations that urged the 109th Congress to stop the Medicare cuts for 2007.

The congressional “fix” related to the annual payment formula applies only to 2007. Barring a change in the Medicare payment formula, the APA Practice Organization will need to continue battling annual payment reductions slated for future years. We are urging Congress to reevaluate the current system whereby payment levels get cut every year and to consider other options.