New law extends 5 percent psychotherapy restoration and postpones SGR cut

By Government Relations Staff

December 16, 2010—President Obama signed The Medicare and Medicaid Extenders Act of 2010 (HR 4994) on December 15, 2010, halting the 25 percent Sustainable Growth Rate (SGR) cut for one full year through the end of 2011.

The new law includes a hard-fought one-year extension of the 5 percent psychotherapy payment restoration. This will ensure the continuation of $30 million in Medicare reimbursements for psychotherapy services in 2011. There is a backlog of claims, and for this reason the bill also provides financial resources to the Centers for Medicare and Medicaid Services (CMS) to process payments for claims bottlenecked since January 1, 2010.

The Medicare and Medicaid Extenders Act of 2010 passed the Senate by unanimous consent on December 8 and the House by a vote of 409 - 2 on December 9. 

The Medicare 'sustainable growth rate' or 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.

The history of the ongoing American Psychological Association Practice Organization (APAPO) advocacy effort for 5 percent psychotherapy payment restoration began in 2007, when Medicare reallocated millions of dollars to increase payments for physician office visits known as evaluation and management (E&M) services. This action resulted from CMS’ “Five-Year Review” of work relative values in the Medicare Fee Schedule. Every five years, the agency looks at certain codes and determines whether they are overvalued or undervalued for Medicare payment.

The APA Practice Organization successfully argued that since psychologists cannot bill for E&M services, the 5 percent taken from psychotherapy services to increase payment for E&M services should be restored. Congress originally granted the psychotherapy payment restoration from mid-2008 to the end of 2010.

Medicare reimbursement and psychologist payment issues remain top priorities for the APAPO. While we continue to face a challenging environment and complex battles on payment issues, this victory demonstrates the power of concerted advocacy – whereby grassroots psychologists work closely with APAPO to achieve favorable legislative outcomes.