Budget Control Act of 2011 adds pressure to Medicare reimbursement

New law creates a deficit reduction committee widely expected to focus significant attention on Medicare payment

By Government Relations Staff

September 15, 2011—Congress addressed the nation’s latest debt challenge on August 2 by passing the Budget Control Act of 2011, which President Obama signed the same day. The bipartisan agreement increased the federal debt limit to avert a default, instituted more than $900 billion in spending cuts and future spending caps, and set forth a process to ensure that Congress achieves further deficit savings amounting to more than $1 trillion.

With enactment of the Budget Control Act, the politics and process affecting Medicare reimbursement change significantly. The legislation created a joint deficit reduction committee, comprising 12 members appointed by House and Senate leaders and tasked with identifying at least $1.2 trillion in savings over the next ten years. If the Joint Committee fails to reach an agreement by November 23, 2011 that can pass in both chambers, automatic cuts to Medicare and other programs will result, slashing provider reimbursement by up to an additional 2 percent.

The Joint Committee is widely expected to focus significant attention on Medicare in general and payments in particular, especially because of the consequence if it fails to come to an agreement. If Congress and the President are unable to meet the savings target by January 15, 2012, the federal government would automatically cut both defense and non-defense spending and reduce Medicare provider payments by up to 2 percent.

If the Joint Select Committee on Deficit Reduction chooses to include a fix of the impending 29.5 percent Sustainable Growth Rate cut scheduled for January 1, 2012, they must offset the cost of that fix with reductions in other government accounts. Visit the Legislative Action Center to remind Congress that without legislative action they will face a five percent cut to psychotherapy payments in addition to the 29.5 percent Sustainable Growth Rate (SGR) cut to all services scheduled for 2012.

Psychology first won enactment of the five percent psychotherapy payment restoration in 2008 after the Centers for Medicare and Medicaid Services (CMS) implemented a cut that disproportionately reduced reimbursement for mental health providers to offset boosted funding for evaluation and management (E&M) services, which psychologists are ineligible to provide. The provision has been extended several times and is set to expire at the end of 2011. Working with provider allies, the APA Practice Organization has also been able to prevent the SGR cut in past years, but the new dynamics have increased the stakes and difficulty.

Email or fax (202) 336-5797 Government Relations staff with any substantive responses you receive from your Representative or Senators.