CMS releases final 2012 Medicare Fee Schedule rule

Rule includes reimbursement changes related to psychological services

By Government Relations staff

November 17, 2011—On November 1, the Centers for Medicare and Medicaid Services (CMS) released its final rule on the 2012 Medicare fee schedule. The rule includes several payment changes that affect reimbursement for psychological services.

Sustainable Growth Rate Cut

The most substantial payment reduction involves a portion of the Medicare formula known as the Sustainable Growth Rate (SGR). Although slightly better than the 29.5 percent reduction projected earlier in the year, the SGR cut for 2012 will be 27.4 percent unless Congress takes action to block it.

The 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. Congress has blocked the SGR cut 12 times since 2001. Over time, the postponement has resulted in an ever-increasing percentage by which provider payments would drop if the SGR cut took effect.

The APA Practice Organization (APAPO) has lobbied Congress throughout 2011 to halt the use of the SGR. Through grassroots mobilization of psychologists in the Federal Advocacy Network and meetings with key congressional offices, APAPO has worked to educate members on Capitol Hill about the severe consequences of threatened cuts to reimbursement for both patients and providers.

Leading members of Congress on both sides of the aisle are predicting passage of legislation that would delay implementation of the SGR cut for 2012. But as always, the challenge remains how to offset the cost of the delayed cut’s cumulative effect as long as the SGR formula remains in place.

Changes in Practice Expense

In 2009, CMS announced changes beginning in 2010 to Medicare's payments for the practice expense portion of numerous services including those commonly billed by psychologists. Members of more than fifty physician and non-physician organizations participated in a survey of the indirect costs associated with providing certain services, after which CMS began a four-year phase in of revised values. While reimbursement for a few services commonly billed by psychologists has gone up, including psychological and neuropsychological testing by computer, values for most other such services have gone down, including diagnostic interviews, psychotherapy and other forms of psychological and neuropsychological testing.

The rule projects a 3 percent overall reduction in reimbursement for psychological services in 2012, followed by a final 2 percent reduction when the phase-in completes in 2013. This reduction is not subject to change by Congress and would not be eliminated by any congressional action on the SGR or an extension of the psychotherapy payment restoration.

Failure to Adopt Higher Value for Psychoanalysis

After reviewing the psychoanalysis code (90845) in September, the American Medical Association (AMA)/Specialty Society Relative Value Update Committee (RUC) recommended that the code’s work value be increased from 1.79 to 2.10. This change in the work value represents on average about 10 dollars more for a single psychoanalysis session.

CMS, however, declined to adopt this recommendation for 2012 and is maintaining the code’s current value while other codes in the psychotherapy family are under review by the AMA’s CPT Editorial Panel. The federal agency stated that it wants to consider the value for the psychoanalysis code relative to any revised psychotherapy codes once their work values also have been reviewed by the RUC. CMS anticipates reviewing the psychotherapy family of codes, including psychoanalysis, for any changes in work values effective for 2013.

Changes to the Physician Quality Reporting System

Since 2007, Medicare has offered incentive payments to eligible professionals, including psychologists, who report data on designated outpatient service measures as part of a program known as the Physician Quality Reporting System (previously known as the Physician Quality Reporting Initiative (PQRI)). The 2012 final Medicare fee schedule rule contains several changes pertaining to the PQRS:

  • CMS is eliminating the six-month reporting period for individual measures reported through claims or a registry based on the rationale that data from a 12-month reporting period is more meaningful to patient experience and care. The six-month reporting period will still be allowed for measures groups that are reported through a registry.

  • A new measures group for dementia has been created that can only be reported through a registry due to the way in which the measures must be analyzed.

  • The incentive payment for eligible professionals who successfully report on PQRS measures in 2012 will be 0.5 percent of all allowed Medicare charges.

  • The measures most commonly reported by psychologists will continue to be part of the PQRS in 2012. These measures are:

# 9 - Major Depressive Disorder: Antidepressant Medication During Acute Phase for Patients with MDD

#106 – Major Depressive Disorder: Diagnostic Evaluation

#107 – Major Depressive Disorder: Suicide Risk Assessment

#128 - Preventive Care and Screening: Body Mass Index Screening and Follow-Up

#130 - Documentation of Current Medications in the Medical Record

#131 - Pain Assessment Prior to Initiation of Patient Therapy and Follow-Up

#134 - Screening for Clinical Depression and Follow-Up Plan

#173 - Preventive Care and Screening: Unhealthy Alcohol Use – Screening

#181 - Elder Maltreatment Screen and Follow-Up Plan

#226 - Measure pair: a. Tobacco Use Assessment, b. Tobacco Cessation Intervention  

See Changes to Medicare reporting program coming in 2012 for additional details about the PQRS program in 2012.

More on Medicare Advocacy

Medicare reimbursement remains a top priority of the APA Practice Organization. APAPO has been hard at work on the legislative front, mobilizing more than 15,000 constituent messages through the Legislative Action Center, coordinating meetings of key contact psychologists with members of the Joint Committee on Deficit Reduction in districts and in Washington, DC and providing testimony to the House Ways and Means Committee.

In addition to advocating for Congress to avert the SGR cut, one of APAPO’s legislative advocacy priorities involves seeking continuation of restoration payments for Medicare psychotherapy services in 2012.

Since 2007 APAPO has successfully sought restoration of payment amounts that psychologists lost when budget neutrality required CMS to offset an increase in payment for evaluation and management services. APAPO’s lobbying on this issue resulted in Congress authorizing an additional five percent payment for psychotherapy services. With the current restoration scheduled to expire on December 31, APAPO is continuing to lobby Congress to extend the additional five percent through 2012.

The outcome of the psychotherapy payment extension may well depend on whether Congress soon considers a larger Medicare payment bill – such as a bill to delay implementation of the SGR cut for 2012. If so, many members appear to favor adding payment extenders to the bill. If not, psychology advocates expect no legislation to extend provider payments, including those for psychological services, to proceed on its own.  


For more information contact the APAPO Government Relations office by email or by phone at (202) 336-5889.