2013 Medicare proposed rule projects payment cuts

APA comment letter raises strong concerns with CMS

Aug. 30, 2012—On July 30, the Centers for Medicare and Medicaid Services (CMS) published its proposed rule on the 2013 Medicare physician fee schedule, which includes important information for psychologists who treat Medicare beneficiaries. CMS is currently projecting that psychologists will suffer on average a 3 percent reduction in their Medicare payments for 2013.

Payment rate cuts for psychological services result from:

  • A 2 percent reduction due to the ongoing practice expense adjustment and other factors; and 

  • A 1 percent decline to offset Medicare payments for new post-discharge “transitional care management” (TCM) services. Because CMS is required to remain budget-neutral in its rulemaking, the new TCM services require a reduction in payment for all other Medicare provider services.

CMS is proposing a new code for TCM services to reduce Medicare beneficiary readmission rates by covering gaps in care related to transferring patients from inpatient settings back into the community. APA’s objection is that the TCM code proposed by CMS is limited to use by physicians and other healthcare professionals who bill Medicare for evaluation and management (E/M) services, thereby systematically excluding psychologists.

In its Aug. 28 comment letter to CMS (PDF, 77KB), APA took strong issue with the fact that psychologists would be ineligible for reimbursement under the new code even though they provide transitional care management services. The letter from APA Executive Director for Professional Practice Katherine C. Nordal, PhD, asked CMS to add a second code without the E/M visit requirement for use by psychologists and other non-physician practitioners who provide TCM services but are not allowed to bill for E/M. 

2013 payment cuts not limited to psychology

Though professional psychology has been disproportionately affected in the past for providing less overhead-intensive services, the 2013 proposed rule does not single out psychological services for decreases. Forty health care specialties will have their 2013 payments reduced in order to fund the cost of the new transitional care management services. Another eight will incur a two-percent reduction. Even though psychology was not singled out for payment cuts, the comment letter to CMS from Dr. Nordal highlighted the “precipitous decline” in Medicare reimbursement rates for psychotherapy and other psychological services over the past decade.

Physician Quality Reporting System

Under the proposed rule, CMS will continue implementing quality improvement initiatives for Medicare providers via the Physician Quality Reporting System (PQRS) (PDF, 172KB). PQRS will transition from offering bonuses for successful participation to imposing penalties for the failure to successfully participate beginning in 2015. Participation in PQRS for calendar year 2013 will serve as the basis for payment adjustments under the new system in 2015.

The APA comment letter (PDF, 77KB) to CMS expressed “strong concerns” that the language in two of the proposed new quality reporting measures for 2013 fails to recognized psychologists’ scope of practice and threatens their ability to successfully participate in PQRS for 2013. Both measures involve timely follow-up to the coordination of care for adult patients with major depressive disorder who have co-morbid conditions. The APA letter specified revisions to the wording of the two measures needed to reflect the services that psychologists provide.

Sustainable Growth Rate factor

CMS’ proposed rule for 2013 also reflects the 27.4 percent cut that will take effect on Jan. 1 unless Congress takes action on the Sustainable Growth Rate (SGR). The APA Practice Organization (APAPO) made finding a permanent fix to the SGR formula a legislative priority this year and a focus of grassroots advocacy with members of Congress during the 2012 State Leadership Conference. APAPO lobbyists and member psychologists continue to meet with members of Congress who sit on key House and Senate health committees to address reductions in payments for psychological services and flaws in the SGR system.

Psychotherapy codes

The proposed rule does not address CMS’ recent review of psychotherapy codes. As part of their Five-Year Review, CMS agreed to evaluate psychotherapy codes to determine whether they are undervalued relative to other services covered in the Medicare fee schedule. APAPO members participated in the survey portion of the AMA/Specialty Society Relative Value Scale Update Committee valuation process. Payment rates for psychological services are being finalized for 2013, but will not be announced until the final fee schedule rule is released in November.

Brief history of Medicare psychotherapy rates

CMS slashed Medicare psychotherapy payment rates by seven percent as part of its Five-Year Review in 2006. APAPO and grassroots psychologists gained four laws restoring five percent of the payment from July 1, 2008 through Feb. 29, 2012, but that restoration was not included in the March 2012 payroll tax law that postponed the SGR cut through the end of 2012.

Expected in early November, the final rule on the 2013 Medicare fee schedule rule will be effective for Medicare services provided on or after Jan. 1, 2013. APAPO will continue to keep members up-to-date with information about the final fee schedule and related developments throughout the remainder of 2012.

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