Comment letter to CMS targets projected Medicare payment cuts

A video presented by Katherine C. Nordal, PhD, APA executive director for professional practice, discusses the long, difficult battle ahead of us.

By Government Relations Staff

On July 19, the Centers for Medicare and Medicaid Services (CMS) published its proposed rule on the 2014 Medicare physician fee schedule. Although the proposed rule does not include payment rates for 2014, the American Psychological Association Practice Organization (APAPO) is cautioning psychologists that, under the Medicare payment formula, changes in the amounts allowed for overhead expenses for the new psychotherapy codes are likely to result in lower payment rates for the most commonly billed services next year.

In a Sept. 6 comment letter from APAPO to CMS (PDF, 150KB) about the proposed rule, Executive Director for Professional Practice Katherine C. Nordal, PhD, warned the federal agency that steep payments cuts would have a devastating impact on psychologists who participate in Medicare and beneficiaries who need psychological services. The letter is part of a multifaceted APAPO advocacy strategy to target continued Medicare payment cuts for practicing psychologists.



Medicare payment for psychotherapy codes

The Medicare payment formula consists of three components that represent work (cognitive effort), practice expense (overhead) and malpractice expense. Different values assigned to each component are combined and then multiplied by a yearly conversion factor to establish a payment amount for each service. All services are valued relative to one another.

Beginning in 2011, the psychotherapy codes were rewritten through the American Medical Association (AMA) Current Procedural Terminology (CPT®) process and revalued by the AMA RVS Update Committee (RUC). In this process the new codes had fewer practice expense (PE) inputs than previous psychotherapy codes did. However, since not all of the new psychotherapy codes were reviewed prior to the release of the 2013 final rule last November, CMS opted to not assign new values for the most commonly billed codes, and instead applied interim values to keep 2013 payments for mental health services at the 2012 level. 

When the 2014 final rule is issued in November, however, CMS is expected to announce its decision whether or not it will accept the new psychotherapy code work values recommended by the RUC. Along with changes in the work values, new PE values are expected to be applied to the psychotherapy codes since the AMA CPT/RUC review of the codes is now complete. 

Projections for 2014 

The CPT/RUC process did result in a recommendation from the RUC for higher work values, but this will not be enough to offset significant PE value reductions that APAPO anticipates in the most commonly billed codes. For example, assuming the higher work values are accepted, the 45-minute psychotherapy code (90834) could still experience a 4 percent reduction; the 30-minute psychotherapy code (90832) a 17 percent reduction; and the psychiatric diagnostic evaluation code (90791) as much as a 21 percent reduction. 

The estimated percentages are based on an analysis produced for the APA Practice Organization by Avalere Health, a highly respected health policy firm with expertise regarding the Medicare payment formula. Based on Avalere’s analysis, certain psychotherapy codes may actually experience increases, although no changes in any psychotherapy code payments are certain until CMS issues the final Medicare fee schedule for 2014 in November.  

Highlights of APAPO letter to CMS

In the APAPO comment letter to CMS, Nordal emphasized for CMS the “precipitously steep decline in clinical psychologist reimbursement under the payment formula” and requested that CMS delay further adjustments in PE, which “if implemented will devastate reimbursement for our members next year and ultimately impact beneficiary access to the services they provide.” 

The letter highlights APAPO’s continued concern with regard to whether the Medicare payment formula can ensure adequate reimbursement for psychological services into the future and to anticipated drastic reductions to primary services due to PE adjustments in 2014. Nordal’s comments focused on the impact that potential payment cuts will have on psychologists and the patients they serve. In the letter APAPO highlights that: 

  • The payment formula is failing to appropriately and fairly reimburse clinical psychologists by favoring services with growing technology and equipment costs. 
  • Clinical psychologist reimbursement for key new psychotherapy codes will be devastated if CMS implements new inputs for practice expense. 
  • Clinical psychologists are major providers of Medicare mental and behavioral services. 
  • Plummeting reimbursement will drive more psychologists out of Medicare, with a corresponding loss of beneficiary access to clinical psychologists’ services. 

In addition, the letter from APAPO discussed two changes contained in the CMS proposed rule: 

  • The Medicare Economic Index (MEI). The MEI Technical Advisory Panel is proposing changes to the calculation of the MEI. The proposed adjustment would include a shift in the portion of the weight for practice expense to the work component. APAPO supports this specific change to the MEI, as it will benefit mental health professionals whose work mainly involves cognitive services, although at best the gains would be modest.
  • The Physician Quality Reporting System (PQRS). APAPO objected to two major proposals for PQRS. First, it opposed eliminating claims-based reporting in calendar year 2017 for purposes of the 2019 PQRS payment adjustment, noting that psychologists do not have access to funding initiatives to invest in electronic health records. Second, despite its low threshold of reporting, APAPO advocated retaining measure #9, Major Depressive Disorder: Antidepressant Medication during Acute Phase, so that mental health providers will continue to have a sufficient variety of measures to choose from. 

Our ongoing advocacy

APAPO reacted to the first signs that changes in Medicare payment, including the PE methodology, were inappropriately lowering psychologists’ fees by winning congressional enactment of a 5 percent boost to psychotherapy payments, as part of the Medicare Improvements for Patients and Providers Act of 2008. This win was a “band aid” for the problem, since Congress does not normally intervene in the Medicare payment process; indeed, Congress chose not to renew the 5 percent increase in 2012. 

Over the past year, the APAPO has more intensely engaged both CMS and members of Congress with this growing payment problem for psychology.

In an ongoing dialogue with CMS, senior staff for APAPO met with Deputy Administrator Jonathan Blum on Aug. 28 to discuss concerns with the payment formula and to seek an end to the continued erosion of psychologists’ fees due to PE adjustments. Meanwhile, APAPO Government Relations lobbyists have been meeting with key health committee staff. Their ongoing advocacy efforts were bolstered by 330 constituent meetings during the 2013 State Leadership Conference in March. APAPO-PAC events have been targeted for members of Congress who sit on committees with Medicare jurisdiction. And as noted earlier in this article, APAPO has retained Avalere Health to quantify the problem for CMS and Congress.

However, since the payment formula is set in statute, CMS most likely believes that it does not have the authority to make significant payment adjustments absent congressional direction. APAPO is pursuing legislative options but must work carefully, since policy and political considerations must be taken into account to assure passage of a solution to the problem. 

It is important for APAPO members to understand that obtaining a legislative solution will be a long and difficult battle. APAPO does not expect this problem to be resolved before 2015. 

In November, the final rule on the 2014 Medicare fee schedule rule will be released. APAPO will continue to keep members up-to-date with information about its ongoing, top-priority advocacy efforts to protect psychologists’ reimbursement and related developments throughout the remainder of 2013.

Members with questions or feedback about Medicare payment should contact Government Relations staff for the APA Practice Organization by sending an email or calling (202) 336-5889. 

Current procedural terminology (CPT®) copyright 2011 American Medical Association. All Rights Reserved.