Recent action on rate cuts is part of broader advocacy agenda

APA's recent action in two states exemplifies its larger strategy of addressing psychologists' reimbursement rate concerns on multiple fronts

by the APA Practice Organization

November 16, 2006 — Many practitioners are concerned by the low fees paid by managed care companies and want to know what the APA Practice Organization is doing to address the situation. Recent examples include developments in Ohio and Massachusetts.

This summary advises members of actions we have taken on rate cuts as part of a larger overall strategy to improve economic realities for psychologists, while making quality care more accessible to patients.

Meeting with Anthem articulates psychology's concerns
Last summer in Ohio, Anthem Blue Cross Blue Shield suddenly announced that it was cutting reimbursement rates for psychologists on its panel by 20 percent, effective November 1, 2006. This action followed years of a relatively good working relationship with the Ohio Psychological Association (OPA).

OPA promptly contacted the APA Practice Organization. We discussed with OPA whether Anthem’s network was adequate at the current rates, Anthem’s marketing representations about its network, Anthem’s explanations for the rate cut, and whether the company had followed its provider contract when lowering the rate.

From these discussions, the most notable issue that emerged was the apparent insufficiency of Anthem’s network even before the rate cut. This dearth of providers was evidenced by the telltale sign of desperate patients saying that they had called many other psychologists on the list and nobody was available to give them an appointment. OPA then surveyed network adequacy in two areas of Ohio and confirmed serious issues with the number psychologists available and wait times for an appointment.

On September 29, OPA and the APA Practice Organization met with Anthem to discuss these and other concerns. We were mindful, however, that antitrust law restricts the ability of member-based professional associations to discuss rates with insurers in any manner that would give the appearance that the organization was attempting to negotiate on behalf of its members or a subset of its members.

Accordingly, we made clear to Anthem that APA and OPA understood that they could not, and did not intend to, negotiate or bargain with Anthem on fee-for-service rates. That having been said, we also made it clear that we believed there were significant problems in the network that limited the accessibility of psychological services to Anthem subscribers.

At the meeting, Anthem stated that the rate cut was necessary to control rising health care costs in order to keep health insurance affordable, that the company had not heard complaints about patient access and that it did not project significant access problems as a result of the rate cut.

We countered that it is difficult for psychologists to accept “rising health care costs” as a rationale for cutting their rates because their rates have been flat for so many years, and because of the high compensation of top company executives. We noted that the stigma associated with mental illness and lack of clear information about how to complain may account for a low complaint rate. Further, the company’s overall treatment of psychologists may result in them having a panel that looks good on paper, but with psychologists unwilling to prioritize Anthem subscribers relative to other managed care panels in which they may participate.

It will be critical going forward to have OPA continue to expand its survey of patient access. If those surveys reveal serious access problems, the next step would be for OPA to then take its survey results to the Ohio Insurance Commissioner appointed by newly elected Governor Ted Strickland, PhD, to the media, and to Anthem.

Massachusetts payers reverse planned rate cuts
In more recent news, the APA Practice Organization recently learned that the Harvard Pilgrim Healthcare Plan (Harvard Pilgrim) and United Behavioral Health (UBH) have announced that they will not go forward with a planned rate cut for its Massachusetts panel of mental health professionals. In fact, these payers will raise certain rates.

The Massachusetts Psychological Association (MPA) contacted the APA Practice Organization shortly after hearing of the proposed rate cut to inform us of the issues and discuss MPA’s strategy for addressing the transition to UBH, including the proposed rate cut. (The cut was precipitated by UBH’s parent company, United Health Care purchasing PacifiCare, the current mental health carve-out company for Harvard Pilgrim.) MPA also had discussions with APA's general counsel to assure compliance with the antitrust laws.

MPA built upon its years of working with Harvard Pilgrim and UBH, in conjunction with an established Mental Health Coalition, on quality of care and other issues. MPA and the Coalition presented various concerns to Harvard Pilgrim and UBH, including current problems with patient access, network membership and provider satisfaction, as well as how various proposed changes in their transition plan might relate to these issues.

Both Harvard Pilgrim and UBH were interested in working collaboratively with MPA to resolve these concerns. In advising MPA of its decision on rates, a UBH official noted the company’s appreciation for MPA’s ‘willingness to meet with us and to share your honest impression of the impact we might have had on the marketplace.’

The broader agenda
Our advocacy with OPA and Anthem in Ohio, and with MPA in Massachusetts, fits into the APA Practice Organization’s larger strategy of addressing the reimbursement rate concern on several fronts. One front involves addressing the managed care rate issue by those means that are legally available to us as a member-based professional association. The second consists of direct efforts to increase reimbursement for psychologists in Medicare that are available to us because of the antitrust exception allowing us to petition the government. Yet a third front involves expanding practice opportunities beyond the traditional third party payer mental health system.

Despite the major constraint of antitrust law discussed above, the APA Practice Organization has employed a variety of legally available approaches to the issue of low rates. For example, in our legal test case, Virginia Academy of Clinical Psychologists v. CareFirst Blue Cross Blue Shield, we were able to take advantage of an exception to antitrust laws that allowed us to petition the courts on an issue that otherwise might raise antitrust concerns if approached in the marketplace.

In that case, we alleged that the company reduced psychologists’ rates in violation of the provider contract, based on false representations about the justification for the cut and with the knowledge that the rate cut would decimate the provider network. We also alleged that the company defrauded consumers by promising a large, stable panel of mental health providers, when they knew that the impending rate cut would in effect create a “phantom panel.”

Litigation resulted in a settlement of the breach of contract claims that gave our psychologist and consumer plaintiffs everything they could have won at trial. The court, however, would not let the case move beyond that settlement to address the fraud claims, apparently based on the traditional view that a managed care company’s relationship with consumers is just a business relationship in which wrongs are righted only through breach of contract remedies.

A more recent example is our involvement in the managed care class actions in federal court in Miami. In that litigation, a nationwide class of psychologists (and other non-physician health care professionals) are suing over 70 managed care companies for conspiring to inappropriately reduce and delay reimbursement. The first two settlements in that case, with CIGNA and Humana, have resulted not only in $15 million in settlement funds, but also a number of policy changes that relate to the reimbursement rate issue.

For example, the settling companies have agreed to promptly update their panel listings when psychologists advise that they are no longer on the panel. This will address the “phantom panel” problem of psychologists who have resigned from the panel having difficulty getting their names removed from the provider directory.

We believe that some companies fail to remove those names to make their panels look adequate when, in fact, low reimbursement and other poor treatment has caused many of the psychologists on the panel list to leave the network. Accurate provider directories put pressure on the company to treat psychologists well enough to keep them on the panel.

The settlements in the case also include provisions limiting the frequency of rate reductions, and creating greater transparency regarding the setting of out-of-network rates.

The second prong of our strategy involves the APA Practice Organization working to increase psychologist reimbursement in Medicare. For example, after a dozen years of effort, the Practice Organization persuaded Medicare that the calculation for reimbursement of psychological and neuropsychological testing should include a “professional work value.” We are also educating local Medicare carriers about the proper implementation of these codes, which will result in payment increases of 26 to 69 percent when properly used.

Conversely, in the recent past we have successfully fought proposals to reduce overall Medicare rates for psychologists by 4.4 percent. We are currently fighting 2007 Medicare payment rates that result in even larger overall reductions in reimbursement. At the same time, we are working to enable psychologists to access the CPT Evaluation and Management (E & M) codes.

In the final prong of our strategy, the APA Practice Organization has worked to expand psychologists’ opportunities in order to reduce their dependency on traditional managed care work and to give patients and others broader access to the important professional training, skills and experience that licensed psychologists have to offer.

Below are examples of the Practice Organization’s varied, ongoing efforts to expand practice opportunities beyond managed care, beyond mental health, and even beyond health services to position psychologists as experts in behavior:

  • Providing psychologists with tools and resources to help them start, build, manage, market, grow and diversify their practices, including:
    Creation of the Center for Professional Development at, the APA Practice Organization’s Web portal. The Center will be dedicated to providing practical tools and information to help practitioners with these practice development goals. The Center will also provide high quality, reliable resources for psychologists seeking continuing education in practice management and development, in many aspects of financial management and business, and in evidence-based practice.

More than 100 articles about practice management and marketing available on

APA convention programming on “Effective and Ethical Marketing Strategies for Psychologists”

Business of practice conferences offered in collaboration with state, provincial and territorial psychological association that cover topics including fee-for-service practice, marketing, practice finance, technology for practitioners, HIPAA compliance and more.

Websites for Psychologists: a tool to help psychologists create their own websites for solo and group practices.

Psychologist Locator Service at that connects consumers directly with thousands of participating psychologists who have already signed up

  • Promoting psychologists as parent coordinators who aid courts and families in high-conflict divorces by resolving disputes over the implementation of custody orders.

  • Expanding hospital practice opportunities, as exemplified by our support of the Psychology Shield advocacy in California to enforce legislation that gives psychologists the right to direct patient care in state hospitals.

  • Creating opportunities on the medical side through advocacy that gave psychologists the ability to bill Health & Behavior CPT codes, and working with a major insurance company to maximize the use and value of psychologists in a healthcare delivery system that better integrates behavioral healthcare with primary care.

  • Prescription privileges advocacy, which has allowed nearly 40 psychologists in New Mexico and Louisiana to become the first non-military psychologists trained and certified to write prescriptions for their patients who need psychotropic medications. This will continue to expand opportunities for psychologists both outside of and within managed care.

  • Educating the business community about the value of psychology and the many roles psychologists play in improving employee health and well-being, as well as organizational performance, through the Psychologically Healthy Workplace Award Program. Our corporate relations activities include representation on advisory committees for employer-based groups such as the Health Enhancement Research Organization, Institute for Health and Productivity Management, and Partnership for Prevention.