In the Spotlight

Medicare contractors have June 1 deadline for increasing psychotherapy payments

CMS has announced that the 5 percent Medicare payment restoration for psychotherapy services will take effect on June 1

by Government Relations Staff

May 31, 2010 — On May 10, the Centers for Medicare and Medicaid Services (CMS) announced that the 5 percent Medicare payment restoration for psychotherapy services will take effect on June 1. The Medicare payment increase is effective for all of 2010, retroactive to January 1.

The result of advocacy by the American Psychological Association Practice Organization (APAPO), Congress approved extending the payment restoration as part of the Patient Protection and Affordable Care Act passed in March. This provision of the recent law translates into an estimated $20 million in Medicare payments to psychologists. 

CMS has directed its contractors to ensure that the higher payments for Medicare psychotherapy services are made as of June 1. The federal agency is expected to provide instructions to contractors soon about how to reconcile Medicare claims submitted earlier in 2010 that were reimbursed without the 5 percent restoration.

It is important for psychologists to be aware of the psychotherapy services payment increase so that they collect the correct copayment from their Medicare patients. Beneficiaries are responsible for 45 percent of the total Medicare payment for outpatient mental health treatment in 2010.

The history of this ongoing APAPO advocacy effort began in 2007, when Medicare reallocated millions of dollars to increase payments for physician office visits involving evaluation and management (E&M) services. This action resulted from the federal agency’s “Five-Year Review” in 2005 of work relative values for E&M codes in the Medicare Fee Schedule. Every five years, CMS looks at certain codes and determines whether they are overvalued or undervalued for Medicare payment. 

The APA Practice Organization successfully argued that since psychologists cannot bill for E&M services, the 5 percent taken from psychotherapy services to increase payment for E&M services should be restored. Congress originally granted the psychotherapy payment restoration from mid-2008 to the end of 2010.

We continue to advocate strongly for Congress to extend the psychotherapy payment restoration through 2011. As part of its current Five-Year Review, CMS is assessing the value of the work that psychologists and other professionals do in providing psychotherapy services. Any changes in the work values for psychotherapy codes resulting from the 2010 Five-Year Review will go into effect on January 1, 2012.