APA Practice leads fight to halt Medicare MEI cuts

The proposed rule on the 2011 Medicare fee schedule would have a significantly negative impact on psychological and other mental health services

by Government Relations Staff

August 31, 2010 — The Centers for Medicare and Medicaid Services (CMS) has released its proposed rule on the 2011 Medicare fee schedule. The bottom line: Much is at stake for practicing psychologists. 

In addition to reflecting a substantial cut to all services as a result of the Sustainable Growth Rate (SGR) formula, along with changes to the Physician Quality Reporting Initiative (PQRI) payments, the rule would have a highly negative impact on psychological and other mental health services due to revisions to the medical economic index (MEI). The MEI, one of many factors used to determine Medicare payment rates, is a means of measuring productivity based on two categories — the professional’s time and practice expense. 

As the agency has done before, CMS is proposing to disproportionately cut reimbursement for mental health and other services, by as much as 5 percent overall for psychologists, to offset the ever-increasing cost of equipment, technology and overhead in the health care system. 

As a result, APA Practice Organization and APA are pursuing a comprehensive strategy that integrates regulatory and legislative advocacy. 

Since our primary opportunity to influence the CMS rule is through the regulatory rulemaking process, APA first submitted a comment letter objecting to the cuts and arguing that psychologists should not be penalized for providing cost-effective services with minimal overhead. A copy of the letter is available online (PDF, 22 KB).

Second, taking advantage of the APA Practice Organization’s lobbying presence and relationships on the Hill, we reached out to key allies and persuaded Representatives Lois Capps (D-CA), Paul Tonko (D-NY) and Tammy Baldwin (D-WI) to circulate a Dear Colleague letter and weigh in directly with CMS. Citizen psychologists worked quickly to signal grassroots support and were able to ensure that the letter sent a strong message from an impressive bipartisan list of 22 signers. The Representatives have pressed CMS Administrator Donald Berwick, MD to prevent an access crisis in Medicare mental health services by taking into consideration the disproportionate impact on mental health and more fairly apportioning the burden. A copy of the letter is available online (PDF, 114 KB)

We are hopeful that CMS will reconsider the revision before the rule is finalized in November. However, if CMS refuses to recognize the disproportionate impact on mental health, we will not give up the fight. While we face significant challenges in our efforts to ensure fair reimbursement for psychological services, we will continue to work together in a deliberate manner combining direct lobbying, grassroots mobilization and political giving to increase the prospects for the best possible result for psychologists and the patients you serve. 

Our advocacy message in a nutshell

CMS has repeatedly made changes to Medicare formulas that have significantly devalued and reduced reimbursement for the time and expertise of health care professionals. It is simply wrong for CMS to continually cut reimbursement for cost-effective services to boost payment for expensive equipment and overhead that are driving health care cost inflation. Patients and providers cannot afford for the federal government to fail to address this recurring problem. CMS must recognize the disproportionate impact of such changes in its rulemaking. If the agency refuses to do so, Congress must step in and require it.

Additional details on the proposed MEI cuts

CMS is proposing to “rebase” the MEI by linking it to data from the 2006 physician practice survey and “revise” it by making changes to nine expense categories such as medical equipment, chemicals, materials and supplies.  The changes would result in an increase in practice expense values. 

However, because the agency is required to remain budget neutral in its rulemaking, CMS would impose a 4 percent across-the-board reduction to the work component for all services. The agency would not change the work values assigned to each code but instead lower the payment by reducing the conversion factor by which the work value is multiplied. The net result is that work-intensive specialties including psychology would see a decrease, while practice expense-intensive specialties would see an increase.

Psychologists and social workers would experience the deepest projected average cut of 5 percent because mental health services are most heavily weighted toward work values. Psychiatrists, emergency medicine doctors and anesthesiologists would each face a 3 percent cut. 

Radiation therapy centers (+8 percent), portable x-ray suppliers (+6 percent) and diagnostic testing facilities (+6 percent) would see the greatest increases because of their reliance on costly technology and overhead. In addition, psychology and social work are already scheduled to receive an additional 2 percent cut due to the second-year implementation of 2009 practice expense adjustments.