Psychologist reimbursement: Gap between Medicare and private sector widens

The increasing gap between Medicare’s rates and private sector payments places beneficiaries’ access to mental health treatment at risk.

An updated analysis conducted by Healthcare Visions Inc. at the behest of the APA Practice Organization (APAPO) found that Medicare’s reimbursement rates to psychologists are 17 percent lower, on average, than private sector indemnity insurance reimbursement rates. This is a 2 percent increase in the gap compared to the 15 percent difference the firm found in a study conducted in 2013. The gap consists of a combination of low Medicare payment rates and the program’s prohibition on balance billing, which is typically allowed under private-sector plans. 

According to the analysis:

The low level of Medicare reimbursement is significant and indicates that psychologists will increasingly opt out of Medicare entirely or reduce the number of Medicare patients they are willing to see. This analysis is consistent with APAPO member surveys carried out in both 2008 and 2013, which found that many psychologists had left the program primarily due to low reimbursement rates. As Medicare reimbursements fall further below commercial indemnity payment, Medicare beneficiaries will find it harder to access mental health services.

The 2013 survey conducted by the APA Practice Directorate’s Practice Research and Policy office found that 26 percent of psychologists had stopped participating in Medicare — primarily due to low reimbursement rates — and that roughly half of those psychologists had left the program within the last five years. The gap between Medicare’s rates and private sector payments places beneficiaries’ access to mental health treatment at risk, a problem that is getting increasingly dire each day as the “Baby Boom” generation begins joining the program. 

APAPO is developing proposals to address the erosion in psychologists’ payments under Medicare’s flawed provider payment formula, with the goal of gaining the introduction of targeted legislation later this year. Restoring psychologists’ payments to appropriate levels will likely require changes in Medicare statute via an act of Congress. 

APAPO staff worked with attendees at the 2014 State Leadership Conference to advocate for Congress to change Medicare laws and policies to improve beneficiaries’ access to psychological services. 

On a separate but related issue, APAPO is also working to help forestall the 24 percent cut in Medicare reimbursement rates scheduled to occur April 1, 2014, as a result of the Sustainable Growth Rate (SGR) formula. APAPO and other health care advocacy organizations are pushing Congress to pass a bipartisan, bicameral proposal to permanently repeal the SGR formula. Meanwhile, we expect Congress will pass a last-minute stopgap measure to once again postpone the SGR payment cut from taking effect on April 1. We will keep members up-to-date about Medicare payment as information becomes available.