New law averts 24-percent cut to Medicare reimbursement rates

A whopping 24-percent reduction is postponed for one year, and a 0.5 percent Medicare payment increase extends through the end of 2014.

By Government Relations staff

President Obama has signed a new law – Protecting Access to Medicare Act of 2014 (H.R. 4302) – averting the 24-percent Sustainable Growth Rate (SGR) cut in Medicare provider payments that was scheduled to take effect on April 1. The bill, whose passage came down to the wire, was negotiated by Senate Majority Leader Harry Reid, D-Nev., and Speaker of the House John Boehner, R-Ohio.

The new law postpones the SGR cut until March 31, 2015, and extends a 0.5 percent Medicare reimbursement rate increase through Dec. 31, 2014. A December 2013 law known as Pathway for SGR Reform Act of 2013 postponed the SGR cut for the first three months of 2014 and increased Medicare reimbursement by 0.5 percent through March 31 of this year.

A significant provision of the law delays adoption of the International Classification of Diseases-10 (ICD-10) code set from Oct. 1, 2014, until Oct. 1, 2015. The practical effect is that practitioners should continue to use the ICD-9-CM code set for coding and billing purposes until the new October 2015 deadline for using ICD-10-CM.

When passage of the Protecting Access to Medicare Act of 2014 was pending, the Centers for Medicare and Medicaid Services instructed Medicare Administrative Contractors (MACs) to hold through April 14 all claims for Medicare services delivered between April 1 and April 14. For services delivered on or before March 31, as well as those delivered April 15 or later, the MACs are expected to process and pay related claims under normal procedures.

Among its additional provisions, the Protecting Access to Medicare Act of 2014 creates a Medicaid demonstration program based on the Excellence in Mental Health Act (S. 164, H.R. 1263) supported by the APA Practice Organization (APAPO). The provision seeks to improve access to comprehensive mental health and substance use treatment services for individuals, particularly those with a serious mental illness.

The provision creates a two-year, eight-state demonstration program to stimulate the development of entities that meet newly established federal criteria for “Certified Community Behavioral Health Clinics (CBHCs). Certification as a CBHC requires delivery of a broad range of services, including outpatient mental health services, crisis mental health services and psychiatric rehabilitation. CBHCs will be eligible for enhanced Medicaid payment.

Psychology Still Seeks SGR Repeal

While the one-year delay in the SGR cut is a victory, Congress still needs to repeal this flawed Medicare cost containment mechanism. Lobbyists for APAPO have been working diligently with legislators to gain permanent repeal of the SGR, and we're seeing signs of progress.

But since leaders have not yet agreed on how to pay for the permanent SGR repeal bill (SGR Repeal and Medicare Provider Payment Modernization Act of 2014, H.R. 4015/S.2000), a one-year delay provides lawmakers additional time to work toward enacting a lasting solution. APAPO will continue to work toward repeal of the SGR formula and its replacement with a reasonable cost containment mechanism.

From January 2013 until now, psychologists have sent nearly 16,000 messages to congressional offices calling for postponement of scheduled SGR cuts and repeal of the SGR system. Thanks to our grassroots members for this crucial support. We look forward to your continued success in having psychology's voice heard on Capitol Hill.