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New Pressures On Financial Reimbursement Require Psychologists’ Action

U.S. CapitolAs we reported last week, the politics and process affecting Medicare reimbursement have changed significantly with the recent enactment of the Budget Control Act.  House and Senate leaders have finished appointing twelve members to the Joint Select Committee on Deficit Reduction, which is tasked with identifying at least $1.2 trillion in savings over the next ten years.  If the Joint Committee fails to reach an agreement that can pass in both chambers, automatic cuts to Medicare and other programs would result, slashing provider reimbursement by up to an additional 2%.

The Joint Committee is expected to make changes affecting the Medicare program.  Psychologists must make their voices heard now to remind Congress that without legislative action they will face a 5% cut to psychotherapy payments in addition to the 29.5% Sustainable Growth Rate (SGR) cut to all services scheduled for 2012. Psychology first won enactment of the 5% psychotherapy payment restoration in 2008 after the Centers for Medicare and Medicaid Services (CMS) implemented a cut that disproportionately reduced reimbursement for mental health providers to offset boosted funding for evaluation and management (E&M) services, which psychologists are ineligible to provide.  The provision has been extended several times and is set to expire at the end of 2011.  Working with provider allies, we have also been able to prevent the SGR cut in past years, but the new dynamics have increased the stakes and difficulty.

Your profession needs you to take action NOW to ensure the Joint Committee and other members are reminded of these critical priorities.

Take Action!

Click here to urge your Senators and Representative to halt Medicare cuts to psychological services

If you are not able to reach the Legislative Action Center from the above link, please visit  If possible, please take action by Friday, August 26.

Grassroots feedback is also extremely important to our advocacy efforts, so we would very much appreciate it if you would e-mail (email address below) or fax (202-336-5797) us any substantive responses you receive from your Representative or Senators.


I am writing as a psychologist and constituent to urge you to extend the Medicare mental health add-on through 2012 and prevent the 5% cut that would harm my patients and practice.

Congress has repeatedly found extension of the psychotherapy payment restoration necessary to address the unintended impact of CMS’s last Five-Year Review on access to Medicare mental health services.  An extension is necessary until completion of the current Five-Year Review of psychotherapy codes, which has been delayed into 2012.

Practitioners are small business people, and we simply cannot afford to see patients for less.  Every year my cost of providing services goes up while I wait to see if the threat of another automatic cut will drive many like me out of the Medicare program altogether.

As Congress begins to consider changes to the Medicare program, please make my patients and the mental health extender a priority, as well as halting the 29.5% Sustainable Growth Rate (SGR) cut.  Thank you for your time and consideration.

Additional Background:


To ensure the viability of the Medicare outpatient mental health benefit, Congress should extend through 2012 the restoration of cuts to Part B mental health services made in 2007.

Mental Health ExtenderCongress restored payments temporarily but they now need to be extended. Through the Medicare Improvements for Patients and Providers Act of 2008, Congress partially restored the cuts made by the Centers for Medicare & Medicaid Services (CMS) “Five-Year Review” through 2009. Subsequent laws then extended the restoration through December 2011. The valuation of psychotherapy codes in the 2011 Five-Year Review has been delayed into 2012. Congress should pass new legislation to extend payments through 2012, until the Five-Year Review is completed.

Effect on Beneficiaries. Extending psychologist payments cut by the Five-Year Review is crucial to protecting access to Medicare mental health services. Psychologists and social workers provide almost all of the Medicare psychotherapy and testing services, but many have indicated that they may have to reduce their caseloads or leave Medicare if they are faced with these reimbursement cuts. The cost of protecting mental health services is very low, increasing costs by only $30 million per year.

Cut By MEI Rebasing.  A CMS technical advisory panel will be asked to examine the effect of a 4% cut to Medicare part B reimbursement for psychologists in January 2011 due to “rebasing” of the Medicare Economic Index (MEI). In the 2011 fee schedule, CMS used more recent survey data that showed practice expense and malpractice became a larger share of the payment formula while provider’s time became smaller. This increased payments for some services, particularly of professionals who utilize expensive technology.  Due to budget neutrality requirements, CMS reduced other reimbursement work values, which hit services of psychologists and social workers the hardest because they are typically provided at lower cost and lower overhead.

These cuts are not related to the Sustainable Growth Rate. Psychologists were saved from a second and even more devastating reduction when Congressional action halted the projected 25% SGR cut through December 31, 2011. Ultimately Congress must replace the flawed SGR formula with one that responsibly and permanently addresses provider payments.

Psychologists will leave Medicare. In a 2008 survey, 11% of psychologists reported that they have dropped out of Medicare participation and a primary reason cited was low reimbursement rates.

Jeff Cook, J.D.
Director of Field & State Operations
American Psychological Association Practice Organization
750 First Street, NE Washington, DC 20002
(202) 336-5875 (Office)
(202) 336-5797 (Fax) (click to verify and reveal email)

Republished with permission: APAPO

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