GAO criticizes how Medicare payment rates are set

GAO criticizes how Medicare payment rates are set


By Paula Hartman-Stein, Ph.D.


National Psychologist, Vol 24, No. 4, p 18.  July/August 2015

The powerful committee of the American Medical Association (AMA) that recommends what Medicare pays physicians and psychologists is under new criticism and scrutiny despite efforts in recent years to make its procedures less opaque.

After a series of articles in the media about the secrecy of the 31-member Relative Update Committee (RUC), it now publishes minutes, dates and locations of meetings and votes on current procedural terminology (CPT) codes, although individual votes are not revealed.

In May the Government Accountability Office (GAO) reported to Congress on the lack of transparency of the methods and the survey data used by the RUC. To ensure accuracy in the reimbursement process, Congress enacted the Protecting Access to Medicare Act of 2014 that included a provision for the GAO to study the RUC’s procedures.

Based on an audit from July 2014 to May 2015, the GAO said, “First, physicians who serve Medicare beneficiaries – including members of the RUC and specialty societies – may have potential conflicts of interest with respect to the outcomes of CMS’ process for setting payment rates. Second, we found some of the RUC’s survey data to have low response rates, low total number of responses, and large ranges in responses.”

Medicare sets payment rates for about 7,000 physicians’ services based on values assigned to each service. Values reflect estimates of the level of work, practice expenses and malpractice costs. Work values are based on the time needed, the intensity of a service and the mental effort and judgment, technical skill, physical effort and psychological stress required. The RUC does not release the survey data to the public.

Misvaluations can create distorted incentives to over- or under-provide services.

Health and Behavior Codes

pay less than psychotherapy

                Codes of particular interest to psychologists are the Health and Behavior (H and B) Assessment Codes, CPT 96150-96154, that describe services to assess factors that may affect the recovery or progression of a physical health problem or illness. This includes assessment and treatment for biopsychosocial factors that do not directly treat the illness and the focus is not on mental health issues.

According to Tony Puente, Ph.D., a voting member of CPT committee, “The Health and Behavior Codes were developed by a collaboration of healthcare divisions within APA. This was psychology’s entry into providing services to non-mental health or neurological disorders – essentially approximately 95 percent of healthcare.”

In a paper written when the codes were developed in 2002, Jim Georgoulakis, Ph.D., APA representative to the RUC, wrote, “The assignment of a work value for the services indicates that these are procedures that should only be performed by physicians, psychologists, or other qualified health care professionals. From a federal reimbursement perspective, monies to pay for these services will be paid out of the medicine pool rather than the psychiatric pool. The application of these codes is expected to be for individuals not meeting the criteria for a psychiatric diagnosis, thus allowing patients without mental health problems access to these services.”

“The H and B codes are huge and a paradigm shift for psychology. It is our gate to ALL of healthcare,” Puente said.

As psychologists move into primary care settings, the H and B codes become increasingly relevant. But, sources who did not agree to be named said the use of H and B codes has been flat over the last few years, and many psychologists do not use them. Puente said, “I continue to be surprised that psychologists have not endorsed them more.”

Their relatively low work value may be a key reason. Using an Ohio example to translate the work values to dollars, the reimbursement for a 45-minute psychotherapy session is $83.31 compared to $58.29 for a 45-minute H and B session.

Federal legislation requires CMS to identify services likely to be misvalued, establish a process to validate the accuracy of relative values and collect data to help establish more accurate values. Savings of 1 percent of Medicare payouts are expected from the revision of relative values in 2016. Medicare payments to physicians totaled about $70 billion in 2013.

Despite a regulation that CPT codes be reviewed every five years, the H and B codes have not been reviewed in 13 years. Because of confidentiality agreements with the AMA, APA representatives declined to comment on whether any review is planned in the near future.