Psychologists may be reimbursed to manage Medicare clients with physical illness.


By Paula Hartman-Stein, Ph.D.


If the pieces of a complex puzzle fall together, The Health Care Financing Administration (HCFA) appears poised to reimburse psychologists, social workers and other nonphysician health care providers for helping Medicare patients manage their physical illnesses.


            It would be a coup for psychology, if and when it happens.


            In the meantime, a number of bureaucratic hurdles need to be cleared in the hope that the new ruling may go into effect on Jan. 1, 2002.


            Psychologists would be able to assist patients and their families manage chronic and acute physical illnesses and, for the first time, be paid for intervening with such physical problems.


            Until now, psychologists have been reimbursed for medically necessary services only when a psychiatric diagnosis could be made in addition to the medical illness.


            During a February meeting of the Relative Update Committee (RUC) of the American Medical Association, RUC assigned work values to five of the codes based on technical skills, physical and mental effort, judgment, and stress associated with risk to the patient.  The “relative value of work” is determined by examining survey data presented by several groups, including the American Psychological Assn. and the National Assn. of Social Workers.  The dollar amount eventually assigned to each code is based on the work values in addition to practice costs, including malpractice insurance and overhead costs.

              After the April meeting, the RUC will most likely recommend the final codes and their monetary amounts to HCFA.  In November, HCFA is expected to publish the final codes in the Federal Register. 

            That will be a time to breathe easier.

            How did this startling development evolve?  What precipitated the American Medical Association’s approval to let it happen?

            By all indications, the reason for an expansion of  nonphysician codes in the Current Procedural Terminology (CPT) is the pressure applied by HCFA to create a “National Coding System.”   In order for the AMA’s CPT  to be accepted by HCFA, it must include procedures performed by nonphysician providers, says James Georgoulakis, Ph.D., the psychologist who serves on the RUC committee.

            The CPT manual, published by AMA, is purchased by the great majority of physicians and nonmedical providers and produces millions of dollars annually for AMA.  Copies vary from $37 to $79 in a market of about 756,000 physicians and an estimated 904,000 health service providers.

            Apparently, AMA, faced with jeopardizing a highly lucrative publication and fighting to continue excluding nonphysicians, is betting on the revenues it produces from the CPT manual as the wiser course.

In principle, a psychologist should be able to join a primary care practice and see patients for 15 minute sessions allowed in the proposed new health and behavior codes (see separate item).   The psychologist should be able to evaluate how the patient is managing his illness—for instance, his diabetic regimen, her smoking addiction, and bill for 15-minute increments, then turning the case over to the attending physician.  This would give the psychologist new responsibilities in a more rational partnership with other health professionals.

            It will be the beginning of fully integrating physical and emotional health care.  But first, practice cost values must be established to pay for each of the codes.  That hurdle is to be cleared at the April RUC meeting and must then await AMA concurrence which includes a recommendation to HCFA.            

            Email Dr. Hartman-Stein at


Hartman-Stein, P.E. (2001) Psychologists may be reimbursed to manage Medicare clients with physical illness. The National Psychologist, Vol. 10, No. 2, p 1,3.