Medicare mid year update: Psychologists eligible for bonuses in 2nd year

By Paula Hartman-Stein, Ph.D.

Psychologists and social workers are now "at the table" preparing to participate in the Medicare pay- for- reporting bonus program expected to be extended by Congress in 2008.

Under the Physician Quality Reporting Initiative (PQRI) passed by Congress in 2006, eligible healthcare professionals who document quality care measures from a list of 74 recommendations will receive a 1.5 percent bonus payment in a lump sum in mid 2008. Because none of these initial measures directly pertain to services initiated by psychologists and social workers, no bonus payments for these groups are expected for this first round of financial incentives.

Under the auspices of the Center for Medicare and Medicaid Services (CMS) the consulting firm of Quality Insights of Pennsylvania convened an Expert Work Group for Psychology and Social Work consisting of Mirean Coleman, MSW, Craig Piso, Ph.D. and me.

Following a series of meetings beginning in March 2007, the work group reached consensus for three "best practice" measures to use with older adults when conducting an initial diagnostic mental health interview that include screening for depression and cognitive impairment and indication of patient acceptance for mental health treatment plans.

CMS posted the proposed measures on their website in June for public comment. CMS requires that the measures have the potential for quality improvement in an area of significance, have a valid evidence base, be useful to an evaluator of quality, and readily identifiable for CMS tracking and data collection. Voluntary implementation of the measures for non-physician practitioners is expected in 2008.

On December 20, 2006 the President signed the Tax Relief and Health Care Act of 2006 that authorized the establishment of the physician quality reporting system by CMS that will reward physician practices if they meet reporting requirements for care provided between July 1 and December 31, 2007.

According to a report by health economist Jim Hahn submitted to Congress in December 2006, the Institute of Medicine has called for variable payments based on quality. Tim Urbin, Ph.D. MBA (Tennessee) said that the trigger for the trend for pay-for-performance has been the overwhelming growth in Medicare and the projected effect on the U.S. economy over the next 40 years. "CMS is open to advice on pay for performance measures that will happen so we are best to be on board with helping the process."

Documentation and coding errors

According to an April report by the Office of Inspector General (OIG) 47percent of the mental health services allowed by Medicare in 2003 did not meet Medicare requirements, resulting in $718 million in improper payments. The types of errors uncovered included services that were miscoded, undocumented, medically unnecessary, or "incident to" violations.

In this study of mental health services, psychiatrists billed for 50 percent of the services, clinical psychologists for 17 percent, and licensed clinical social workers for 11 percent. Nurses and other physicians billed for the rest of the claims.

"Almost all miscoded individual psychotherapy claims lacked documentation to justify the time billed," according to the report. Reimbursement for psychotherapy services is based on face-to-face time with patients. In most of the records for miscoded services, no time was documented.

Undocumented services account for $356 million. Services in this category had no medical records, billing errors such as the wrong date on the claim form, or represented services not rendered.

Medically unnecessary services represented $106 million because the psychotherapy sessions were too long, the patient could not benefit from the treatments, sessions were too frequent, no clinical problem was documented in the record, or the patient cancelled the session.

According to the OIG report, ten of the 16 "incident to" services billed in error were conducted in a skilled nursing facility or a hospital, violating federal regulations.

Recommendations from the OIG include that CMS revise, expand, and reissue its former program memorandum on mental health services to increase emphasis that codes reported on claim forms be supported by careful and appropriate documentation.

Audits on the increase

According to James Georgoulakis, Ph.D., APA representative to the AMA’s Relative Update Committee- a new Medicaid audit program- the Medicaid Integrity Program (MIP) is moving forward, and providers may face audits on multiple levels.

In addition, the Payment Error Rate Measurement (PERM) audits of Medicaid are part of the Congressional mandate to calculate every state’s error rate, the first ever federal strategy to fight Medicaid fraud. Within the MIP, the OIG, and the PERM, the federal government has allocated $160 million dollars over the next five years to target fraud, abuse, and inappropriate documentation of healthcare claims.

Paula Hartman-Stein, Ph.D. is the Chairperson for the first Psychology and Social Work Expert Work Group, Quality Measures Project. She can be reached through her website,

From The National Psychologist (2007) Volume 16, No. 4, p. 4.