Prognosis not all bad for Medicare fees

By Paula Hartman-Stein, Ph.D.

In order to cope with pending 9% reductions of their fees in 2007, psychologists who bill Medicare will need to invent some strategies for stress reduction. Repeating the adage, "It’s always darkest before the dawn," may help.

Psychologists may take solace they are not the only healthcare professionals experiencing lower reimbursement in 2007. "Everyone is taking a hit," said James Georgoulakis, the APA representative to the Relative Update Committee (RUC) of the American Medical Association.

"It is ridiculous (editor: he actually said pure BS) to think that money is taken only from Psychology to fund Evaluation and Management services, codes available to physicians," said "We have a pot of money allocated by Congress to pay for Medicare services, so when certain clinical codes have an increase in their work value, the monetary value of other codes is reduced to keep the overall budget the same," Georgoulakis explained. Congress mandates Medicare’s budget neutrality, also known as a zero sum game.

On December 9 Congress passed the Tax Relief and Health Care Act of 2006 (HR 6111), resulting in a last minute elimination of the 5% cut for all Medicare providers. Before the legislation passed, psychologists expected cuts as deep as 14%. In response to that news, significant number of psychologists considered opting out of the Medicare program, according to an informal Internet survey of 498 psychologists conducted in early December by the National Alliance of Professional Psychology Providers (NAPPP). John Caccavale, Ph.D., Director of NAPPP, reported that only slightly more than a third of the psychologists who voted said they would continue to take Medicare patients. "The survey is not a random one, so the exact percentages of psychologists expecting to leave Medicare is unclear, but it would be significant and will impact the program," said Caccavale.

But gloom and doom predictions about additional reductions in fees for mental health services under Medicare that may result in subsequent neglect of the mental health needs of older adults may be premature.

According to Georgoulakis, "Many psychologists are taking a short- sighted view of the situation. Temporarily it looks bad for the patient and the doctor, but the fact that Evaluation and Management codes received an increase in their work values signifies the start of future improvements of the value of other cognitive services," he said.

In the Medicare system, reimbursement is determined by work values plus overhead and malpractice costs.

In past years CMS has made retroactive reimbursement increases throughout the year as a result of adjustments to practice expenses for clinical services and from pressure from members of Congress. "We do not have final, final amounts of reimbursement for all of the codes open to psychologists for 2007," said Georgoulakis. "We are never finished."

According to Joe Casciani, Ph.D. (San Diego), Senior V.P. of Vericare, a company that hires psychologists to work in long term care facilities, "Psychologists need to do a much better job showing the value of behavioral health services in order to gain better reimbursement."

According to Caccavale, "Creating alliances with organized Medicine, social workers, labor unions, and consumer groups are essential strategies when advocating for improved reimbursement." To participate in NAPPP’s advocacy efforts, write to .

The Tax Relief and Health Care Act includes a provision for a 1.5% bonus-incentive payment for the second half of 2007 for providers who voluntarily report quality measures determined by the Centers for Medicare and Medicaid (CMS). According to a Congressional Research Service report for Congress updated December 12, 2006, a number of government sponsored pay-for-performance initiatives are currently underway in physicians’ offices, hospitals, and nursing homes.

According to Nick Cummings, Ph.D., past president of APA, "The future of healthcare reimbursement will become increasingly performance-based, something that good, effective clinicians do not have to fear. The hope is that one day we will be freed from arbitrary, picayune bean counter case management and rewarded for producing successfully on behalf of our patients. The only casualties will be marginal, ineffective providers who drain the healthcare system without results."

Paula Hartman-Stein, Ph.D. is a clinical psychologist and consultant at the Center for Healthy Aging in Kent, Ohio. Past president of the Society of Clinical Geropsychology of APA, she is involved in advocacy efforts on a regional and national basis. She can be reached through her website,

National Psychologist Vol. 16, No. 1, p. 3.