Psychology News in Medicare Today from the National Psychologist, 1998, Volume 7 Number 5.

by Paula Hartman-Stein, Ph.D.

  1. What is Consolidated Billing?

"Consolidated billing" refers to Medicare regulations in section 4432(b) of the Balanced Budget Act of 1997 that makes skilled nursing facilities responsible for billing Medicare for the entire package of services that its residents receive, other than a short list of excluded services such as those provided by physicians, nurse practitioners working in collaboration with a physician, and qualified psychologists. The regulations are part of an interim final rule on the Skilled Nursing Facility Prospective Payment System. Examples of services affected by consolidated billing are physical, occupational, and speech-language services as well as psychological services furnished by clinical social workers.

  1. How does "Consolidated billing" affect payment of psychological services to Medicare patients in a skilled nursing facility?

Under this regulation psychological services provided by clinical social workers would no longer be paid by Part B Medicare. Consolidated billing was modeled on the Medicare comprehensive billing or "bundling" requirement for inpatient hospital services that has been in effect for over ten years. Essentially the result is that clinical social workers could only be compensated by the skilled nursing facility itself. Because psychologists and psychiatrists are excluded from consolidated billing and can continue to bill Part B Medicare, skilled nursing facilities would save money by contracting with these providers for all behavioral health services.

  1. Are psychological services furnished as "incident to" the professional services of a psychologist affected by "consolidated billing?"

Yes, they are. The new regulation makes services furnished by supervisees or those "incident to" a psychologist subject to consolidated billing. This means that the nursing facility would be responsible for billing Medicare for such services. Private practice groups that have used "extenders" in nursing homes would not be able to bill Part B Medicare directly for their services. As with clinical social workers, "extenders" would be a cost to the facility, and it is less likely that the nursing homes would be willing to employ them when psychologists’ and psychiatrists’ services would essentially be of no direct cost.

  1. When is consolidated billing to be implemented?

Originally consolidated billing was to be effective July 1, 1998. On June 19,1998 HCFA agreed to a two-year delay of the implementation of the consolidated billing regulations affecting mental health services in skilled nursing facilities. Two factors have contributed to the delay : a major lobbying effort by the National Association of Social Workers and HCFA’s computer problems with moving into the year 2000.

  1. How has the announcement of the consolidated billing regulations affected behavioral health practices in nursing homes?

As a result of pending implementation of the new regulations, nursing home-based behavioral health practices have laid off social workers and psychology assistants who worked under psychologists’ licenses. Some companies who had depended heavily on social workers and psychology "extenders" have reportedly closed in some states such as in Ohio. After the delay in implementation was announced, some of the social workers have been brought back to work, according to sources in California.

  1. Are there any lobbying efforts in the works to fight consolidated billing as it affects mental health services in nursing homes?

Yes, NASW intends to use the delay to work to introduce a bill in January 1999 that will exclude social workers from the consolidated billing requirement.

  1. Can the trend toward prospective payment systems benefit psychologists in any foreseeable way?

Yes, beginning July 1998 and phased in over the next three years, skilled nursing homes will be receiving more of their federal funding based upon the acuity level of their residents. Acuity levels are determined based on Resource Utilization Groups (RUGS), the nursing home equivalent of Diagnostic Related Groups (DRG’s), used in acute care settings. Ratings of mood and behavior play a role in determining a patient’s RUG’s score. Identified psychological problems at the time of admission can ostensibly impact the rating of patient acuity and therefore result in higher payment to the facility. Because Medicare Part B does not pay for "fishing expeditions" or routine psychological consults on new admissions, it would appear to be in the best financial interest of the institution to pay behavioral health providers to perform screening evaluations as patients are admitted. This may be a new avenue of employment opportunity for psychologists skilled in geropsychological assessments.

Paula Hartman-Stein, Ph.D. is a consultant and clinical psychologist specializing in treating geriatric clients and their families in Akron, Ohio at the Center for Healthy Aging. One of the seven Technical Consulting Group experts who worked on the psychology RBRVS study at Harvard, Paula also is a member of the APA task force on qualifications for specialist and generalist in geropsychology. She recently edited Innovative Behavioral Healthcare for Older Adults: A Guidebook for Changing Times. She can be reached at or through her website

Back to CHA Main page