December 1st, 2010

Medicare cuts: detrimental to both psychologists and clients

The Centers for Medicare and Medicaid Services (CMS) issued a final payment rule on November 2 that affirmed a 21 percent Medicare reimbursement cut effective December 1 and another four percent decrease on January 1, 2011. This decision comes in spite of stringent lobbying efforts from the psychology community.

CMS uses the Medical Economic Index (MEI), which measures a medical professional’s time and practice expenses and the Sustainable Growth Rate (SGR), a formula that considers practice costs, Medicare enrollment and real gross domestic product per person to determine Medicare rates. According to CMS, from 2001 through 2015, physician costs are estimated to rise 40 percent, while Medicare payments will decrease 42 percent.

The American Psychological Association’s Practice Organization (APAPO) has led the efforts to ease the financial crunch these cuts will impose on psychologists. Peter Newbould, director of congressional and political affairs at the APAPO, notes that the MEI rebasing disproportionately cuts reimbursement for mental health providers than for other providers. “This penalizes psychologists who have low overhead practices and rewards others who use expensive imaging machines,” he says. “Effectively, we have psychologists who haven’t gotten a raise for Medicare work in years.” In 2006, the APA asked Congress, in the interest of “having equitable care for mental health,” to restore five percent, which they have done for the last four years.

Newbould says, “If the cuts are not changed, it will be another tsunami wave coming at psychologists’ practices. We are reasonably optimistic that when Congress comes back in session, they will delay the SGR and will extend the Medicare psychotherapy five percent boost.”

Milton J. Marasch, Ph.D., president of the Vermont Psychological Association (VPA), VPA’s insurance chair and private practitioner in Shelburne, Vt., reports that 60 percent of his practice is with elders and those with disabilities who are on Medicare. He says that a 21 percent cut and another potential four percent decrease in January would be “devastating.” An independent provider to nursing homes, Marasch cites the dilemma these institutions would face should the cuts be enacted. “I don’t know how they could continue to pay psychologists,” he says. “There will be a humongous access difficulty for clients.”

In his leadership role at VPA, Marasch hears negative feedback from colleagues. “One psychologist who is a Medicare provider says he’ll have to drop it. For every one who tells me this, how many are not saying so out loud?” he asks. In spite of receiving some cost of living adjustments to his Medicare rates, Marasch points out that he is still reimbursed at rates lower than 2006 levels. “I am looking to see Congress do something to fix the problem, rather than patch it,” he says.

Peter Oppenheimer, Ph.D., who belongs to a group practice in Barrington, R.I., says that the rate-setting process has become politicized. In his role as Rhode Island Psychological Association (RIPA) representative to the APA, chairman of the legislative and insurance and managed care committees and chairman of the board of psychology for RIPA, he is intimately familiar with the political volatility surrounding the Medicare reimbursement issue. He notes that Congress’s attempts to achieve budget neutrality and pressure from special interest groups influences its decisions, often to the detriment of psychologists.

For the most part, psychologists are the “essence of small business,” according to Oppenheimer. “It’s difficult to invest [in a practice] when you don’t know when the rug will be pulled out from under you,” he says. “We’ve been rescued a number of times, but we’d like to have a commitment for a long term rationale. It does the public no good at all that the system has gotten so political.”

Oppenheimer points out that in recent years, Rhode Island has focused on creating integrated and collaborative care. The instability of Medicare rates impedes the ability to motivate and engage psychologists in this new model of care as well as those in private practice. “We need to provide the infrastructure and services clients deserve,” he says. “Psychologists are unsure about what their commitment can be to Medicare clients.”

Steven C. Atkins, Psy.D., adjunct professor at Dartmouth Medical School and owner of SCA Psychological Services, P.L.L.C. in Lebanon, N.H., emphasizes the negative effect these cuts will have on patient care, particularly those who live “outside the big city bubble.” He says, “Psychologists are the largest providers of psychotherapy in rural settings. It will be more difficult finding qualified psychologists to see these Medicare clients.”

Our graying society only complicates matters. “As our population ages, psychologists can’t keep taking Medicare clients. Even those who want to can’t afford it. We are mindful that potential access to qualified healthcare will get worse unless we find some way to work this out,” he says. “This issue is not so much about putting money in our pockets, but about people in need of service. Will qualified psychologists be around to serve them?”

Atkins adds, “I am all about fiscal responsibility but when you talk about healthcare, we’re talking about $30 million a year. That’s not a whole lot of money when you talk about trillions in the budget for other things. People need the type of services we offer. They are potentially life-saving.”

Twenty-two members of Congress have voiced their support for the APA and proposed a revision to the MEI, which would link it to more recent practice data and would make changes to the expense categories.

The Centers for Medicare and Medicaid Services (CMS) issued a final payment rule on November 2 that affirmed a 21 percent Medicare reimbursement cut effective December 1 and another four percent decrease on January 1, 2011. This decision comes in spite of stringent lobbying efforts from the psychology community.

CMS uses the Medical Economic Index (MEI), which measures a medical professional’s time and practice expenses and the Sustainable Growth Rate (SGR), a formula that considers practice costs, Medicare enrollment and real gross domestic product per person to determine Medicare rates. According to CMS, from 2001 through 2015, physician costs are estimated to rise 40 percent, while Medicare payments will decrease 42 percent.

The American Psychological Association’s Practice Organization (APAPO) has led the efforts to ease the financial crunch these cuts will impose on psychologists. Peter Newbould, director of congressional and political affairs at the APAPO, notes that the MEI rebasing disproportionately cuts reimbursement for mental health providers than for other providers. “This penalizes psychologists who have low overhead practices and rewards others who use expensive imaging machines,” he says. “Effectively, we have psychologists who haven’t gotten a raise for Medicare work in years.” In 2006, the APA asked Congress, in the interest of “having equitable care for mental health,” to restore five percent, which they have done for the last four years.

Newbould says, “If the cuts are not changed, it will be another tsunami wave coming at psychologists’ practices. We are reasonably optimistic that when Congress comes back in session, they will delay the SGR and will extend the Medicare psychotherapy five percent boost.”

Milton J. Marasch, Ph.D., president of the Vermont Psychological Association (VPA), VPA’s insurance chair and private practitioner in Shelburne, Vt., reports that 60 percent of his practice is with elders and those with disabilities who are on Medicare. He says that a 21 percent cut and another potential four percent decrease in January would be “devastating.” An independent provider to nursing homes, Marasch cites the dilemma these institutions would face should the cuts be enacted. “I don’t know how they could continue to pay psychologists,” he says. “There will be a humongous access difficulty for clients.”

In his leadership role at VPA, Marasch hears negative feedback from colleagues. “One psychologist who is a Medicare provider says he’ll have to drop it. For every one who tells me this, how many are not saying so out loud?” he asks. In spite of receiving some cost of living adjustments to his Medicare rates, Marasch points out that he is still reimbursed at rates lower than 2006 levels. “I am looking to see Congress do something to fix the problem, rather than patch it,” he says.

Peter Oppenheimer, Ph.D., who belongs to a group practice in Barrington, R.I., says that the rate-setting process has become politicized. In his role as Rhode Island Psychological Association (RIPA) representative to the APA, chairman of the legislative and insurance and managed care committees and chairman of the board of psychology for RIPA, he is intimately familiar with the political volatility surrounding the Medicare reimbursement issue. He notes that Congress’s attempts to achieve budget neutrality and pressure from special interest groups influences its decisions, often to the detriment of psychologists.

For the most part, psychologists are the “essence of small business,” according to Oppenheimer. “It’s difficult to invest [in a practice] when you don’t know when the rug will be pulled out from under you,” he says. “We’ve been rescued a number of times, but we’d like to have a commitment for a long term rationale. It does the public no good at all that the system has gotten so political.”

Oppenheimer points out that in recent years, Rhode Island has focused on creating integrated and collaborative care. The instability of Medicare rates impedes the ability to motivate and engage psychologists in this new model of care as well as those in private practice. “We need to provide the infrastructure and services clients deserve,” he says. “Psychologists are unsure about what their commitment can be to Medicare clients.”

Steven C. Atkins, Psy.D., adjunct professor at Dartmouth Medical School and owner of SCA Psychological Services, P.L.L.C. in Lebanon, N.H., emphasizes the negative effect these cuts will have on patient care, particularly those who live “outside the big city bubble.” He says, “Psychologists are the largest providers of psychotherapy in rural settings. It will be more difficult finding qualified psychologists to see these Medicare clients.”

Our graying society only complicates matters. “As our population ages, psychologists can’t keep taking Medicare clients. Even those who want to can’t afford it. We are mindful that potential access to qualified healthcare will get worse unless we find some way to work this out,” he says. “This issue is not so much about putting money in our pockets, but about people in need of service. Will qualified psychologists be around to serve them?”

Atkins adds, “I am all about fiscal responsibility but when you talk about healthcare, we’re talking about $30 million a year. That’s not a whole lot of money when you talk about trillions in the budget for other things. People need the type of services we offer. They are potentially life-saving.”

Twenty-two members of Congress have voiced their support for the APA and proposed a revision to the MEI, which would link it to more recent practice data and would make changes to the expense categories.

By Phyllis Hanlon

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