2014 Medicare reimbursement frequently asked questions

By Government Relations staff

Q.Why did the APA Practice Organization (APAPO) report in early December that psychologists will receive some of the largest increases in Medicare for 2014 when payments for some services are dropping?

A. Medicare has taken an important step towards reversing the trajectory of downward payments for psychological services by raising the work values — reflecting cognitive effort and complexity in providing a service — for the family of psychotherapy codes. Because psychotherapy services are billed so frequently by mental health providers, the Centers for Medicare and Medicaid Services (CMS) decision will mean millions of dollars in additional costs to Medicare. As a result, after almost a decade of incurring some of the biggest losses among Medicare providers, the payment pool allocated to psychology will have the second highest increase in total payments allocated for 2014.

Unfortunately, other adjustments to Medicare payments will chip away at these increases and at the fees for other psychological services besides psychotherapy. As disappointing as any payment losses are for psychologists, without the new higher work values for psychotherapy, the most commonly provided service by psychologists, Medicare payments for 2014 would be much lower. Through their work with the coding and reimbursement process and their advocacy to Congress and CMS, APAPO and APA have bent the payment curve in psychology’s favor. At a time when federal dollars are shrinking, APAPO positively impacted the areas over which the organization has some control.

Q.Why are new services like crisis psychotherapy and interactive complexity add-on seeing such big gains when the diagnostic evaluation is being significantly reduced?

A. The higher work values for the psychotherapy codes are a result of the critically important survey data collected by APAPO in 2012 and 2013. Psychologists, psychiatrists and clinical social workers participating in the Relative Value Scale Update Committee (RUC) survey process furnished valuable information about the level of intensity and skill involved in furnishing the different psychotherapy services. They also indicated how the psychotherapy codes should be valued relative to other health care services. While some of the psychotherapy services received higher increases in their work values than others, CMS accepted all the higher work values for psychotherapy codes as recommended by the RUC.

As important as the work values are, the Medicare payment formula also takes overhead costs known as practice expense (PE) and malpractice expense into consideration. PE, which is typically low for mental health providers whose services do not involve expensive equipment, fell further when the psychotherapy codes were reviewed and inpatient overhead costs such as for nursing services that had allocated for many years were removed from the valuation. As a result, the diagnostic evaluation and 30-minute psychotherapy codes suffered significant losses in practice expense that offset the gains from their higher work values.

Q.Why are the payments for testing services being slashed? 
A. The three codes for psychological testing, along with the neuropsychological testing by computer code, will suffer substantial cutbacks in 2014. The losses for these codes are all due to a reduction in PE. According to CMS, after reviewing PE values for consistency and relativity the agency determined that certain items such as the fee and licensing costs for these codes should be categorized as indirect PE costs rather than disposable supplies. Changing how these items were classified resulted in a significantly lower PE value for each of the codes. This was an internal CMS decision based on the categorization of the factors involved in a variety of different services, not just the testing codes used by psychologists. APAPO is evaluating the rationale behind this decision to determine its advocacy options with CMS.

Not all of the testing codes will be reduced in 2014. The codes for a neurobehavioral status exam, neuropsychological testing by a psychologist, and neuropsychological testing by a technician will see increases of 1.1 percent, 2.6 percent, and 4.1 percent, respectively.

Q. What exactly will my Medicare payments be in 2014?
A. Payment schedules for each locality will be released soon by the various Medicare Administrative Contractors (MACs). Psychologists should monitor the website of their regional MAC since all MACs are required to post payment schedules online.

Q.When will we learn if there are any changes for 2014 in Medicare’s reporting system known as PQRS?
A. APAPO is reviewing the discussion in the final rule on PQRS and will provide members with detailed information thorough the PracticeUpdate e-newsletter in January.