PracticeUpdate | April 19, 2018

Reimbursing for services

How CMS determines psychologists’ fees through the annual physician fee schedule.
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By APA Office of Health Care Financing

April kicks off the beginning of the Medicare rule-making season for the Centers for Medicare and Medicaid Services (CMS). Every year, CMS enters a lengthy process of creating the new Medicare Physician Fee Schedule (MPFS) — a set of very detailed instructions, payment policies, payment rates and new or modified regulations for health services, including psychological services, that are typically implemented on Jan. 1 of the next calendar year.

All psychologists should be aware of and prepared for payment and policy changes that will affect their practice at the beginning of each year. Even if you do not participate in Medicare, private insurance companies use the annual physician fee schedule updates as a benchmark for determining their reimbursement rates. Therefore, the annual rulemaking process impacts services billed by every provider type.

The Proposed Rule

CMS publishes a “Proposed Rule” on or about July 1 each year. This serves as notification of the agency’s plan to create new or modified policies, address current problems, introduce new goals for the Medicare program and set payment amounts for all services paid under the physician fee schedule. The document also solicits written comments from stakeholders on the proposed changes. The comment period is typically 90 days and provides opportunities for individuals and organizations, like the Practice Organization, to offer insight related to issues raised in the rule. The Practice Organization may agree with the policies, disagree or propose a more advantageous alternative. There may also be instances when you will be asked by the Practice Organization, through our Federal Advocacy Action Alert system, to write individual letters to CMS during the comment period.

The Final Rule

Once the comment period ends, CMS is required to review all comments received and craft a “Final Rule,” which is published on or about Nov. 1. The Final Rule must contain the agency’s summary and response to comments received for the Proposed Rule. As a rulemaking agency, CMS addresses:

  • How they revised a proposal to include the comments received.
  • Why they will not be making any further changes to the proposal.
  • The removal of a proposal and a statement regarding how they intend to address the matter in a future rulemaking process.
  • Updated payment rates for all healthcare services.

The rules and regulations published in this document become effective on Jan. 1 of the next year.

Development of the fee schedule

The Social Security Act requires CMS to establish payments for health care services furnished under the physician fee schedule. Payment rates are based on national uniform relative value units (RVUs), which are composed of three categories of resources:

  • Physician work.
  • Practice expense.
  • Malpractice expense.

The American Medical Association (AMA) and its Current Procedural Terminology (CPT®) Editorial Panel and Specialty Society Relative Value Scale Update Committee (RUC), work in coordination with specialty societies like APA, and play a critical role in informing CMS on these resource categories. The CPT Panel is tasked with creating, revising or modifying CPT codes, descriptors, rules and guidelines. The RUC then reviews survey data on proposed RVUs for the procedures defined by CPT codes and submits them to CMS for consideration. CMS reviews the RUC's recommendation and makes final determination on the fees, which are published each year as part of the physician fee schedule.

APA has retained a seat on the AMA CPT and RUC for over 25 years and represents psychology’s interests at every meeting to ensure fair and accurate coding and reimbursement rates for the health care services you provide.

The importance of advocating for psychology

Advocacy is key to defining the future of psychology. The Practice Organization has a long history of working closely with CMS, AMA and other specialty societies to maintain the visibility and credibility of the profession.

Through the Practice Organization’s participation in the rulemaking process, we actively represent psychologists’ interests in nearly every payment-related policy discussion, as well as engage with CMS to ensure a favorable payment environment for the profession.

While the Practice Organization’s interaction with CMS and the AMA CPT and RUC specifically address the Medicare program, commercial insurance companies also use policies and payment rates assigned to CPT codes to reimburse providers, including psychologists, for their services. Therefore, even if you are not a Medicare provider, the Practice Organization’s advocacy efforts on the federal level also impacts those on the state/commercial level.

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