Please see the Action Alert below. Hopefully better news to follow...
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APA Practice Organization Information Alert
Date: October 30, 2009
To: SPTA and Division Federal Advocacy Coordinators
APAGS Coordinators
From: Marilyn Richmond, J.D., Assistant Executive Director for
Government Relations, American Psychological Association Practice
Organization
Cc: Katherine Nordal, Ph.D., Executive Director for Professional Practice
SPTA Executive Directors
SPTA Directors of Professional Affairs
CAPP
Re: Medicare Payment Changes for Psychological Services in 2010
The Centers for Medicare and Medicaid Services (CMS) have announced
changes in 2010 to Medicare's payments for the practice expense portion
of numerous services including those commonly billed by psychologists.
Although the exact amount varies for each service, we expect Medicare
payments for psychologica services to be reduced on average by 7% based
on the practice expense changes. We recognize that this reduction is a
considerable loss for psychologists. We are providing information below
to help members understand why CMS is making this change in how it will
pay for Medicare services next year. Psychologists should also know that
they are not the only Medicare providers facing these changes; many
other specialties including cardiology, nuclear medicine, oncology,
radiology, social work, and urology will also see significant reductions
in practice expense in 2010.
What the practice expense values represent
The practice expense values are one part of the Medicare reimbursement
formula and represent the costs attributed to providing a service. The
practice expenses values have two components: direct and indirect.
Direct expenses are those associated with a specific service; for
example, booklets or plates that are used during testing. Indirect
expenses are incurred regardless of the service being provided such as
administrative staff salaries, utilities, computers, and rent. Indirect
expenses are based on data that considers the typical costs per year and
the numbers of hours per year that a practice operates.
Why the practice expense values are changing in 2010
In 2005 CMS revised its methodology for calculating practice expense
values, an action that stemmed in part from requirements under the
Balanced Budget Refinement Act of 1999 and was designed to make practice
expense values more specific to the service provided. The impacts from
that change have been phased-in over the past three years with the
transition scheduled to conclude with the 2010 fee schedule. Under the
new methodology, practice expense payments for psychological services
were reduced by about 2% each year from 2006 through 2009.
Amid concerns that CMS was using outdated information a multi-specialty
survey was launched in 2007 - 2008 to obtain current data about the
indirect costs of providing services. The survey was a joint effort
among the American Medical Association, APA, and fifty other physician
and non-physician organizations. None of the organizations had a role in
the survey's design or administration. Independent research firms
collected and analyzed the surve data which was then sent to CMS for use
in the calculation of practice expense values. Prior to the
multi-specialty survey, there was no baseline indirec practice expense
data for a number of specialties including psychology. Since 1998
psychologists' overhead expenses per-hour had
been cross-walked to those reported by psychiatrists. The recent survey
provides more specific indirect cost data for each specialty, including
psychology. CMS will now make payment determinations based on the survey
data that more accurately reflects the indirect costs associated with
practice expense. For psychology, the survey data indicates that
indirect practice expenses are lower than what had been previously
assumed under the cross-walk to psychiatry.
APAPO utilized the services of its actuary to review the practice
expense data obtained in the survey. After confirming the validity of
the data our actuary noted some possibilities why the survey results
indicated that psychologists had low indirect practice expenses.
Psychologists tend to have small practices with few administrative and
clinical staff. Also, in response to the economic downturn over the past
few years psychologists have likely improved their productivity and/or
reduced spending for items such as technology (e.g., computers,
software) and office supplies.
How the practice expense changes differ among services
Not all psychological services will see the same rate of change in their
practice expense values because of the way the values are
calculated. The practice expense value for a code is based on multiple
factors used to calculate both the direct and indirect costs of the
service.
Factors included in the formula used by CMS are:
Direct Costs
* Supplies, equipment, clinical staff time/cost;
* The utilization rate for each service plus the sites-of-service
(in-office or in a facility);
* The current pool of practice expense values allocated to direct costs
for all services in the fee schedule;
* The conversion factor; and
* A budget neutrality factor.
Indirect Costs
· Survey data of rent, utilities, administrative staff and numbers of
hours per year that the practice is open;
· The current pool of practice expense values allocated to indirect
costs for all services in the fee schedule;
· The conversion factor; and
· A budget neutrality adjustment.
The direct and indirect costs are calculated separately and then blended
into the final practice expense value. In most cases, the practice
expense value account for approximately 30% of the total payment for
psychological services. Neuropsychological testing, however, is unique
because of the supplies and equipment that are used to provide these
assessments. Due to the costs for supplies and equipment the practice
expense values for neuropsychological testing services account for a
larger percentage of the total fee than they do for psychotherapy or
psychological testing. As a result, reductions in the practice expense
values for neuropsychological testing, including changes in indirect
costs such as rent, utilities, and administrative staff, have a greater
impact on the final payment than do practice expense reductions for
other psychological services.
Service for psychological and neuropsychological testing by a computer
will have their practice expense values raised. These changes are due in
part to the new data about the direct practice expense costs for these
services that APA provided to CMS in late 2007.
The chart below projects payment changes for the most commonly billed
psychological services.
Projected 2010 fees* for the most commonly billed services
CPT Code Descriptor 2009 Average Fee 2010 Average Fee % Change 2010 v. 2009
90801 Psych. diag. intvw. $152.92 $151.48 - 0.94
90806** 45-50 min. outpt. psychtx $ 89.08 $ 82.59 - 7.28
90818 45-50 mins. inpt. psychtx $ 85.84 $ 80.07 - 6.72
96101 Psych testing by psych $ 84.40 $ 77.90 - 7.69
96102 Psych testing by tech $ 51.21 $ 54.82 7.04
96103 Psych testing by comp/ $ 46.17 $ 59.51 28.89
96118 Neuropsych testing by psych $108.20 $ 89.81 - 17.00
96119 Neuropsych testing by tech $ 74.30 $ 63.48 - 14.56
96120 Neuropsych testing by comp. $ 68.52 $ 84.40 23.16
96150 Health/Beh. assmt. $ 22.72 $ 20.56 - 9.52
96152 Health/Beh. interv. $ 20.92 $ 19.12 - 8.62
* 2010 fees are based on the 2009 conversion factor and do not reflect
the projected SGR cut.
** The 5% restoration for psychotherapy services is not included in
these calculations.
As mentioned above, other specialties will also see significant
reductions in practice expense. Cardiology and radiology, for example,
will each have their practice expense values cut by 10% while radiation
oncology will lose 17% and nuclear medicine 12%.
Additional information
There are still other activities that may yet impact payment next year.
APAPO is actively lobbying Congress to extend the restoration providing
an extra 5% for psychotherapy services for an additional two years to
2012. Final payment amounts for 2010 will not be known until Congress
decides if and how to address the SGR cut currently projected by CMS to
reduce all payments by 21.5%. In addition, parity in Medicare will be
phased-in starting in 2010 when Medicare's payment rises to 55% and the
beneficiary's portion drops to 45%. Full parity, with 80% paid directly
by Medicare, will take effect in 2014. Psychologists with any questions
about Medicare reimbursement may contact the Government Relations Office
by telephone at 202-336-5889 or by email at pracgov@apa.org
<mailto:pracgov@apa.org> . CMS lists its complete payment formula and
issues affecting the practice expense methodology in the July 13, 2009
Federal Register, Vol. 74, No. 132, on pages 33526-33552.
Jeff Cook, J.D.
Director of Field & State Operations
American Psychological Association Practice Organization
750 First Street, NE
Washington, DC 20002
(202) 336-5875 (Office)
(202) 336-5797 (Fax)
jcook@apa.org (Email)
--
Dr. M. Arnold, PhD, RN
Licensed Psychologist - Registered Nurse
Psychological Services, Behavioral Health
Counseling, Consultation and Education
Focused on the Needs of Older Adults
Western Suffolk/Eastern Nassau Counties, LI, NY
Long Term Care Settings
(631) 271-9863
"It is unwise to be too sure of one's own wisdom.
It is healthy to be reminded that the strongest might weaken
and the wisest might err." Mahatma Gandhi (1869-1948)
"It is better to know the patient who has the disease than it is to know the disease which the patient has."
Hippocrates (460 BC - 377 BC)
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