New Medicare Law Benefits Psychologists and Patients
by Government Relations Staff
July 17, 2008—The Medicare Improvements for Patients and Providers Act of 2008 (H.R. 6331) became law on July 15, as Congress overrode a presidential veto. The APA Practice Organization had strongly supported the bill.
As the Senate struggled for days to get a veto-proof majority, in a stunning turn of events, the Senate passed the bill on July 9 by a wide margin of 69-30 votes. Sen. Ted Kennedy (D-MA) made his first appearance on the Senate floor since his diagnosis of brain cancer to vote in favor of the bill.
The Senate action came less than two weeks after a filibuster precluded the bill from moving to a vote. Over the July 4 recess, psychologists and other Medicare providers kept intense pressure on targeted senators to pass the legislation.
Late in June, the House of Representatives passed H.R. 6331 by an overwhelming majority.
The law contains several important provisions that benefit psychologists and Medicare beneficiaries who need psychological services.
The Medicare Improvements for Patients and Providers Act of 2008 will:
Increase payments for psychotherapy by five percent ($45 million) from July 1, 2008 through December 31, 2009 to partially offset cuts imposed in 2007.
Payment levels for psychotherapy and other psychological services suffered steep cuts in 2007 as a result of the Centers for Medicare and Medicaid Services' (CMS) most recent review of Medicare payment. Every five years, CMS looks at services codes and determines whether they are overvalued or undervalued. After the decision was made to boost payment for "evaluation and management" (E/M) codes starting January 1, 2007, budget neutrality requirements forced a reduction in payment for all other codes. Among providers, psychologists were the hardest hit by this payment reduction.
At the time of the reduction, the APA Practice Organization (APAPO) immediately began advocating to provide relief for members adversely affected by the cut, first by securing language in the Children's Health and Medicare Protection Act to restore Medicare funding for psychological services. The House passed the Act in 2007.
Since then, the APAPO has ensured that restoration language was included every time the House and Senate voted on Medicare legislation — throughout all six votes. Through APAPO advocacy, psychotherapy codes were the only codes that Congress provided relief for through this law.
Phase in Medicare coinsurance parity.
Currently, Medicare beneficiaries are responsible for paying 50 percent of the approved amount for outpatient mental health services, but only 20 percent for other services. Under the new law, mental health services will enjoy the same 80-20 percent split in coinsurance by 2014. A phase-in to coinsurance parity for outpatient mental health services begins in January 2010, when beneficiaries will pay 45% coinsurance; the figure drops to 40 percent in 2012, 35 percent in 2013 and 20 percent in 2014. The change will help alleviate the financial shortfall suffered by many practitioners who are unable to collect coinsurance amounts from beneficiaries. This provision of the new law is expected to cost $600 million over the six years.
The APAPO, a founding member of the Medicare Mental Health Equity Coalition, worked in tandem with Senators Olympia Snowe (R-ME) and John Kerry (D-MA) to advance the coinsurance parity issue and win this important victory for psychology.
Halt the 10.6 percent Sustainable Growth Rate (SGR) cut for 18 more months and provide a Medicare payment update for 2009.
The SGR is part of a formula that determines each year if Medicare reimbursements will increase or decrease from the year before. For the last six years, the reimbursement rate has dropped; every year Congress has taken action to stop the cut from taking effect. In December 2007, Congress delayed implementation of a 10.6 percent cut in 2008 Medicare payments from taking effect for six months, until July 1. The new law postpones this cut for an additional 18 months and provides a 1.1 percent payment update for 2009.
Click here to learn more about Medicare claims processing in light of the new law.
Expand federal appropriations for mental health services delivery to veterans and other residents of rural areas.
H.R. 6331 will use an existing Medicare grant program to expand mental health services delivery in rural areas by appropriating an additional $50 million for mental health services under this program in 2009 and 2010. States that apply for available funds would be able to use the monies they receive to reimburse providers of mental health services. Although the relevant provision in the bill highlights the needs of veterans who served in Iraq and Afghanistan, the mental health services also would be available to other residents of rural areas.
We will continue to let members know through this e-newsletter and at APApractice.org how practicing psychologists are affected by this new law. 
NewMedicareLawBenefitsPsychologistsAndPatients.pdf
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