Medicare Reimbursement for Psychotherapy Services

August 2011

This review summarizes the cuts which have been proposed during the past year to the Medicare outpatient mental health benefit.  The Clinical Social Work Association strongly encourages Congress to prevent these cuts.  
 
Mental Health Extender:  Congress restored payments temporarily but they now need to be extended.  Through the Medicare Improvements for Patients and Providers Act of 2008, Congress partially restored the cuts made by the Centers for Medicare & Medicaid Services (CMS) “Five-Year Review” through 2009. Subsequent laws then extended the restoration through December 2011. The valuation of psychotherapy codes in the 2011 Five-Year Review has been delayed into 2012.  Congress should pass new legislation to extend payments through 2012, until the Five-Year Review is completed.
 
Cut by MEI Rebasing:  A CMS technical advisory panel will be asked to examine the effect of a 4% cut to Medicare part B reimbursement for LCSWs in January 2011 due to “rebasing” of the Medicare Economic Index (MEI).  In the 2011 fee schedule, CMS used more recent survey data that showed practice expense and malpractice became a larger share of the payment formula while provider’s time became smaller. This increased payments for some services, particularly of professionals who utilize expensive technology.  Though CMS reduced other reimbursement work values, LCSWs and psychologists were hit the hardest because they typically provide services at lower cost and lower overhead.
 
Proposed Sustainable Growth Rate Cuts:  LCSWs were saved from a second and  reduction when Congressional action halted the projected 25% SGR cut through December 31, 2011. The current proposed cut to psychotherapy services using the SGR formula would be 29.5%.

Effect on Beneficiaries:  Extending payments cut by the Five-Year Review is crucial to protecting access to Medicare mental health services. Licensed clinical social workers and psychologists provide almost all of the Medicare psychotherapy services. Many LCSWs may have to leave Medicare if they are faced with these reimbursement cuts. The cost of protecting mental health services is very low, increasing costs by only $30 million per year.

Medicare beneficiaries need the psychotherapy services provided by LCSWs.  Congress needs to preserve their access to LCSW mental health treatment by maintaining current mental health reimbursement rates.

©CSWA2011