Congress to Avert Drastic Medicare Fee Cut; Psychiatric Copay Reduction Less Clear

August 1, 2008

Congress will undoubtedly set aside, one more time, a scheduled, drastic cut in Medicare fees for psychiatrists and all other physicians sometime this summer based on action in Congress before its Fourth of July recess. The House and Senate almost agreed to replace the 10.6% cut in fees scheduled for July 1 with a 1.1% increase through the end of 2009. But various political difficulties interceded, and the Bush administration stepped in and ordered a 10-day halt to any fee cuts until Congress returned to Washington.

Congress will undoubtedly set aside, one more time, a scheduled, drastic cut in Medicare fees for psychiatrists and all other physicians sometime this summer based on action in Congress before its Fourth of July recess. The House and Senate almost agreed to replace the 10.6% cut in fees scheduled for July 1 with a 1.1% increase through the end of 2009. But various political difficulties interceded, and the Bush administration stepped in and ordered a 10-day halt to any fee cuts until Congress returned to Washington.

Congress will eventually pass some permutation of the Medicare Improvements for Patients and Providers Act of 2008 (HR 6331), which passed the House by a vote of 355 to 59 on June 25. It increased Medicare fees by 1.1% and included an amendment eliminating the 50% Medicare copay for psychiatric services, which the American Psychiatric Association and many other mental health advocacy groups have long pushed for. The bill also included provisions requiring Medicare Part D coverage of benzodiazepines and barbiturates, which are commonly used to treat anxiety and other psychiatric illnesses; and codifying the “All or Substantially All” policy (currently a regulatory guideline to ensure that Part D drug plans cover all or substantially all of the medications within certain classes: antipsychotics, antidepressants, anticonvulsants, and antivirals, for example).

But the Senate could muster only 58 votes for the House bill on June 26, 2 votes short of the 60 necessary to cut off debate. Many Republicans opposed the bill-and the Bush administration issued a veto threat-because the bill would pay for the elimination of the 10.6% fee cut and some new Medicare benefits (such as the reduction of the mental health copay to 20%) by cutting Medicare payments to Medicare Advantage (MA) plans affiliated with teaching hospitals and to a subset of MA plans called “private fee-for-service” plans. Such plans are available to special needs populations, such as seniors with diabetes or heart conditions.

If Republicans and the Bush administration stick to their guns after Congress returns from the Fourth of July recess, the cost of HR 6331 will have to be reduced, and that may mean adjusting the mental health copayment provision, which the Congressional Budget Office estimated would cost the federal government $4.5 billion from 2008 to 2010. When HR 6331 came up for a vote in the House, the mental health copayment improvement provision was hardly mentioned, so it would be a likely candidate to jettison if Senate Republicans demand MA cuts be downsized.