Congress Reduces Medicare Payment Cut

January 1, 2007
Stephen Barlas

Volume 24, Issue 1

Just before it left Washington at the tail end of the December lame-duck session, Congress gave physicians a last-minute reprieve from the 5% Medicare pay cut that would have gone into effect on January 1, 2007. Moreover, the House and Senate approved a 1.5% bonus to be added to Medicare reimbursement in the second half of 2007 for physicians who voluntarily report quality-of-care measures.

Just before it left Washington at the tail end of the December lame-duck session, Congress gave physicians a last-minute reprieve from the 5% Medicare pay cut that would have gone into effect on January 1, 2007. Moreover, the House and Senate approved a 1.5% bonus to be added to Medicare reimbursement in the second half of 2007 for physicians who voluntarily report quality-of-care measures.

Some psychiatrists still face reductions in Medicare reimbursement in 2007, although now not quite as severe as the proposed cuts would have been. That is because Medicare has made changes in the "work" component of the relative value unit (RVU) reimbursement formula for all current procedural terminology (CPT) codes for 2007.

These changes will help psychiatrists who bill a lot of evaluation and management (E&M) codes. Those who don't will be hit harder.Key E&M codes for psychiatrists are the 99203-05 series for outpatient office visits. Becky Yowell, deputy director, Office of Healthcare Systems and Financing, of the American Psychiatric Association (APA), said the 2% decrease overall for psychiatry codes in 2007 was "worse than we had hoped for."

The APA wanted Medicare to spread out the RVU reductions across work and practice expense RVUs. The total RVUs for CPT codes billed most by psychiatrists have comparatively little of their value in the practice expense RVUs. But the Centers for Medicare & Medicaid Services (CMS) declined to take that advice.

Of course, a 2% reduction for psychiatrists is a lot better than a 7% reduction, which is what had been in store because of the 5% cut in the conversion factor update in 2007 dictated by the controversial Medicare fee update formula. The conversion factor is a dollar figure multiplied by the total RVUs for each CPT code to determine the Medicare reimbursement for that service. The AMA, joined by specialty groups, had beseeched Congress through the fall to cancel that 5% reduction, as Congress had done in previous years, or else face the prospect of increasing numbers of physicians refusing to treat Medicare patients.

"If the 2007 Medicare cut had occurred as planned, nearly half of physicians told the AMA the cut would force them to limit the number of new Medicare patients in their practice," said Cecil Wilson, MD, the AMA Board Chair.

Reporting quality of care
Congress waited until the very last minute to accept that argument and tacked cancellation of the 5% reduction onto an omnibus tax and trade bill that was passed in the waning days of the lame-duck session. But the 1.5% bonus payment physicians can qualify for starting July 1, 2007, depends on them voluntarily reporting to the CMS quality measures under the CMS Physician Voluntary Reporting Program. These consist of 66 quality measures to which so-called G-codes are attached. A physician will report the appropriate G-code that represents the clinical services furnished with regard to a specific measure set.

Only 1 of those 66 measures applies specifically to psychiatrists: antidepressant medication during the acute phase for patients with a new episode of major depression. Tom Leibfried, deputy director, congressional affairs for the APA, said he does not know how many psychiatrists have been voluntarily reporting that measure to date. But he added that given the cost of the additional paperwork and the relatively anemic 1.5% bonus, he doubted that many psychiatrists who haven't been reporting would start to do so as a result of the incentive.

Moreover, there are questions about the qualification procedure to get that 1.5% bonus, and how that bonus will be paid. The provision in HR 6111-the lame-duck tax and trade bill-appears to say that for specialty groups to which less than 3 of the 66 measures apply, physicians must report those measures (ie, 1 measure in the case of psychiatrists) 80% of the time to qualify for the incentive payment. The language is not clear as to whether that 80% is the threshold for all psychiatrists collectively or whether it applies to individual psychiatrists based only on their patients. Nor is it clear whether the bonus applies only to payment for services defined by that G-code or for all psychiatrists' billings. The APA's Leibfried indicated that questions such as that would be hashed out by the CMS during rule making in the first quarter of 2007.

However, while he doubted the motivational strength of the 1.5% bonus payment, Leibfried suggested that "forward thinking psychiatric practices" might want to start establishing the infrastructure for quality reporting "just to be ready." Congress is on an immutable path to tie Medicare payments to quality of care, he emphasized.

Of course, measured against the average 2% drop in Medicare reimbursement for psychiatrists in 2007 as a result of the changes in work RVUs, even a 1.5% bonus payment may turn out to be an ample motivating factor.

An interesting sidelight to the CMS's bulking up of work RVUs for psychiatric office visits is that the professional associations for psychologists and social workers had asked Medicare either for the right to use psychiatry E&M codes, which they cannot do now, or to reduce the proposed increases in psychotherapy E&M codes. But Medicare refused to accede on this point, leaving psychologists to face a 9% Medicare pay cut in 2007.

Medicare stated in its final rule on fee policies for 2007, which was issued in November, "Our Internet Only Manual 100-02 Chapter 15 Section 160 continues to state that "any therapeutic services that are billed by clinical psychologists . . . under CPT psychotherapy codes that include medical evaluation and management services are not covered.'"