Medicare Fee Schedule Changes Positive for Psychiatrists in 2009

January 1, 2009

Psychiatrists will average a 4% fee increase in 2009 from Medicare, which compares very favorably with many other subspecialties.

Psychiatrists will average a 4% fee increase in 2009 from Medicare, which compares very favorably with many other subspecialties. The new year also brings with it a new Medicare program that will be of interest to psychiatrists, in addition to a potential threat that Congress could undo a welcome Medicare change with positive psychiatric implications that has been authorized in 2008 as part of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).

First, the Medicare fee schedule for 2009 announced by the Centers for Medicare & Medicaid Services (CMS) in November gives all physicians a base 1.1% increase because of congressional action last June, when the MIPPA was passed. That bill averted what would have been a significant reduction in pay because of the Medicare fee formula. On top of the 1.1% in the form of an increase in the conversion factor, every specialty received either additions to that increase, or reductions from it, depending on changes in the practice expense, work, and malpractice relative value units (RVUs) of a subspecialty’s main codes.

The MIPPA also may have contributed to the generous (relative to other subspecialties) 4% average fee increase that psychiatrists will get in 2009. That is because the bill authorizes expansion of the Medicare telehealth benefit to community mental health centers as “originating” sites. That means, for example, that for the first time, a psychiatrist or other health care professional who works in a Community Mental Health Center (CMHC) will be able to pick up the phone and call a psychiatrist in a private office off-site when in need of a second opinion or advice. Psychiatrists have long been allowed to bill for telehealth services provided out of their office-but not when the person at the other end of the line is at a CMHC. So this opens up new consulting possibilities.

Making CMHCs eligible as orig­inating sites may be an especially big boon because the payments the centers have been receiving from Medicare for partial hospitalization programs-where they must provide a minimum of 3 specific services per day to a person with mental illness-have been declining over the past 4 years and will take another nosedive in 2009. Being able to bill Medicare separately for a telehealth “originating” fee gives CMHCs an additional avenue of income and may take some of the sting out of the Preferred Health Plan fee decrease.

The MIPPA will have another, albeit indirect, positive impact on psychiatrists who see Medicare patients. The bill requires Medicare to clarify the chronic conditions that must be covered by what are called Medicare Advantage Special Needs Plans. These plans are a type of Medicare Advantage Plan that serve only beneficiaries living in institutions, eligible for both Medicare and Medicaid, or living with severe or disabling chronic conditions. In 2004, 11 Special Needs Plans were approved by the CMS. In 2007, 476 Special Needs Plans were approved, and more than 800,000 beneficiaries were enrolled. This represents a significant increase in plans in 4 years.

Despite the proliferation of Special Needs Plans, it has never been clear what conditions they must cover. The MIPPA required the CMS to establish a panel that would designate exactly which conditions are “medically complex, substantially disabling, or life-threatening, having a high risk of hospitalization or other adverse outcomes, and requiring a specialized delivery system across domains of care.” In its November final ruling on Medicare fees for 2009, the CMS said that 1 of the 15 designated clinical conditions is “certain chronic and disabling mental health conditions.” This means that Special Needs Plans will have to provide specialized services to those people.

The MIPPA was a huge bill, and it was passed without any congressional hearings because a 10% cut in Medicare pay for physicians was about to take effect on June 30, 2008. Averting that reduction (that is where the 1.1% increase comes in) was the major raison d’etre for the MIPPA. So Congress passed the bill in a rush, without fully considering many of its provisions.

One of those was an amendment-Section 176-that opened the door to some major changes in the psychiatric drugs Medicare must provide. That amendment dictates that the CMS use 2 factors to determine from which drug classes all of the available drugs must be provided to patients. Currently, there are 6 such categories-including one for patients with depression and another for patients with psychosis. Those patients have access to “all or substantially all” of the drugs available for those ailments. But that policy was set via “guidance” by the CMS, not by Congress. The MIPPA amendment put into the law a requirement that the CMS in 2010 provide all drugs to all disease categories that meet 2 conditions:

• Restricted access to drugs in the category or class would have major or life-threatening clinical consequences.
• A significant clinical need exists for such individuals to have access to multiple drugs within a cate­gory or class because of unique chem­­­ical actions and pharmacological effects of the drugs within the category or class. The American Psychiatric Association (APA) supported that provision because it felt the provision would ensure availability of not just all the current depression and psychosis medications but possibly other psychiatric drugs that might be used in newly designated classes that meet the 2 requirements.

However, according to Andrew Sperling, director of legislative advocacy at the National Alliance of the Mentally Ill, the CMS has raised questions about the wording of Section 176. In addition, groups such as the Academy of Managed Care Pharmacy (AMCP) and Pharmaceutical Care Management Association want Congress to repeal both Section 176 and the current guidance that established the 6 protected classes. They will attempt to convince Congress to make those changes in the context of the Medicare reform bill Congress is expected to pass in 2009.

Judith A. Cahill, executive director of AMCP, said, “We would suggest that the appropriate ‘corrective’ action that should be taken by the Congress is to repeal Section 176 with language that reaffirms the independent, evidence-based Part D formulary decision-making process that is applicable for all therapeutic drug classes.” AMCPhas produced a study showing that the regulations requiring Medicare’s Part D prescription drug plans to include all drugs in the 6 designated classes could cost US taxpayers an additional $511 million per year. But Sperling says that Sen Max Baucus (D-Mont), chairman of the Senate Finance Committee, the key Medicare decision maker in the upper body, is “on our side.”