The leading practice resource for behavioral health providers — since 1974

Volume 34, No. 4, Issue 408
April, 2008

MEDICARE: Psychologists and CSWs struggle to avert a 10.6% rate cut

Lobbyists for professional mental health organizations are scrambling to prevent a 10.6% Medicare cut that will take effect July 1 unless legislation can be passed by congress and signed by President Bush.

Psychologists and clinical social workers were spared drastic cuts at the start of 2008, as Congress passed a last-minute reprieve, putting off the day of reckoning for six months.

Jim Finley, senior government relations associate for the National Association of Social Workers (NASW), believes the upcoming cut may be avoided, or at least put off for another six months.

“We’re very active on this issue--the entire health care profession is,” Finley tells us. “I expect it to be fixed for six months because they can’t cut provider fees right before the election.”

The NASW and American Psychological Association (APA) are also pressing for mental health parity in Medicare. That would mean a 20% co-pay--the same as in medical services--rather than the current effective 50% co-pay. “We’re optimistic we’re going to get it this time,” says Finley.

Congress ended up approving a miniscule half-percent Medicare increase at the end of 2007, but some therapists ended up seeing a slight decrease in reimbursement nonetheless. That was due to changes in how the government calculates the amount of work performed. The formula for Relative Value Units (RVUs) varies from region to region.

Jean Thoensen, a mental health care biller in Centreville, VA, recalls, “When the first claims started coming back for 2008 services, I thought, ‘What the heck is this? I’m getting paid less than last year and I was supposed to get a half-percent increase.’”

For example, one clinical social worker we heard from took a $3 per session hit starting in January despite the pay boost. Rates were cut in 2007, but not as drastically as announced at the end of 2006.

“Now, unless Congress does something, the hammer’s really going to drop,” Thoensen says. “Anybody who can will quit Medicare.

“The other thing about Medicare cuts is that insurance companies look at them. TriCare Standard lowered their rates to match Medicare. The big fear I have is that there could be a follow-the-leader effect. Social workers in my area (Virginia) and in Dallas are already getting $60 for a 90806--and that hasn’t changed in six years.” If you knock 10.6% off of that, you get $53.64.

Finley believes that the Medicare payment strucutre needs a major overhaul. For one thing, he says, there’s too much money being funneled into Medicare Advantage programs that benefit insurers. Savings in that area could be used to prop up provider reimbursement. But non of that is likely to be addressed during election season.

Contacts: 1) Jim Finley, NASW, Washington, DC, (202)408-8600, email:; 2) Jean Thoensen, PsychBiller, Centreville, VA, (703)266-8612,