Comments: Proposed Rule for Revisions to Payment Policies under 2006 Physician Fee Sched, Sept 2005

Published Tuesday, September 27, 2005 7:00 am

Centers for Medicare & Medicaid Services (CMS)
Department of Health and Human Services
Attention: CMS-1502-P
P. O. Box 8017
Baltimore, MD 21244-8017

Dear Sir/Madam:

We are pleased to submit these comments on the proposed rule for Revisions to Payment Policies under the Physician Fee Schedule for Calendar Year 2006 on behalf of the American Association for Geriatric Psychiatry (AAGP). The AAGP is a professional membership organization dedicated to promoting the mental health and well-being of older people and improving the care of those with late-life mental disorders. Our membership consists of more than 2,000 geriatric psychiatrists as well as other health care professionals who focus on the mental health problems faced by senior citizens.


Once again we must express our deep concern with the Agency’s failure to propose any steps to address the forecasted negative update to the conversion factor for the physician fee schedule. The preamble to this proposed rule estimates the update for calendar year 2006 to the conversion factor will be a minus 4.3 percent. We understand that the Agency believes that it has no discretion in the calculation of Medicare physician expenditures under the provisions of the sustainable growth rate (SGR). However, we respectfully disagree with this position and strongly recommend that you consider changes in the way you estimate spending increases under the Medicare fee schedule.

Specifically, we do not think physician expenditures should include the cost of prescription drugs furnished incident to a physician’s service. As you know, such drugs are excluded from the physician fee schedule; including them in the estimates of spending under the fee schedule holds physicians accountable for an expense that is largely outside their control, and one that is rising very rapidly. In addition, we believe that the SGR should be adjusted to account for outlays related to new national coverage decisions. Coverage decisions that expand beneficiary access to advancements in medical diagnosis and treatment should be treated in a manner similar to changes in law and regulation that are expected to affect outlays for physicians’ services.

For psychiatry, a negative update to the fee schedule and other changes in practice expense relative value units (RVUs) results in a 4.2 percent reduction in total Medicare payments for the specialty in 2006. This cut comes at a time when practice costs including malpractice premiums are rising 8.4 percent, as reflected in the estimated Medicare Economic Index (MEI) for this year.(1) It’s important to underscore that this proposed negative update to the fee schedule is not merely a slowing in the rate of increase in fees--it’s a reduction in actual payments and, taking into account the estimated MEI for 2006, the total impact is a 7.8 percent decline in the value of Medicare physician payments. In other words, if Medicare payments were adjusted to be consistent with the increased costs of running a practice as represented in the MEI, then payments should be 3.5 percent higher in 2006 than in 2005. Instead, the payments for psychiatrists will be 4.2 percent lower in 2006, which amounts to a net loss of 7.7 percent (- 3.5 percent -4.2 percent).

If, as predicted these negative updates continue through the end of this decade, the fee schedule conversion factor will be reduced to a level near that in place for 1993. Clearly, this cannot continue without significant adverse effects on beneficiary access to care. While we do not have evidence of a significant increase in the number of psychiatric practices that have placed limits on new Medicare patients, our members are especially vulnerable to these reductions as a substantial part of their income derives from the diagnosis and treatment of Medicare beneficiaries. We do know that a number of geriatric psychiatry practices are near bankruptcy or have been forced to close. Many other geriatric psychiatrists are actively re-evaluating the financial viability of their practice. At a time when there is growing evidence of undiagnosed and untreated mental illness in the senior population, these policies are likely to erode access to mental health care for growing numbers of elderly and disabled beneficiaries.

Malpractice RVUs

We also want to call your attention to the continuing under-recognition of the cost of malpractice insurance in fee schedule payments. While we are pleased that you are using more recent premium data, we regret this information is not available for assessment at this time. The impact table 33 included in the proposed rule shows a reduction of 0.1% resulting from malpractice RVU changes for psychiatry. We cannot identify the reason for this reduction, and we certainly have no information from our members suggesting a decline in malpractice premiums. We continue to believe that the weight given to malpractice costs in the overall fee schedule should be increased.


Finally, we would like to comment on two issues identified in the proposed rule relating to telehealth services. Currently, Medicare covers telehealth services for individual psychotherapy, medication management, and psychiatric diagnostic interviews. In order to increase the access of beneficiaries to psychiatric services in rural or underserved areas, we would recommend a modification to the current definition of an interactive telecommunications system. In our view, the example cited in the preamble to the proposed regulation of a two-way audio system in combination with a one-way real time video connection would permit a consulting physician to conduct a valid patient evaluation or therapeutic intervention. This change would likely make such telehealth services more available to patients who would otherwise not be able to have a face-to-face visit. We also recommend that skilled nursing facilities (SNFs) be added to the definition of a telehealth originating site. Again, this would permit psychiatrists to treat patients in facilities where access to a consulting psychiatrist is not feasible.

Current trends in Medicare payments for physician services combined with the limited and discriminatory Medicare benefit for mental illness care can further burden Medicare beneficiaries and jeopardize their access to effective treatment. We believe that CMS should take every opportunity to exercise its discretion to expand access to psychiatric services. We hope you will reconsider your options for updating the fee schedule to avoid further reductions and will expand the availability of telehealth consultations for Medicare beneficiaries.

Thank you for this opportunity to comment on the proposed rule.


Christine M. deVries
Executive Director

1. Medicare Payment Advisory Commission. “Report to the Congress: Medicare Payment Policy.” p. 81. March 2005.