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The AMA Specialty Society Relative Value Scale Update Committee (RUC) last month accepted proposed valuations for psychotherapy procedures from a working group representing APA and four other associations whose members do psychotherapy.
The RUC forwarded the proposal to the federal Health Care Financing Administration (HCFA), which sets reimbursement rates for physicians who bill under Medicare. HCFA will review the proposal, provide for a public comment period later this year, and promulgate the final version of the code rules for January 1999.
In January 1997 HCFA began using 24 new psychotherapy codes, exploding the prior, limited structure that had recognized only four different psychotherapy codes. The process that led to the RUC's acceptance of the code values began in April 1997.
The significance of the RUC's acceptance of the working group's proposal is that it establishes "for the first time a baseline for the 24 HCFA codes based on input from professionals who perform psychotherapy procedures," observed Eugene Cassel, J.D., deputy director of regulatory affairs in APA's Division of Government Relations.
In addition to APA, the professional associations represented in the working group were the American Psychological Association, the American Nurses Association (ANA), the National Association of Social Workers, and the American Academy of Child and Adolescent Psychiatry (AACAP). The APA chaired and provided leadership to all five associations, according to Shelley Stewart, deputy director of federal affairs in APA's Division of Government Relations.
The proposal was based on a survey of members of the different associations asking them to evaluate the time and effort involved in performing variants of psychotherapy. The survey employs vignettes in which psychotherapy is appropriate.
The 24 HCFA codes differentiate between psychotherapy involving medical evaluation and management, and psychotherapy that does not involve medical evaluation and management. The physician groups-APA and AACAP-and the nurses association surveyed members for psychotherapy with medical evaluation and management.
Despite the competing agendas of psychiatrists, psychologists, nurses, and social workers, the groups were able to work collegially for this mutual purpose, observed Sherry Smith, director of the AMA's Department of Physician Payment Systems.
"I think if you talk to representatives of any of these groups they would tell you that it's evolved into a positive working relationship," she said. The benefit of such disparate groups working together is that it greatly increases the likelihood that HCFA will accept the recommendations, she noted. But she added that HCFA has the ultimate authority to reject or alter the recommendations.
Chester Schmidt, M.D., chair of the APA Work Group on Codes and Reimbursements, spoke with Psychiatric News about the RUC's activities. The committee is charged with determining the "relative value units" (RVU's) for all the codes in the Current Procedural Terminology (CPT) manual, said Schmidt.
"It's an interesting exercise in that it's a zero-sum game. That is because the HCFA budget each year is fixed," he observed.
Given efforts to reign in the costs of Medicare, the HCFA budget is unlikely to grow on a per capita basis for the foreseeable future, so it is likely that the process will continue to require a "budget-neutral" approach, he added.
The RVU's deal "almost exclusively with Medicare," although the Medicare fee schedule is "fast becoming the gold standard" for private plans as well, Schmidt noted. The RVU's do not apply to Medicaid, for which reimbursement methodology is different and the rates are lower, he added.
"If HCFA increases its share of funding allocated for psychiatric RVU's, that necessitates less money for everyone else," Schmidt continued. "So you can imagine the dynamic of the RUC which includes [all the medical specialties]." Despite this, the different specialties are required by the AMA to make a unified pitch to the RUC for the desired RVU's, he noted.
Ronald Shellow, M.D., who sits on APA's Work Group on the Resource-Based Relative Value Scale (RBRVS), participated in last month's RUC presentation. Shellow was responsible for coordinating input from the different specialty groups.
"What the members need to understand is that all physician fees under Medicare Part B (which applies to physician fees, as opposed to part A, which applies to hospital costs) come out of a single pool of federal money," Shellow explained. The total amount in that pool is set each year by a "formula tied to a price index," he said.
When HCFA exploded the old psychotherapy codes from 4 to 24, it radically altered the dynamics of psychotherapy reimbursement under Medicare, he observed. HCFA made the change to allow for more appropriate payment based on distinguishing details of how psychotherapy is practiced, Shellow said. The codes now distinguish between ordinary psychotherapy; psychotherapy that includes medical evaluation and management; outpatient psychotherapy; and psychotherapy delivered in an inpatient, partial hospitalization, or residential treatment setting. There is further differentiation based on whether the therapy is cognitive, insight oriented, or behavioral, versus interactive. The last category refers to play psychotherapy, "almost always conducted with children," Shellow added.
Shellow explained that the RUC originated because the AMA wanted to make certain that reimbursement values for HCFA codes evolved with input from physicians who actually do the relevant procedures. The AMA "wanted to determine what physicians thought were the appropriate work values for each code," he said.
Over time the process evolved to include nonphysician specialties. This complicated matters, said Shellow, which was where the Lewin Group, an actuarial firm, came in.
"When the five associations, including APA, surveyed their members, the values for the 24 codes were not uniform and did not represent the differentials we thought they should represent," said Shellow. "So in order to make a more statistically coherent presentation, Lewin averaged the effect of time, evaluation and management, and site of service in ordinary psychotherapy versus play [interactive] psychotherapy, and developed mean values for those four psychotherapy variables derived from the survey data."
Lewin Group consultant Al Dobson offered his analysis of the recent RUC process. "What Lewin did was standardize the survey," he said.
"My take is that it does a couple of things," said Dobson. "It puts the stamp of approval from the representatives of the five groups on the code values going to HCFA. It shifts payment from inpatient settings to outpatient settings and puts appropriate emphasis on the time differential, so if you work more, you get paid more. It puts a little less value on the evaluation and management differential than many people had expected, but that is entirely consistent with prior HCFA evaluations of work values for the codes."
In practical terms, said Shellow, last month's RUC process means that if HCFA adopts the work values that the AMA presented and were accepted by the RUC, there will be "a slight increase in fees paid for office-based visits versus hospital-based visits, something which we have long thought made sense" since most psychiatrists do psychotherapy more frequently in the office setting than in the hospital.
Donald Scherl, M.D., chairs the APA Work Group on the RBRVS. He spoke with Psychiatric News about the significance of HCFA's expansion of the 24 codes last year, which set the stage for last month's RUC process.
The expansion accomplished several things that were good for psychiatry, according to Scherl.
The revised codes "stabilize and differentiate, to some degree, the work that we do. One of the problems in the prior coding was that there were not enough categories to differentiate among the kinds of work we do, the amount of effort we put in, and the time we spend," he added. "The more we can differentiate our services, the more accurately we can seek appropriate payment for those services."
Another positive outcome is that "the Editorial Board of the AMA CPT book accepted the new codes, which brings a further level of stability to both how we label and code our work and how it is reimbursed," Scherl observed. "The AMA does not change the CPT codes easily, so that is in itself a significant accomplishment."
Finally, it "solidifies the notion that psychiatrists often, and some would say always, do more in their work than other mental health professionals; that is, they do medical evaluation and management as part of psychotherapy."
The broad acceptance of the differentiated codes means that "people recognize that there is a difference between what we do and other mental health professionals do, and that the additional work we do should be paid for," Scherl added.