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What's Happening With The Alzheimer's Exemption?

Unlike other medical services that are reimbursed under Medicare at 80 percent, most psychiatry services are reimbursed at 50 percent of the Medicare-allowed amount, with patients or their secondary insurers responsible for the other half of the payment. The only procedure codes paid at 80 percent are the two initial diagnostic interview codes, 90801 and 90802, and M0064, which represents the briefest office visit with a stable patient for a medication check. The lower reimbursement level is based on something called the outpatient mental health treatment limitation.

Under Medicare regulations there is, however, one other exception to the limitation. Psychiatric services provided to patients with Alzheimer's disease or related disorders are exempt unless the primary service rendered to the patient is psychotherapy. The reasoning behind this is that treatment provided to a patient suffering from Alzheimer's or a similar dementia is in all likelihood medical management and should be paid at the same rate as other medical management services, or 80 percent.

This means that psychiatrists who provide pharmacologic management (CPT code 90862) for dementia patients covered by Medicare are supposed to be reimbursed at 80 percent of the Medicare-allowed amount for performing a 90862 service. When a 90862 service is provided for patients with a diagnosis other than Alzheimer's or a similar dementia, the reimbursement from Medicare is only 50 percent.

Working with Leslie Fried, the attorney who directs the American Bar Association/Alzheimer's Association joint Medicare Advocacy Project and a leading advocate for the rights of people with Alzheimer's, APA has been involved in putting pressure on the Centers for Medicare and Medicaid Services (CMS), the federal agency that administers Medicare, and on individual Medicare Part B carriers to have this payment issue remedied. OHSF staff have also worked on behalf of individual psychiatrists to help them receive proper payment.

In fall 2003 OHSF conducted a survey of Medicare carrier medical directors to see where things stood. The results were not entirely discouraging. California, New York, Florida, Georgia, Ohio, West Virginia Vermont, Massachusetts, Maine, and Rhode Island said they were reimbursing at the 80 percent rate mandated by Medicare regulations or would be by January 2004. Medical directors from a number of other states responded that they were awaiting clarification from CMS about how to proceed.

It was clear APA needed to meet with staff at CMS to expedite publication of this clarification. Early in 2004, when a meeting was requested, OHSF staff were told that the problem was being remedied and there was no reason to have a meeting. When a written explanation of how CMS was planning to resolve the issue was requested, APA staff were told things had not yet been finalized. Shortly thereafter, CMS staff announced that the problem would be remedied as part of the physicians' fee schedule that is published each May. On May 20, however, a notice was posted on the Physician Regulatory Issues Team area of the CMS Web site stating: "CMS intends to clarify this policy through a manual issuance rather than through the Physician Rule. The expected date of issuance will be announced as soon as we know."

OHSF staff called CMS to find out what was going on. Ellen Jaffe, the Medicare specialist at OHSF, said that it appears no one is quite sure. She was told that nothing has been written yet for the manual issuance and that the "change management process is very complex."

A letter from OHSF Director Sam Muszynski has gone to Liz Richter, director of the Hospital and Ambulatory Policy Group at CMS, requesting a meeting as soon as possible. When OHSF receives word from CMS that it has assured proper payment for treatment of Alzheimer's patients, we will notify you through this publication and through a posting on APA's Web site. Meanwhile, if you're not reimbursed properly for care you provide to Medicare patients, you can appeal.

Call APA's Help Line at (800) 343-4671 if you need assistance.

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