[Federal Register Volume 63, Number 78 (Thursday, April 23, 1998)]
[Rules and Regulations]
[Pages 20110-20131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10591]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 410, 417, 424, and 482

[HCFA-3706-F]
RIN 0938-AE99


Medicare Program; Scope of Medicare Benefits and Application of 
the Outpatient Mental Health Treatment Limitation to Clinical 
Psychologist and Clinical Social Worker Services

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule.

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SUMMARY: This rule addresses requirements for Medicare coverage of 
services furnished by a clinical psychologist or as an incident to the 
services of a clinical psychologist and for services furnished by a 
clinical social worker. The requirements are based on section 6113 of 
the Omnibus Budget Reconciliation Act of 1989, section 4157 of the 
Omnibus Budget Reconciliation Act of 1990, and section 147(b) of the 
Social Security Act Amendments of 1994 (SSA '94). This rule also 
addresses the outpatient mental health treatment limitation as it 
applies to clinical psychologist and clinical social worker services.
    This final rule also conforms our regulations to section 104 of the 
Social Security Act Amendments of 1994. Section 104 provides that a 
Medicare patient in a Medicare-participating hospital who is receiving 
qualified psychologist services may be under the care of a clinical 
psychologist with respect to those services, to the extent permitted 
under State law.
    In addition, this final rule requires that clinical psychologists 
and clinical

[[Page 20111]]

social workers use appropriate diagnostic coding when submitting 
Medicare Part B claims.

EFFECTIVE DATE: This final rule has been classified as a major rule 
subject to congressional review. The effective date is June 22, 1998. 
If, however, at the conclusion of the congressional review process the 
effective date has been changed, the Health Care Financing 
Administration will publish a document in the Federal Register to 
establish the actual effective date or to issue a notice of termination 
of the final rule action.

FOR FURTHER INFORMATION CONTACT: Regina Walker-Wren, (410) 786-9160.

SUPPLEMENTARY INFORMATION:

I. Background

A. Clinical Psychologist Services

    Before section 6113 of the Omnibus Budget Reconciliation Act of 
1989 (OBRA '89), Pub. L. 101-239, became effective, Medicare Part B 
paid for the services of clinical psychologists (CPs) if they were 
furnished as an incident to the services of a physician or if the 
services were furnished in certain settings. Section 6113(a) of OBRA 
'89 revised section 1861(ii) of the Social Security Act (the Act), 
which defined ``qualified psychologist services,'' to expand Part B 
coverage of CP services to services performed in all settings. The 
services, however, must be those that the psychologist is legally 
authorized to perform under State law and that would otherwise be 
covered if furnished by a physician or as an incident to a physician's 
services. This, in effect, allows payment to be made directly to a CP 
for qualified psychologist services furnished by the CP or incidental 
to the CP's services (except for services furnished to hospital 
patients). The provision was effective for services furnished on or 
after July 1, 1990. Section 1833(p) of the Act (now designated as 
section 1842(b)(18)(A) of the Act), which requires that payment for 
qualified psychologist services be made only on an assignment-related 
basis, was unchanged by the OBRA '89 amendments.
    Section 6113(d) of OBRA '89 amended section 1833(d)(1) of the Act 
to eliminate a then-existing dollar limitation on payment for 
outpatient mental health treatment. It, however, retained a 62\1/2\ 
percent limitation that had been established by earlier legislation. 
(Note that section 1833(d)(1) has been redesignated as section 1833(c) 
by the Medicare Catastrophic Coverage Repeal Act of 1989, Pub. L. 101-
234.) Section 1833(c) applies to expenses for mental health treatment 
services incurred on or after January 1, 1990.
    Section 6113(c) of OBRA '89 requires the Secretary, while taking 
into consideration concerns for patient confidentiality, to develop 
criteria regarding direct payment to CPs under which the CPs must agree 
to consult with a patient's attending physician.
    As a further development, section 4157(a) of the Omnibus Budget 
Reconciliation Act of 1990 (OBRA '90), Pub. L. 101-508, amended section 
1861(b) of the Act, which defines ``inpatient hospital services,'' by 
revising paragraphs (3) and (4) to exclude, effective January 1, 1991, 
CP services furnished to a hospital inpatient from the definition. In 
addition, section 4157(c) of OBRA '90 amended section 1862(a) of the 
Act, which concerns exclusions from coverage, by revising paragraph 
(14) to permit direct billing by CPs for qualified psychologist 
services if furnished to hospital patients.
    On December 29, 1993, we published a proposed rule, at 58 FR 68829, 
concerning Medicare coverage and payment of CP, other psychologist, and 
clinical social worker services. That proposed rule contains additional 
information on the legislative background of CP services.
    Subsequent to the publication of the December 1993 proposed rule, 
Congress enacted the Social Security Act Amendments of 1994 (SSA '94), 
Pub. L. 103-432. Section 104 of SSA '94 amended section 1861(e)(4) of 
the Act. Prior to SSA '94, section 1861(e)(4) provided that each 
Medicare patient in a participating hospital be under the care of a 
physician. This provision was incorporated into our regulations at 
Sec. 482.12(c). Section 482.12(c) allows a practitioner to assume 
responsibility for a patient's care only if the practitioner is 
included in the definition of ``physicians'' at section 1861(r) of the 
Act. That definition includes doctors of medicine and osteopathy 
(including psychiatrists) and other practitioners, but does not include 
CPs.
    As amended by section 104 of SSA '94, section 1861(e)(4) of the Act 
now provides that a hospital patient receiving qualified psychologist 
services may be under the care of a CP with respect to services 
furnished by the CP, to the extent permitted under State law.

B. Diagnostic Psychological Tests

    Before enactment of the qualified psychologist services benefit 
(that is, the CP benefit authorized under section 1861(ii) of the Act), 
we authorized, under section 1861(s)(3) of the Act, Medicare coverage 
for diagnostic psychological testing services performed by a qualified 
psychologist practicing independently of an institution, agency, or 
physician's office. In order to have his or her diagnostic services 
covered under this provision, the psychologist had to meet certain 
qualifications and the diagnostic services had to have been ordered by 
a physician. These services were covered as ``other diagnostic tests,'' 
and Medicare paid for them on a reasonable charge basis.

C. Clinical Social Worker Services

    Before the enactment of OBRA '89, services of a clinical social 
worker (CSW) were payable by Medicare Part B when furnished in various 
settings, such as a risk-based health maintenance organization (HMO); 
as part of hospital outpatient services under sections 1861(s)(2)(B), 
1861(s)(2)(C), and 1861(ff)(2)(C) of the Act; and as an incident to the 
services of a physician under section 1861(s)(2)(A) of the Act. (The 
applicable HMO statutory provision is contained at section 
1861(s)(2)(H)(ii) of the Act, which includes these services in the list 
of ``medical and other health services.'')
    Section 6113(b) of OBRA '89 amended section 1861(s)(2) of the Act 
to include CSW services in the definition of ``medical and other health 
services'' generally covered under Part B of Medicare at section 
1861(s)(2)(N) of the Act. It also amended section 1861(hh), which 
defines a CSW, to define ``clinical social worker services'' as 
services performed by a legally authorized CSW for the diagnosis and 
treatment of mental illnesses (other than services furnished to an 
inpatient of a hospital and other than services furnished to an 
inpatient of a skilled nursing facility (SNF) that the facility is 
required to provide as a requirement for participation) and that would 
be covered if furnished by a physician or as an incident to a 
physician's professional service. This provision is effective for 
services furnished on or after July 1, 1990.
    Section 6113(b)(3) of OBRA '89 amended section 1833(p) (now section 
1842(b)(18)(A)) of the Act to specify that Part B payment for CSW 
services (as defined in section 1861(hh)(2) of the Act) is made only on 
an assignment-related basis.
    Readers who desire additional information regarding the legislative 
background for CSW services are referred to the above-cited December 
29, 1993, proposed rule. Note, however, that, subsequent to the 
publication of the December 1993 proposed rule, section 147(b) of SSA 
'94 amended the consultation requirement at section 6113(c) of OBRA '89 
(discussed above with regard to CPs) to include CSWs.

[[Page 20112]]

Therefore, effective January 1, 1995, CSWs have been required by law, 
as a condition of payment for their professional services, to consult 
with their patients' primary care or attending physician.

D. Payment in Certain Facilities

    In accordance with section 1876(a)(6) of the Act, payment for 
services furnished to an enrollee of a risk-based HMO or competitive 
medical plan (CMP) can only be made to the HMO or CMP. Thus, a CP or 
CSW who furnishes services in these settings may not bill Medicare 
directly for these services. Payment will continue to be made through 
the risk-based HMO or CMP under the appropriate payment methodology.
    It should be noted, however, that the scope of services requirement 
for both cost and risk-based HMOs or CMPs is changed with the addition 
of CP and CSW services to the list of ``medical and other health 
services'' defined under section 1861(s) of the Act. The scope of 
services requirement for both cost and risk-based HMOs and CMPs is set 
forth in existing Sec. 417.440(b) and includes all Part A and Part B 
services that are available to Medicare beneficiaries in the HMO's or 
CMP's geographic area. Therefore, both cost and risk contracting HMOs 
and CMPs must now furnish CP and CSW services as Medicare-covered 
services. Note, however, that under section 1861(hh) of the Act, there 
is no coverage under Part B for services and supplies incident to a 
CSW's services. Coverage, however, is provided, under section 
1861(s)(2)(H)(ii) of the Act, for services and supplies furnished as an 
incident to a CSW's services if furnished in a risk-based HMO or CMP. 
Thus, services and supplies incident to a CSW's services are covered by 
Medicare only when furnished by risk-based HMOs and CMPs.
    Comprehensive outpatient rehabilitation facilities (CORFs) could 
bill for CP services furnished through December 31, 1990. However, 
effective January 1, 1991, a separate claim must be submitted under 
Part B for services of a CP in a CORF furnished to patients of the 
facility. This is because, as of January 1, 1991, services of CPs are 
not included in the scope of CORF services described under section 
1861(cc)(1)(D) of the Act. In that section, the law states that CORF 
services do not include any item or service that is not included under 
section 1861(b) of the Act if furnished to an inpatient of a hospital. 
As noted above, section 1861(b), which contains the statutory 
definition of ``inpatient hospital services,'' as amended by section 
4157(a) of OBRA '90, provides that inpatient hospital services do not 
include qualified psychologist services. As a result, a separate claim 
must be submitted under Part B for CP services to hospital inpatients. 
The same policy applies to CORFs under section 1861(cc)(1) of the Act, 
as noted, to SNFs under section 1861(h)(7) of the Act, and to home 
health agencies under the language following paragraph (m)(7) of 
section 1861 of the Act.
    Note also that, in accordance with section 1881(b) of the Act, 
Sec. 405.2163(c), which governs services required for outpatient 
maintenance dialysis patients furnished in end stage renal disease 
facilities, includes the services of social workers. Payment for social 
worker services is included in the composite rate payment made to the 
dialysis facility. Therefore, when a CSW furnishes social services as 
required under Sec. 405.2163(c), these services are billed by the end 
stage renal disease facility, and these services are paid for by 
Medicare as part of the composite rate. The composite rate, a payment 
rate provided for under section 1881(b) of the Act, is a comprehensive, 
all inclusive, prospective payment for all of the items and services 
required for outpatient maintenance dialysis.
    Section 1861(aa)(3) and (4) of the Act includes the services of CPs 
and CSWs in the services of a Federally qualified health center. 
Section 1861(aa)(1)(B) of the Act includes the services of CPs and 
CSWs, and services and supplies furnished as an incident to those 
services, as rural health clinic services. Coverage for these services 
is addressed in Secs. 405.2446, 405.2450, and 405.2452. We plan to 
address provisions related to these services in a separate rulemaking 
document.

II. Provisions of the Proposed Rule

    As stated earlier, on December 29, 1993, we published a proposed 
rule that addressed the provisions of section 6113 of OBRA '89 and 
section 4157 of OBRA '90. Our proposal is summarized below.

A. Clinical Psychologist Services

1. Inclusion as ``Medical and Other Health Services''
    We proposed to revise Sec. 410.10, ``Medical and other health 
services: Included services,'' to include, in the list of medical and 
other health services covered under Part B, the diagnostic and 
therapeutic services furnished by a CP and services and supplies 
furnished as an incident to a CP's services.
2. Covered Services
    We proposed, in a new Sec. 410.71, that Medicare Part B cover 
(subject to the 62\1/2\ percent limitation for certain outpatient 
mental health treatment services) services that are furnished by a CP 
who meets certain requirements (discussed in section III, ``Analysis of 
and Response to Comments,'' of this preamble). The services must be 
those that are within the scope of the CP's State license and must be 
services that would be covered if furnished by a physician or as an 
incident to a physician's services. With regard to this provision, we 
proposed the following:
    <bullet> The outpatient mental health treatment services of CPs and 
services and supplies furnished as an incident to those services are 
subject to the 62\1/2\ percent payment limitation set forth in proposed 
Sec. 410.155.
    <bullet> Payment for the services of CPs and incident-to services 
furnished to hospital inpatients and outpatients through December 31, 
1990, is made to the hospital.
    <bullet> Effective January 1, 1991, CPs may bill Medicare Part B 
directly for their services to hospital patients.
    <bullet> When applying for a provider number and annually 
thereafter, CPs who bill Medicare Part B directly (including CPs who 
furnish services to hospital patients and bill Medicare Part B directly 
for the services) must submit an attestation statement agreeing to 
consult with the beneficiary's attending or primary care physician in 
accordance with accepted professional ethical norms, taking into 
consideration patient confidentiality.
    <bullet> The CP must agree to inform the beneficiary, prior to a 
consultation, that it is desirable to consult with the beneficiary's 
primary care or attending physician to consider any medical conditions 
that may be contributing to the beneficiary's condition. We also 
proposed, in Sec. 410.71(e)(2)(iii), that if the beneficiary assents, 
the CP must agree to consult with the physician within 1 week of 
obtaining the beneficiary's consent. We specifically requested public 
comment on this latter proposal.
    <bullet> The annual attestation contains an agreement to include a 
notation in the beneficiary's medical records to the effect that he or 
she was notified of the desirability of a consultation between the CP 
and the beneficiary's primary care or attending physician, and the 
patient's response to the notification. We specifically requested 
public comment on this matter.
    <bullet> In the attestation statement the CP agrees that, if he or 
she is unable to reach the physician after at least four attempts, he 
or she will notify the physician in writing about the provision of care 
to the beneficiary. We

[[Page 20113]]

specifically invited comments concerning this matter as well.
    We also proposed that the definition of CP that appears in the HMO 
rules at Sec. 417.416(d)(2) be revised to cross-refer to the 
qualifications we would set forth at Sec. 410.71.
3. Incidental Services
    We proposed, in Sec. 410.71(a)(2), that Medicare Part B would cover 
services and supplies furnished as an incident to a CP's services if 
the incidental services and supplies would be covered if furnished by a 
physician or as an incident to a physician's services.
    We also proposed that, in order for services and supplies furnished 
as an incident to the services of the CP to be covered by Medicare, 
they must meet the longstanding Medicare requirements that are 
applicable to services furnished as an incident to the professional 
services of a physician. That is, services must be--
    <bullet> The type that are commonly furnished in a physician's or 
CP's office and are either furnished without charge or are included in 
the CP's bill;
    <bullet> An integral, although incidental, part of professional 
services performed by the CP;
    <bullet> Performed under the direct supervision of the CP (that is, 
the CP must be physically present and immediately available); and
    <bullet> Performed by an employee of either the CP or the legal 
entity that employs the supervising CP under the common law control 
test of section 210(j) of the Act (42 U.S.C. 410(j)), as more fully set 
forth in 20 CFR 404.1007.
4. Consultation
    We proposed, in Sec. 410.71(c), that consultation between the CP 
and the beneficiary's primary care or attending physician would not be 
a separately-billable service for Medicare payment purposes. We also 
proposed that the primary care or attending physician also would not be 
permitted to bill Medicare for this consultation.
5. Payment on an Assignment-Related Basis
    We proposed to revise Sec. 410.150, ``To whom payment is made,'' to 
specify that payment is made directly to the CP on an assignment-
related basis for CP services furnished by him or her and for services 
and supplies furnished as an incident to his or her services. We 
pointed out that the assignment requirement would not preclude a CP 
from furnishing his or her services as an incident to the services of 
another health care practitioner if these services meet all of the 
incident-to requirements. In such a case, the practitioner may bill 
Medicare for the incident-to services. In this case, payment would be 
made by Medicare to the practitioner.
6. Limitation on Mental Health Treatment Services
    We proposed to revise Sec. 410.152(a)(1)(iv), which concerns 
amounts of payment, to remove the annual dollar limitation on covered 
mental health treatment services as a factor in determining incurred 
expenses. (Incurred expenses are Part B covered expenses incurred by an 
individual during his or her coverage period.)
7. Payment Amount
    We proposed to revise Sec. 410.152, ``Amounts of payment,'' to 
specify that Medicare Part B pays, subject to the mental health 
treatment limitation of Sec. 410.155(c), 80 percent of the lesser of 
the actual charge or the fee schedule amount for CP services.
8. Definition of ``Mental Health Treatment''
    We proposed to add a definition of ``mental health treatment'' to 
paragraph (a) of Sec. 410.155, ``Mental health treatment limitation.'' 
We proposed to define ``mental health treatment'' as ``therapy for the 
treatment of a mental, psychoneurotic, or personality disorder.'' We 
also proposed to specify a distinction between ``treatment'' and 
``diagnosis,'' as discussed below.
    We proposed to revise Sec. 410.155(b) to include examples of 
services that are subject to, or excluded from, the application of the 
limitation.
    <bullet> We proposed that the limitation does not apply to mental 
health treatment furnished to hospital inpatients, brief office visits 
to a physician for the purpose of monitoring or changing drug 
prescriptions used in the mental health treatment, partial 
hospitalization services that are not directly provided by a physician, 
and diagnostic services that are performed to establish a diagnosis.
    <bullet> We proposed that the limitation will apply not only to 
mental health treatment furnished by physicians and CORFs but also to 
mental health treatment furnished as an incident to the services of a 
physician and to the mental health services of other health care 
practitioners whether the services are furnished directly by the 
practitioners or as an incident to their services. Thus, for example, 
the limitation would apply to the services of CPs, services furnished 
as an incident to the services of CPs, and to the services of CSWs.
    With respect to diagnostic psychological testing and other 
diagnostic services, we proposed that services performed in order to 
establish a patient's diagnosis are not subject to the limitation, 
because those services do not represent treatment of a mental disorder. 
We stated that the limitation would apply to testing that is part of 
treatment (for example, when it is used to evaluate a patient's 
progress during treatment). Only diagnostic services used to establish 
a diagnosis for a patient's mental illness would be excluded from the 
limitation.
    We proposed to revise Sec. 410.155(c) of the regulations to remove 
the dollar limitation.
    We also proposed to revise the heading of Sec. 410.155, from 
``Psychiatric services limitations: Expenses incurred for physician 
services and CORF services'' to ``Mental health treatment limitation.'' 
Further, we proposed to update the example, in existing 
Sec. 410.155(d), of how the limitation is applied.
    As a technical revision, we proposed to remove the reference to 
``medical services for the diagnosis and treatment of tuberculosis'' 
from the definition of ``hospital'' in Sec. 410.155(a). Section 2335 of 
the Deficit Reduction Act of 1984 (Pub. L. 98-369) repealed the special 
conditions and requirements associated with coverage of treatment of 
tuberculosis patients and eliminated the special provider category of 
tuberculosis hospitals.
9. Basis for Payment
    We proposed to revise Sec. 424.55(b)(1), which concerns accepting 
assignment, to reflect that, in accepting assignment, a supplier (which 
includes a CP) agrees to accept, as the full charge for the service, 
the charge approved by the carrier as the basis for determining the 
Medicare Part B payment. We proposed to revise paragraph (b)(2)(i) of 
this section, which currently reads: ``To collect nothing for those 
services for which Medicare pays 100 percent of the reasonable 
charge.'' We proposed to change ``reasonable charge'' to ``approved 
amount'' to reflect that, based on recent statutory changes, there are 
also fee schedules and other basis for payment, in addition to 
reasonable charge.
    We proposed to revise paragraph (b)(2)(ii) of Sec. 424.55. This 
paragraph currently limits the amount that the supplier may collect 
from the beneficiary or other source to only the amount of any unmet 
deductible, plus 20 percent of the difference between the reasonable 
charge and the unmet deductible for those services for which

[[Page 20114]]

Medicare pays 80 percent of that difference. We proposed to revise this 
to state that, for those services for which Medicare pays less than 100 
percent of the approved amount, the supplier may collect only the 
difference between the Medicare-approved amount and the Medicare Part B 
payment (that is, the amount of any reduction in incurred expenses 
under Sec. 410.155(c) and any applicable deductible and coinsurance 
amount). This change would recognize that a supplier may collect, from 
the beneficiary or other source, the 37\1/2\ percent differential that 
results from the mental health treatment limitation.

B. Diagnostic Psychological Tests

    Diagnostic psychological testing services performed by an 
independent psychologist, other than a CP, practicing independently of 
an institution, agency, or physician's office are currently covered as 
other diagnostic tests under section 1861(s)(3) of the Act. We stated 
our intent to continue to cover this type of testing. We, however, 
invited public comment on methods to employ that would control the 
potential for excessive use of psychological testing.
    In addition, we stated that we intend to address the coverage 
requirements for the psychological tests benefit in a separate 
rulemaking in the near future and that, at that time, we will invite 
public comment about the professional qualifications that should be 
required for the persons who perform these tests. We stated our intent, 
until the rule establishing these qualifications is effective, to 
continue to cover this type of testing if furnished by any psychologist 
who is licensed or certified to practice psychology in the State or 
jurisdiction where he or she is furnishing services or, if the 
jurisdiction does not issue licenses, if provided by any practicing 
psychologist.

C. Clinical Social Worker Services

    1. We proposed to revise Sec. 410.10, ``Medical and other health 
services: Included services,'' to include the services of CSWs in the 
list of medical and other health services covered under Part B.
    2. We proposed, in a new Sec. 410.73(a), to define a CSW as an 
individual who--
    <bullet> Possesses a master's or doctor's degree in social work;
    <bullet> After obtaining the degree, has performed at least 2 years 
of supervised clinical social work; and
    <bullet> Either is licensed or certified as a CSW by the State in 
which the services are performed or, in the case of an individual in a 
State that does not provide for licensure or certification, has 
completed at least 2 years or 3,000 hours of post master's degree 
supervised clinical social work practice under the supervision of a 
master's degree level social worker in an appropriate setting such as a 
hospital, SNF, or clinic.
    3. We proposed, in a new Sec. 410.73(b), to specify that Medicare 
Part B pays for services performed by a CSW for the diagnosis and 
treatment of mental illness that the CSW is legally authorized to 
perform if the services would be covered if furnished by a physician or 
as an incident to a physician's professional services.
    4. We proposed to specify, in a new Sec. 410.73(c)(1), that payment 
for CSW services furnished to hospital inpatients and outpatients is 
made to the hospital (not to the CSW).
    We proposed to specify, in a new Sec. 410.73(c)(2), that payment 
for CSW services furnished to inpatients of an SNF, if the SNF is 
required to provide such services as a requirement for participation, 
is made to the SNF. Under the statute, however, any coverable CSW 
services furnished in an SNF that the SNF is not required to furnish as 
a requirement for participation could be billed by the CSWs directly 
under Part B. Thus, we specifically invited public comment and 
suggestions on how we can clearly identify or differentiate the level 
of services that would clearly qualify under the statute as CSW 
services performed in SNFs from those services that are required by the 
SNF requirements for participation.
    As noted above, the conditions of coverage for end stage renal 
disease facilities require that social worker services be made 
available to dialysis patients. Therefore, we proposed to specify, in a 
new Sec. 410.73(c)(3), that payment for social services furnished to 
dialysis patients that are required by the conditions for coverage for 
end stage renal disease facilities is made to the facility. We 
specifically invited public comment, however, regarding whether any CSW 
services to dialysis patients can be distinguished from the required 
facility services.
    5. We proposed, in a new Sec. 410.73(d), to hold those CSWs who 
bill Medicare Part B directly to the same consultation requirements as 
we would CPs. Accordingly, the CSW, when applying for a Medicare 
provider number and annually thereafter, would be required to submit to 
the carrier an attestation statement agreeing to consult with the 
beneficiary's attending or primary care physician in accordance with 
professional ethical norms, taking into consideration patient 
confidentiality. We would require that the attestation statement 
contain the same information we proposed to require for the attestation 
statement of CPs.
    We also proposed to specify, in a new Sec. 410.73(c)(5), that a CSW 
or attending or primary care physician may not bill Medicare or the 
beneficiary for the consultation that would be required by this rule.
    6. We proposed to revise Sec. 410.150, which explains to whom 
payment is made, to specify that payment may be made directly to the 
CSW, on an assignment-related basis, for services he or she furnished.
    7. We proposed to revise Secs. 410.152, ``Amounts of payment,'' and 
410.155(b), ``Services subject to limitation,'' regarding application 
of the mental health treatment limitation. The provisions of proposed 
Secs. 410.152 and 410.155(b), discussed in sections II.A.7. and II.A.8. 
of this preamble, respectively, would also apply to services of CSWs.
    8. We proposed to further revise Sec. 410.152 by adding a new 
paragraph (m), which would specify that Medicare Part B pays, subject 
to the mental health treatment limitation of Sec. 410.155(c), 80 
percent of the lesser of the actual charge for the therapeutic services 
of a CSW or 75 percent of the fee schedule amount for CP services.
    9. We proposed to amend Sec. 417.416, ``Qualifying condition: 
Furnishing of services,'' to specify that an HMO or CMP may permit the 
covered services of a CSW to be furnished without physician 
supervision. We also proposed that services incident to the 
professional services of a CSW are not covered by Medicare if furnished 
in a cost-based HMO or CMP.
    10. The proposed revision to Sec. 424.55, ``Payment to the 
supplier,'' discussed in section II.A.9. of this preamble, would also 
apply to CSWs.

D. CPs and CSWs Diagnostic Coding

    We proposed that, beginning with the effective date of the final 
rule, CPs and CSWs would be required to use only ICD-9-CM diagnostic 
coding when submitting claims to our carriers.

III. Analysis of and Response to Comments

    In response to the December 1993 proposed rule, we received 
approximately 740 public comments. Commenters included national, State, 
and local professional associations; State and local governmental 
agencies; psychologists, psychiatrists, CSWs, and other individuals.
    The concerns expressed by the commenters focused predominately on 
the proposed definition of ``clinical psychologist,'' the attestation 
statement,

[[Page 20115]]

and the consultation requirements. There were also other issues 
addressed in the public comments, such as, which medical coding system 
CPs or physicians should use to report services, how to distinguish the 
professional services of CSWs from the social services that social 
workers are required to furnish to patients in SNFs that house 120 or 
more beds, psychological testing, and the grandfathering of master's 
level psychologists who were licensed by their respective States at the 
time licensure laws first became effective.
    A summary of the comments and our responses are presented below.

A. The ``Clinical Psychologist'' Definition (Sec. 410.71)

    The proposed CP definition is basically comprised of three 
requirements: the educational degree, State licensure, and clinical 
experience. For purposes of addressing public comments on the proposed 
definition of ``clinical psychologist,'' however, we believe it is 
helpful to analyze the various components of the definition. These are 
as follows:
    <bullet> The individual must hold a doctoral degree in psychology.
    <bullet> The doctoral degree in psychology must be from an 
accredited program.
    <bullet> The psychology program must prepare the candidate to 
practice clinical psychology by providing appropriate clinical 
psychology training.
    <bullet> The individual must be licensed or certified at the 
independent practice level of clinical psychology by the State in which 
he or she practices.
    <bullet> The individual must possess 2 years of supervised clinical 
experience, at least one of which is postdoctoral degree experience.
    <bullet> The 2 years of supervised clinical experience must have 
been supervised by a psychologist qualified at the doctorate level.
1. The Individual Must Hold a Doctoral Degree in Psychology
    Comment: The majority of the comments we received on the CP 
definition supported maintaining the standard that requires a doctoral 
degree in psychology. On the other hand, many commenters objected to 
maintaining that standard. These latter commenters believed that the 
standard should be replaced with a standard that would enable 
psychologists with master's degrees to qualify as CPs. It was suggested 
by a few of these commenters, however, that these master's level 
psychologists be paid at the same rate as social workers with master's 
degrees who are also authorized to bill the Medicare program directly 
for professional diagnostic and treatment services.
    Also, these commenters contend that in some States there is a 
shortage of psychologists with doctoral degrees, particularly in the 
rural areas. They further assert that, while psychologists with 
doctoral degrees are not very accessible to the elderly population in 
rural areas, there are psychologists in these areas who have a master's 
degree in psychology and are licensed by the State at the independent 
practice level to furnish diagnostic and treatment services. These 
commenters have urged us to defer to State Psychology Boards to 
determine who is eligible to furnish psychological services under the 
Medicare program, since professional licensure has always been 
controlled by the State.
    Response: The statute, at section 1861(ii) of the Act gives the 
Secretary the authority to define the term ``clinical psychologist'' 
for the purpose of covering, under the Medicare Part B program, the 
professional diagnostic and treatment services of CPs and services and 
supplies furnished as an incident to their professional services.
    Previously, we had established a definition of CP in regulations at 
Sec. 417.416(d)(2). This definition was issued in final regulations in 
1985 and has been used for purposes of coverage of CP services in HMOs 
and CMPs. Application of this definition in the community mental health 
center setting was addressed through instructions issued in September 
1986; for purposes of the expanded CP benefit, instructions were issued 
in August 1990.
    As we stated in the proposed rule, while this CP definition in its 
entirety may have been appropriate for psychologists furnishing 
services in limited settings such as HMOs, CMPs, and community mental 
health centers, its use for purposes of the expanded benefit caused 
extensive concern among CPs. While we believe that there are provisions 
of the definition that remain appropriate even under the expanded 
benefit, we believe other provisions of the definition require some 
modification.
    Under the expanded CP benefit, CPs are authorized to perform 
services that would otherwise be furnished by a physician, as well as 
accept responsibility for services furnished by others incident to 
their professional services. We believe that it is prudent for these 
practitioners to have a level of education that is close to that which 
physicians receive if they are going to perform in this capacity. Even 
though a few States may license psychologists with master's degrees at 
the independent practice level to furnish both diagnostic and treatment 
services, we want to ensure that only those practitioners with the 
highest level of education, knowledge, and experience furnish services 
to Medicare beneficiaries.
    Additionally, we believe that the requirement for a doctoral degree 
is the standard for psychologists who are qualified to furnish services 
and supervise the services of others, as evidenced by the industry and 
by other Federal programs. Information from the Association of State 
and Provincial Psychology Boards indicates that 32 States and the 
District of Columbia do not license or certify psychologists below the 
doctorate level, and most of the 18 States that do license or certify 
individuals at the masters level require supervision of the 
individual's services by a doctorate level psychologist. Over 90 
percent of psychologists licensed or certified for independent clinical 
practice do have doctoral degrees.
    We have concerns about the suggestion that the Medicare program 
allow psychologists with master's degrees who are licensed by the State 
at the independent practice level of psychology to qualify as CPs, but 
pay these psychologists at the same rate that the program pays CSWs for 
their professional diagnostic and treatment services. Although the 
Medicare program makes direct payment to independently practicing CSWs 
for their professional diagnostic and treatment services, the CSW 
benefit is a more restricted benefit than the CP benefit. For example, 
CSWs may not bill directly for services they furnish hospital 
inpatients and outpatients or for services in SNFs that participate in 
Medicare. Additionally, the program does not authorize direct payment 
to CSWs for services furnished incident to their professional services, 
except in certain limited situations.
    Furthermore, the law provides direction on how the program must pay 
for the services of CPs as well as CSWs based on criteria that are 
specific to each of these categories of practitioners. Accordingly, we 
do not have the discretion to pay doctoral level psychologists at one 
rate and master's level psychologists at another--just as we do not 
have the discretion to pay master's level social workers at one rate 
and doctoral level social workers at another. Practitioners who meet 
the criteria for CPs and CSWs, respectively, will be paid at the 
established rate for that benefit.
    The following may help to relieve the concerns expressed about the 
shortage

[[Page 20116]]

of psychologists with doctoral degrees in rural areas. Section 
1861(aa)(1)(B) of the Act states that the term ``rural health clinic 
services'' includes services furnished by a CP (as defined by the 
Secretary). Therefore, in developing a notice of proposed rulemaking 
that will address Medicare coverage of services provided by rural 
health clinics, we must develop a definition of CP that is appropriate 
for practitioners who are employed by those entities. Under the rural 
health clinic benefit, the CP definition will take into account the 
shortage of psychologists with doctoral degrees in rural areas, 
particularly those designated as health professional shortage areas. We 
will not, however, discuss the requirements for CPs who are employed by 
rural health clinics in this final rule. Instead, the provisions of the 
definition for purposes of the rural health clinic benefit will be 
proposed in a separate notice of proposed rulemaking.
    Comment: Many professional organizations and psychologists 
commended us for proposing a more comprehensive definition of a CP by 
removing the previous requirement that an individual must hold a 
doctoral degree from a program in clinical psychology. They stated that 
our efforts to develop an improved definition will help to provide 
Medicare beneficiaries with access to basic mental health care. These 
commenters, in most cases, indicated whether their local carriers have 
been interpreting the CP definition on a case-by-case basis (while 
awaiting a final rule) to include practitioners who have clinical 
experience, even though their doctoral degrees are from another program 
in psychology.
    On the other hand, many commenters from professional associations 
and organizations stated that the existing requirement that an 
individual must hold a doctoral degree from a program in clinical 
psychology should be restored and that the proposed definition, which 
does not specify that the doctoral degree must be from a program in 
clinical psychology, is inappropriate. These commenters questioned how 
we could ensure that other doctoral level psychologists who have 
graduated from programs such as neuropsychology or school, 
developmental, educational, comparative, experimental, and industrial 
psychology have the appropriate education and clinical training and 
experience to treat Medicare patients. These commenters believed that 
removal of the existing requirement for a doctoral degree from a 
program in clinical psychology could present a danger to the medically 
vulnerable Medicare population.
    Some commenters stated that, for purposes of determining who 
qualifies as a CP under the Medicare program, we should recognize those 
psychologists who are listed as health service providers in the 
National Register of Health Service Providers in Psychology, and they 
pointed out the following. The National Register is a way of 
identifying many clinicians who graduate with degrees from programs 
that do not specify the word ``psychology'' in their title, but are 
clearly programs in psychology. The Civilian Health and Medical Program 
of the Uniformed Services, which is another Federally funded and 
managed program, references the National Register as a mechanism for 
identifying CPs. Also, some States have added a certification to the 
psychology license that designates psychologists trained and 
experienced in the provision of clinical services as health service 
providers.
    Response: We realize that there are many psychologists who, 
although their doctoral degree is labeled other than ``clinical 
psychology,'' graduated from psychology programs that provided them 
with the appropriate knowledge, training, and experience in clinical 
psychology. We are very concerned that we not indirectly deny 
beneficiaries access to the care of qualified psychologist services 
solely because the degree that a practitioner has earned is labeled 
something other than ``clinical psychology.'' Based on our carriers' 
experience in interpreting the CP definition on a case-by-case basis, 
we do not agree with those commenters who believe that removal of the 
existing requirement for a doctoral degree from a program in ``clinical 
psychology'' presents a danger to the Medicare population.
    We believe that the National Register is a mechanism that can be 
instrumental in identifying psychologists who are qualified to furnish 
qualified psychologist services. We do not believe, however, that it 
should be used by carriers as the sole criterion to determine who is 
qualified to furnish psychologist services under the Medicare program 
because listing is optional and requires payment of a fee by the 
practitioner. Also, the register lists nonphysician practitioners who 
have received some clinical training and experience from programs that 
are not designated as psychology programs.
    While we have made allowances for the types of psychology programs 
that can qualify a practitioner under Medicare's CP benefit, we require 
that the individual's doctoral degree at least be from a program that 
is designated as a psychology program. The CP benefit was created as a 
discrete benefit for psychologists, and not nonphysician practitioners 
who may receive some clinical training as part of their doctoral degree 
programs. We believe that Congress would have to create a separate 
benefit to recognize practitioners whose degrees are in a field other 
than psychology.
    Therefore, in this final rule, we specify that an individual who 
seeks qualification as a CP must hold a doctoral degree in psychology.
2. The Doctoral Degree in Psychology Must Be From an Accredited Program
    Comment: Many commenters stated that the requirement, under our CP 
definition, for institutional accreditation should be restored. In 
fact, many physicians opposed the proposed revisions to the CP 
definition because they believed the revisions are inappropriate in 
that they would remove the requirement that the doctoral degree program 
be from an educational institution that is accredited by an agency 
recognized by the Commission on Recognition of Postsecondary 
Accreditation (previously known as the Council on Postsecondary 
Accreditation). They believed that to ensure the quality of the 
psychology doctoral program these programs must be housed in accredited 
institutions of higher learning and be university-based. Additionally, 
they stated that merely requiring that a doctoral degree in psychology 
be from an accredited program is too open-ended because it does not 
specify who must perform the accreditation function. They maintain that 
our proposed requirement potentially dilutes the quality of 
psychologists who are eligible to treat Medicare patients.
    Many psychologists and professional associations in California 
commented that the accreditation requirement in the original and the 
proposed CP definition would pose a serious problem for about one-
fourth of the psychologists in California. The affected psychologists 
would be those whose doctoral degrees in psychology are either from 
schools that are not regionally accredited by the Commission on 
Recognition of Postsecondary Accreditation or are from psychology 
programs that are not accredited. These commenters stated that 
approximately one-fourth of the licenses granted by the Board of 
Psychology in California, for the period beginning January 1990 through 
1991, were to psychologists who are graduates of State approved 
doctoral programs in psychology. The commenters further

[[Page 20117]]

stated that many of the institutions that house State approved 
psychology programs were specifically developed to train psychologists 
in clinical applications of health care. (The State of California 
regulates these institutions and their programs through the Council for 
Private Postsecondary and Vocational Education.) These commenters 
suggested that, in order to avoid inadvertently eliminating otherwise 
qualified professionals from participating in the Medicare program 
because of a semantic problem, we amend our proposed definition to 
require that a CP hold a doctoral degree in psychology from an 
accredited or State approved program.
    Response: We have thoroughly examined the academic accreditation or 
approval requirements imposed by the various States for licensure or 
certification of psychologists. The wide degree of variation in the 
specifics of State requirements makes creation of a uniform Federal 
standard infeasible. We have concluded that reliance on State licensure 
or certification requirements provides adequate assurance that an 
individual's doctoral degree was obtained from a program that met 
appropriate academic standards.
3. The Individual Must be Licensed or Certified at the Independent 
Practice Level of Clinical Psychology by the State in Which He or She 
Practices
    Comment: We received very many comments pertaining to the above 
requirement, which is included in the proposed CP definition. We were 
informed that 48 States generically license psychologists at the 
independent practice level of psychology, not clinical psychology and 
that the States, in the vast majority of cases, do not employ concepts 
of what constitutes ``clinical psychology.'' On the other hand, we 
received many comments that the addition of the word ``clinical'' to 
this requirement regarding State licensure and certification at the 
independent practice level actually strengthened the requirement 
overall.
    Response: We have learned from the commenters, and as a result of 
our own investigation, that State licensure or certification laws are 
broadly based and, in combination with regulatory requirements for 
licensing or certifying psychologists, limit the scope of 
psychologists' activities to those for which they have received 
appropriate education, training, and experience. Additionally, the 
licensing law of every State either incorporates an ethics code or a 
State board's disciplinary code that makes it illegal for a 
psychologist to practice in an area for which he or she has not 
received training. Accordingly, to the extent that a psychologist, 
regardless of the type of doctorate possessed, were to provide services 
for which he or she had not received appropriate education and 
training, that psychologist would be practicing outside the scope or 
his or her competence and would be subject to both legal and ethical 
sanctions.
    By inserting the word, ``clinical'' into this requirement under the 
proposed CP definition, we would exclude all of the otherwise-qualified 
psychologists in 48 states from participating under the Medicare 
program. Therefore, in this final rule we amend this requirement to 
specify that an individual who seeks qualification as a CP under 
Medicare must be licensed or certified at the independent practice 
level of psychology by the State in which he or she practices.
4. The Psychology Program Must Prepare the Candidate to Practice 
Clinical Psychology by Providing Appropriate Clinical Psychology 
Training
    Comment: Several commenters believed that, to guard against 
erroneous interpretations, we need to further clarify the term 
``clinical psychology training.'' They stated that, as written, this 
section uses the terms ``clinical psychology'' and ``clinical 
psychology training'' to describe a ``clinical psychologist.'' The 
commenters believe that the fact that no further explanation of these 
terms is provided could create considerable, but unnecessary, ambiguity 
in the definition. Therefore, these commenters have suggested a 
provision that they believe clarifies that the term ``clinical 
psychology training'' means education and practical experience that 
prepares the psychologist to provide diagnostic, assessment, 
preventive, and therapeutic services directly to individuals. It was 
suggested that this sentence be added to the end of this particular 
requirement under the CP definition.
    Response: We believe that this suggestion clarifies the intent 
about the emphasis on the term ``clinical psychology.'' We wanted to 
stress that psychologists who furnish services under this benefit must 
have the education and experience to furnish diagnostic testing and 
assessment services and preventive or therapeutic intervention services 
directly to individuals whose mental growth, adjustment, or functioning 
is impaired or at risk of impairment. Accordingly, we believe that the 
focus should be on the actual observation and treatment of patients by 
the psychologist much more so than on services or work that is 
theoretical or experimental. In addition, we believe that the key 
element is the scope of practice authorized by State licensure or 
certification. Therefore, we are clarifying in this final rule that the 
individual must be licensed to furnish diagnostic, assessment, 
preventive, and therapeutic services directly to individuals.
5. The Individual Must Possess 2 Years of Supervised Clinical 
Experience, at Least 1 Year of Which is Postdoctoral Degree Experience
    Comment: Many commenters stated that the above requirement should 
specify a minimum total number of hours for the required supervised 
clinical experience. These commenters stated that some States, for 
example, Florida, Kentucky, and Washington, require a specific number 
of hours, with Florida requiring 2 years or 4,000 hours of supervised 
experience. These commenters believed that establishment of a 
requirement for 2 years/4,000 hours of supervised experience for CPs 
would put in place a mechanism that would serve to protect the Medicare 
population.
    A few commenters, however, stated that it is possible that the 
requirement under the proposed CP definition would eliminate doctoral 
level psychologists who lack a postdoctoral year of supervised clinical 
experience because they were licensed as a psychologist at the master's 
level and received their doctoral degree later in their career.
    Response: All States have licensure/certification requirements for 
supervised experience, but they vary in terms of specific details. 
Therefore, adoption of a uniform Federal standard is not feasible. We 
have concluded that reliance on State licensure or certification 
requirements provides adequate assurance that an individual has 
completed appropriate supervised clinical experience.
6. The 2 Years of Supervised Clinical Experience Must Have Been 
Supervised by a Psychologist Qualified at the Doctoral Level
    Comment: Many commenters expressed concern that the above 
requirement could inadvertently exclude a number of qualified 
psychologists from participating under the Medicare program. They 
explained that some highly qualified, doctorally trained psychologists 
who have been in practice for a long time received their clinical 
supervision from licensed master's level psychologists in States where 
licensed master's level supervision was, and continues to be,

[[Page 20118]]

acceptable to State licensing boards. Therefore, these commenters 
suggested language that reads, ``a CP must possess 2 years of 
supervised clinical experience, at least one of which is postdoctoral 
degree experience, and the supervision as provided by a licensed 
psychologist.'' We also received a suggestion that we recognize 
supervision that was provided by a physician.
    Many commenters also stated that our proposed requirement would 
place an onerous task on Medicare carriers because it requires them to 
determine who provided the supervision of the psychologist's clinical 
experience.
    On the other hand, many other commenters stated that the 
requirement pertaining to who supervises the clinical experience should 
be strengthened. These commenters stated that we should require that 
the clinical experience be supervised by a CP who has a doctorate 
degree in clinical psychology. Their rationale for strengthening this 
requirement is that if someone is going to learn about clinical 
practice from a supervisor, that supervisor is a superior teacher if he 
or she is licensed in what he or she is teaching/supervising.
    Response: By relying on State licensure or certification (see 
previous response) this level of detail need not be addressed by a 
Federal standard.
7. Grandfathering Master's Level Psychologists
    Comment: Many commenters expressed concern about whether this final 
rule will grandfather those psychologists who were grandfathered under 
their State's original licensing laws. They were concerned that the 
proposed CP definition would restrain the practice of some 
psychologists who have been practicing for at least 20 years prior to 
the implementation of the CP benefit. According to some comments we 
received on the grandfathering issue, the criteria that some States 
used to determine who was qualified for grandfathering was based on 
whether the individuals could demonstrate that they had an established 
practice in psychology for a number of years followed by a successful 
performance on the national licensing examination. The commenters 
stated that, while few independently practicing master's level 
psychologists remain in practice today, those who are still practicing 
would be excluded under the proposed CP definition from participating 
in the Medicare program. These commenters requested us to accept, for 
the purpose of qualifying psychologists under Medicare, certification 
as a health service provider for master's level psychologists who were 
grandfathered and have been practicing since State licensure laws went 
into effect and who are listed in the National Register of Health 
Service Providers in Psychology.
    Response: The State licensing boards that adopted grandfathering 
clauses used criteria that varied from State to State to determine who 
qualified. Also, there was no one time period for purposes of 
grandfathering because all State licensing boards did not implement 
licensing laws for the psychology profession concurrently. Thus, there 
has been no uniformly recognized standard for grandfathering. Moreover, 
as discussed at length in our earlier response regarding the 
requirement for a doctoral degree, we do not believe it is appropriate 
to recognize as a CP any practitioner who lacks a doctorate. The few 
remaining masters level psychologists who have been grandfathered to 
practice in their individual States have not been recognized as CPs 
under our current instructions in the Medicare Carriers Manual. 
Therefore, continuing their exclusion from Medicare should not disrupt 
their practices and will have negligible impact on the overall 
availability of services to beneficiaries.
    Comment: We also received several comments appealing to us to 
grandfather into the final rule those psychologists that, before 
publication of the final rule, carriers had determined were qualified 
as CPs. (On an interim basis, carriers were granted the discretion to 
interpret, on a case-by-case basis, the CP definition to include 
psychologists with doctoral degrees in psychology programs that were 
labeled other than ``clinical psychology'' provided they met all the 
other definitional requirements. Conversely, carriers had the 
discretion to adhere strictly to the requirement which stipulates that 
a CP must have a doctoral degree from a program in clinical psychology. 
During this interim measure, many psychologists who would have 
otherwise been excluded from coverage were granted provider numbers by 
carriers to participate in the Medicare program as CPs.) These 
commenters would like to ensure that coverage of these psychologists' 
services is not discontinued as a result of the provisions of the final 
rule.
    Response: We do not believe that it is necessary to specify in this 
final rule that those psychologists who carriers qualified as CPs prior 
to the promulgation of this final rule must be grandfathered under the 
final CP definition. We believe that the decisions carriers have made 
about qualifying individuals as CPs, using the discretion that we 
granted them in the interim (which was to choose to issue provider 
numbers to psychologists with doctoral degrees from psychology programs 
labeled other than ``clinical psychology'' provided the individual had 
the appropriate knowledge, training, and experience in clinical 
psychology) will not conflict with the CP definition under this rule 
and will not require a reversal of their decisions.
8. Retraining of Psychologists
    Comment: Many commenters strongly asserted that we should not 
establish standards for retraining psychologists to qualify for 
coverage under Medicare, as this could intrude or undermine State 
licensure and scope of practice authorities as well as accredited 
educational institutional training programs. They believed that we 
should limit Medicare coverage to CPs who qualify based on the current 
requirements. These commenters stated that there is no congressional 
mandate for us to establish new education and training criteria in 
order to cover nonqualified psychologists under Medicare. In fact, 
these commenters challenged us about our mission by questioning whether 
we plan to become a psychology training and payment agency. Lastly, 
they characterized our proposal to cover the services of psychologists 
who retrain as ``ridiculous'' and a wasteful expenditure of taxpayer's 
funds.
    Conversely, we received as many or even more comments stating that 
the opportunity for professional retraining by psychologists is of 
great value to society, because it encourages and facilitates the 
unique contributions that can be made by psychologists with broadly 
diversified backgrounds. These commenters stated that they very much 
appreciate our acknowledgment that appropriate retraining should enable 
a psychologist to qualify for Medicare coverage purposes.
    The latter commenters informed us, however, that the psychology 
profession refers to retraining as ``respecialization.'' They clarified 
that, under the respecialization process, psychologists receive a 
certificate, not a second doctoral degree as we stated in the preamble 
to the proposed rule. Also, in response to our request (under this 
particular proposal) for standards for retraining programs that prepare 
candidates to practice clinical psychology, these commenters have 
referred us to the professional, official standards in place that were 
established by the American Psychological

[[Page 20119]]

Association's Committee on Accreditation.
    Response: We have concluded that there is no need to create a 
special provision to address this situation. This issue is generally 
rendered moot by our decisions not to specify a degree in ``clinical'' 
psychology but to rely on State licensure or certification. Individuals 
who have respecialized can qualify if they meet our criteria.
9. Summary
    In summary, as a result of our consideration of public comments, 
proposed Sec. 410.71(e)(1) is designated as Sec. 410.71(d) and is 
revised to specify that a CP is an individual who--
    (1) Holds a doctoral degree in psychology; and
    (2) Is licensed or certified, on the basis of the doctoral degree 
in psychology, by the State in which he or she practices, at the 
independent practice level of psychology to furnish diagnostic, 
assessment, preventive, and therapeutic services directly to 
individuals.

B. Diagnostic Psychological Tests

    We stated in the proposed rule that we will continue to cover 
diagnostic psychological tests under section 1861(s)(3) of the Act as a 
discrete benefit under the Medicare program. We intend to continue to 
cover these tests when furnished by any psychologist who is licensed or 
certified to practice psychology in the State or jurisdiction where he 
or she is furnishing services or, if the jurisdiction does not issue 
licenses, if provided by any practicing psychologist.
    We explained in the proposed rule that we plan to do a separate 
rulemaking that will address the qualifications for persons who perform 
diagnostic psychological tests and that, at that time, we will invite 
public comments on this issue. In the meantime, however, we invited 
public comment on methods to employ that will control the potential for 
excessive use of psychological testing. We received a number of 
suggestions. We thank the respondents, and we will consider their 
comments as we develop the separate rulemaking.

C. Services Furnished as an Incident to CP Services (Sec. 410.71(a)(2))

    Comment: We received comments from a professional association 
stating that the requirement under the ``incident to'' benefit that 
calls for the provision of services under the direct supervision of the 
CP (that is, the CP must be physically present in the office suite and 
immediately available) hampers the ability of the CP to provide 
necessary mental health services in an effective and efficient manner. 
This association believed that all ``incident to'' services should be 
performed under the direct supervision of the CP; it did not believe, 
however, that direct supervision requires the physical presence of the 
CP. The association claimed that mental health services are different 
from many health services that pertain exclusively to physical health. 
Therefore, according to the association, the CP's presence is not 
appropriate in this arena because mental health services are unlikely 
to create a risk that would necessitate the CP's immediate physical 
presence. This association believed that a more reasonable standard 
would require that the CP be readily available by telephone for 
consultation, if necessary, as is the customary practice in the 
profession. It believed that this would provide complete protection to 
the patient without impeding the ability of the psychologist to perform 
other services.
    On the other hand, we received comments from a State psychological 
association that maintained the requirement that the CP be immediately 
present and available is appropriate. It stated, however, that the 
reference to the ``office suite'' is dated and no longer justified. The 
association recommended that the reference be removed because it seems 
to preclude services to patients in skilled nursing facilities or in 
settings other than an office.
    Lastly, regarding the direct supervision requirement under the 
``incident to'' benefit, one psychologist commented that the 
requirement is not clear about whether the CP should be in the building 
during the time of services.
    Response: The statute limits coverage to services that would be 
covered if furnished as an incident to a physician's services. 
Therefore, we are using the same standard for ``incident to'' that 
applies to physicians, including mental health services that are 
furnished as an incident to a physician's service. That standard, as 
currently reflected in section 2050.1.B of the Medicare Carriers Manual 
(HCFA Pub. 14-3), states that ``supervision in the office setting does 
not mean that the physician must be present in the same room with his 
or her aide. However, the physician must be present in the office suite 
and immediately available to provide assistance and direction 
throughout the time the aide is performing services.'' We did not mean 
to imply, however, that ``incident to'' services must always be 
furnished in the office suite, and this final rule revises proposed 
Sec. 410.71(a)(2)(iv) to clarify this point. As an example, a CP could 
directly supervise a service performed outside the office suite (such 
as in an SNF) if the CP is in the room with the aide while the aide 
performs the service. This also parallels the physician standard as 
expressed in section 2050.IB, which indicates that the requirement for 
direct supervision of a service performed in an institution is not 
satisfied merely by the physician being available by phone or being 
present somewhere in the institution.
    Comment: One psychologist asked which services furnished by CPs in 
the hospital setting remain bundled and which services are unbundled. 
(``Bundled'' is a term used to indicate that payment for the service is 
included in the payment made to the hospital.) He was particularly 
interested in whether services furnished as an incident to the 
professional services of a CP are bundled into the payment that 
hospitals receive for their services.
    Response: Coverage and payment for the direct professional services 
of a CP are unbundled by law from hospital services. Therefore, a CP 
(or the hospital on behalf of the CP) must bill the carrier for the 
direct professional services furnished to hospital patients. The 
payment that is made to hospitals for ``hospital services'' no longer 
includes payment for the professional services of CPs. However, 
coverage of services furnished in the hospital setting as an incident 
to the professional services of CPs remains bundled.

D. The Outpatient Mental Health Treatment Limitation (Sec. 410.155)

    Comment: We received numerous comments on various issues pertaining 
to the limitation from a major professional association stating that we 
should use different terminology regarding the limitation when 
discussing how it applies to the services of physicians. First, the 
association suggested that when referring to the services of 
physicians, we use the term ``psychiatric medical services,'' instead 
of the term ``mental health treatment services.'' It believed that the 
term ``mental health treatment'' is appropriate only for psychologists. 
In addition, this association recommended that we consider revising the 
phrase, ``mental, psychoneurotic, and personality disorders'', and 
that, instead, we use the current language contained in the American 
Psychiatric Association's Diagnostic and Statistical Manual.
    Second, this association pointed out that the listing of services 
that are exempt from the limitation is inaccurate and incomplete 
because it does not contain the diagnosis and medical

[[Page 20120]]

management of patients with Alzheimer's Disease or other related 
disorders. It stated that, for years, section 2472.4 of the Medicare 
Carriers Manual has listed these services among those excluded from the 
application of the limitation. Also, it believed that the appropriate 
interpretation of the statutory exclusion for monitoring or changing 
drug prescriptions used in the treatment of a mental illness or mental 
disorder should include the decision as to whether to prescribe such a 
drug. Thus, the association stated that the exclusion should read, 
``brief office visits for the purpose of prescribing, monitoring, or 
changing drug prescriptions used in the treatment of a mental illness 
or mental disorder.''
    Third, this association stated its belief that the limitation 
should apply to partial hospitalization services furnished by CPs, as 
it pertains to partial hospitalization services furnished by 
physicians.
    Fourth, this association commented that the example under paragraph 
(d) of this section is incorrect. It believed that the $100 deductible 
should apply against the approved amount--$750 first; then the 
remaining $650 should be subject to the 62.5 percent limitation. 
Additionally, it suggested that we provide examples under this 
paragraph to illustrate single assigned and unassigned claims for both 
inpatient and outpatient services.
    We received several other comments from psychologists on the 
limitation expressing that the limitation should be eliminated, that it 
should never apply to psychological testing, and that the limitation on 
treatment services requires patients to make higher copayments than 
many of them can afford, therefore forcing these patients to seek 
inpatient mental health care as a more affordable alternative.
    Response: With regard to the association's first comment, we 
believe that no purpose would be served under the Medicare program by 
accepting, as suggested, the artificial distinction in terminology when 
discussing the services of physicians versus the services of CPs and 
CSWs. However, we are not defining the phrase ``mental health 
treatment,'' but rather adhering to the statutory language regarding 
expenses in connection with the treatment of a mental, psychoneurotic, 
or personality disorder. Clearly physicians, psychologists, and other 
practitioners all may furnish that treatment.
    We agree that medical management for patients diagnosed with 
Alzheimer's disease or related conditions is not subject to the 
limitation and have added this exception to the list. Psychotherapy for 
these conditions, however, is subject to the limitation. This reflects 
current policy as stated in section 2472.4 of the Medicare Carriers 
Manual.
    With regard to revising the wording that pertains to brief office 
visits for monitoring or changing drug prescriptions, the initial 
decision as to whether to prescribe a drug is beyond the scope of this 
exception as authorized by the statute. Consequently we have not made 
the suggested change.
    Regarding the concern about whether the limitation applies to 
``partial hospitalization services furnished by CPs,'' the situation 
does not exist so the concern is moot. As specified in Sec. 410.43(b), 
CP services are separately covered and are not paid as partial 
hospitalization services. Thus, CP services are subject to the 
limitation when they are furnished to patients of a partial 
hospitalization program.
    We cannot accept the suggestion to eliminate the outpatient mental 
health treatment limitation. It is not within our administrative 
authority to eliminate the statutory limitation; elimination of this 
limitation would require a change in the law. Neither are we in a 
position to specify that the limitation should never apply to 
psychological testing. In fact, we understand that testing frequently 
is performed in order to evaluate a patient's progress. Clearly in 
those cases the testing is part of treatment and, thus, is subject to 
the limitation.
    We disagree with the comment that the example under paragraph (d) 
is incorrect. The example is correct. The Act specifies, at section 
1833(c), that the limitation must be applied first in order to 
determine the amount of expenses to which the deductible is applied. We 
have, however, expanded the examples to illustrate how the limitation 
applies to single assigned and unassigned claims for both inpatient and 
outpatient services. We have also made revisions to the examples to 
make them easier to understand.

E. The Consultation Requirement, CPs and CSWs (Secs. 410.71(e)(2) and 
410.73(d))

    Comment: We received a great many comments from psychologists, 
social workers, and professional organizations representing these 
nonphysician practitioners that supported the general attestation/
consultation requirement. However, these commenters overwhelmingly 
opposed the specific proposed requirements under the general 
requirement for an attestation/consultation.
    One of their concerns addressed the proposed requirement that would 
require either the CP or CSW to make at least four attempts to consult 
directly with the primary care or attending physician prior to 
resorting to written notification. The commenters believed that this 
proposal exceeds what Congress envisioned in terms of a consultation 
requirement, and that it imposes an unreasonable, unnecessary, and 
unjustifiable burden on practitioners who participate in the Medicare 
program. They stated that their review of the OBRA 89 legislative 
history reveals that Congress envisioned either written or direct 
consultation, with no expressed preference for one over the other, and 
with no requirement that more than one attempt at direct consultation 
take place. Also, they made a position for enabling CPs or CSWs to use 
their professional judgement about whether and when to consult a 
patient's physician based on the needs of the patient, not the needs of 
the reimbursement system. They suggested that the system's needs must 
never be elevated above the patient's needs. Moreover, they suggested 
that either one successful direct attempt to consult by telephone or 
written notification is appropriate, sufficient, and consistent with 
congressional intent. However, we received many comments that were 
contrary to the position taken above, in that they supported the 
proposed requirement for written notification to the patient's primary 
care or attending physician if the CP or CSW failed after four attempts 
to telephone the physician.
    Response: We agree with the suggestion that there needs to be 
changes or exceptions made to the proposed provisions of the 
consultation requirement. In view of this, we have reconsidered our 
approach about the method used by a CP or CSW to establish a 
consultation with a patient's primary care or attending physician. If 
the goal is that, if a patient consents, a consultation occur in a 
timely manner, it really does not matter whether the CP's or CSW's 
approach is by telephone or in writing. Our initial preference for 
telephone calls was that a telephone call solicits a more immediate 
response (provided that the physician is available) than sending a 
letter by mail to the physician and awaiting a response.
    We realize that requiring four phone calls by the CP or CSW to the 
patient's primary care or attending physician could be burdensome. 
Accordingly, in this final rule we require that if the beneficiary 
assents to a CP or CSW consultation with his or her primary care or 
attending physician, the CP or CSW must attempt to consult the

[[Page 20121]]

physician within a reasonable time after receiving the beneficiary's 
consent to the consultation. If attempts to consult directly with the 
physician are not successful, the CP or CSW must notify the physician, 
within a reasonable time, that he or she is furnishing services to the 
beneficiary. We believe that this effort represents a sincere attempt 
on behalf of the practitioner to comply with the consultation 
requirement regardless of whether the physician responds to the 
request. Unless the primary care or attending physician referred the 
beneficiary to the CP or CSW, the practitioner must document in the 
patient's medical record the date the patient consented or declined 
consent to consultation, the date of consultation, or if attempts to 
consult did not succeed, the date and manner of notification to the 
physician.
    Comment: Many commenters stated that the requirement that 
consultation occur within 1 week after obtaining the beneficiary's 
consent is unnecessarily burdensome and does not give consideration to 
patients who visit their practitioners less often than weekly. These 
commenters suggested that, instead, we require a consultation within 
the first month of treatment, with documented notification in writing. 
Other commenters suggested that we maintain our proposed requirement 
for a consultation within 1 week of the patient's consent and add that 
it must take place by the time treatment is initiated.
    Response: As we revisited this issue, we concluded that it is not 
necessary to specify that the attempt at consultation occur within 1 
week of the patient's consent. Our focus for the consultation 
requirement is on whether CPs or CSWs are aware of their patient's 
medical condition and any medications that they may be taking that 
could interfere with treatment of their patient. Therefore, this final 
rule requires that the attempt(s) at consultation be made within a 
reasonable time after receiving the patient's's consent.
    Comment: The above group of commenters also stated that CPs and 
CSWs should be required to sign the attestation statement only once--
when requesting a provider number under the Medicare program. The 
commenters believed that CPs and CSWs should not be required to make 
the same attestation statement annually thereafter and that having the 
original consultation attestation statement on file should be 
sufficient to document adherence to the consultation requirement. They 
believed that a requirement such as the one that was proposed, results 
in unnecessary paperwork, delays in services, and an undue burden on 
both the practitioner and the carrier. Therefore, they urged us to 
abolish the stipulation that requires a CP or CSW to resubmit an 
attestation statement on an annual basis.
    Response: Initially, we viewed the proposed annual resubmission of 
the attestation statement as a way to remind CPs and CSWs both of the 
significance of the consultation requirement and that the requirement 
is a condition of payment for their services. We agree, however, that 
an annual attestation may be an onerous task for carriers and for CPs 
and CSWs who participate under Medicare. Thus, in reexamining this 
issue with a goal to reduce paperwork and information collection 
burden, we have concluded that a less burdensome approach is for us to 
accept the CP's or CSW's signature on the certification statement that 
is part of the provider/supplier enrollment application as an 
indication of his or her agreement to the consultation requirement. In 
signing that statement, the applicant certifies to, among other things, 
the following: ``I am familiar with and agree to abide by the Medicare 
laws and regulations that apply to my provider type, including the 
Conditions of Participation.'' Therefore, in this final rule, we 
require that the attestation occur only at the time the CP or CSW 
requests a provider number. Thus, there is no burden on CPs and CSWs 
who already have a provider number.
    Comment: Several commenters believed that some exceptions to a 
mandatory consultation would be appropriate. First, they stated that 
the proposed rules do not take into account the situation in which a 
patient is a hospital inpatient or in a skilled nursing facility and is 
ordered or referred to the CP or CSW by his or her primary care or 
attending physician. The commenters pointed out that, in these cases, 
the patient's physician is aware of the mental health intervention and 
treatment and that communication in these settings takes place via 
orders, consultation notes, and progress notes that the physician 
reads. The commenters suggested that, under these circumstances, a 
consultation is unwarranted and, therefore, exceptions be made to the 
consultation requirement and the rules simply require a notation in the 
patient's chart regarding the consultation. Conversely, others 
commented that the consultation requirement should apply to patients in 
all settings and that the contact should be with the patient's primary 
and specialist physicians who are treating the patient.
    Response: We disagree with the suggestion that we establish an 
exception to the consultation requirement for services that CPs or CSWs 
furnish to patients in the hospital and skilled nursing facility 
settings or that an exception to this requirement be made based on the 
site of services. However, we see no reason to require CPs or CSWs to 
initiate consultation in cases in which it is the patient's primary 
care or attending physician who actually refers the patient to the CP 
or CSW. For CPs or CSWs who receive a patient based on a physician's 
referral, we believe it is sufficient to require the practitioners to 
make a note to that effect on the patient's chart, including the 
referring physician's name. This final rule revises our proposed 
requirement accordingly. (Note also that this final rule designates 
proposed Sec. 410.71(e)(2) as Sec. 410.71(e).)
    Comment: Many commenters expressed a concern about patients who do 
not wish the CP or CSW to consult with their primary care or attending 
physician. These commenters contend that patients who do not desire 
such a consultation should have the right to withhold consent. In 
addition, these commenters believed that a request for a consultation 
with a beneficiary's physician could violate that person's rights 
because it makes public to the physician that the person is seeking 
mental health services. Accordingly, these commenters have urged us to 
include a specific provision under the attestation statement to address 
situations wherein a patient refuses consent to a consultation between 
his or her CP or CSW and their primary care or attending physician.
    Response: We believe emphatically that Medicare beneficiaries must 
have the right to refuse consent to a consultation between their 
practitioner and their primary care or attending physician. No 
beneficiary should ever be coerced to consent to such a consultation. 
In this final rule, at Sec. 410.71(e)(3). We require that, if a 
beneficiary does not consent to the consultation, the date the 
beneficiary declined consent to the consultation be documented in the 
beneficiary's medical record.
    Comment: Some commenters expressed concern about situations in 
which physicians do not respond to the request for a consultation 
because it is not a billable service. The commenters maintain that 
often physicians are not available for a consultation and are not eager 
to return a phone call or respond to a letter if they cannot bill the 
Medicare program for their efforts to participate in a consultation 
with their patient's CP or CSW. Therefore, the

[[Page 20122]]

commenters suggest that we allow for monetary compensation to the 
participants of the consultation, or make some allowance in the final 
rule for a notation in patient's records, of a good faith attempt by 
the CP or CSW to consult with the patient's primary care or attending 
physician. Other commenters maintain that CPs and CSWs should not be 
permitted to bill for the required consultation.
    Response: We maintain that the consultation between the CP or CSW 
and the patient's primary care or attending physician is not a billable 
service for any of the professionals involved. In addition, as stated 
in the proposed rule, the House Ways and Means Committee report that 
accompanied OBRA '89 (H.R. Report No. 247, 101st Cong., 1st Sess. 1015) 
indicated that the Committee intended that the consultation not be a 
billable service. Accordingly, neither a CP, CSW, or physician can bill 
the Medicare program or the beneficiary for the consultation. Also, we 
have made allowances to provisions of the consultation requirement that 
will accommodate CPs and CSWs in situations in which they make a good 
faith attempt to consult with their patient's primary care or attending 
physician even though that effort is not reciprocated.
    Comment: Finally, numerous commenters urged us to direct our 
carriers to conduct regular reviews to determine compliance with the 
consultation requirement and to ensure appropriate treatment is being 
provided by CPs and CSWs.
    Response: We do not believe it is necessary to hold CPs and CSWs to 
a higher standard of review than is required for other health care 
professionals. For example, we do not believe it is necessary to 
require CPs to routinely submit documentation supporting their 
communication, or attempts to communicate, with the attending physician 
nor would we expect our carriers to conduct regular reviews of CPs and 
CSWs absent an indication that inappropriate treatment is being 
furnished. Carriers may request documentation and conduct reviews of 
CPs and CSWs, as they may for any other health professional, to 
determine that the services furnished are medically necessary.

F. Diagnostic Coding Used by CPs and CSWs (Sec. 410.155(a))

    Comment: Many commenters suggested that diagnosis codes from the 
fourth edition of the American Psychiatric Association's, Diagnostic 
and Statistical Manual--Mental Disorders (DSM-IV) should be recognized 
in addition to, or instead of, diagnosis codes from ICD-9-CM. They 
pointed out that the DSM-IV code numbers are fully compatible with ICD-
9-CM codes. On the other hand, several other commenters asserted that 
only ICD-9-CM diagnosis codes should be used when submitting claims.
    Response: After reviewing the DSM-IV codes as published in May 1994 
and comparing them to the 1997 version of ICD-9-CM codes, we have 
concluded that this is a distinction without a difference. With only 
two minor exceptions, which appear to be inadvertent errors, the 
numerical codes under both systems now are identical. Therefore, the 
Medicare claims processing system will accept diagnosis code numbers 
derived from DSM-IV (except for the two discrepancies noted below) 
because they are indistinguishable from ICD-9-CM code numbers. One 
discrepancy is that ICD-9-CM code 305.1 has an additional zero shown in 
the fifth position in DSM-IV. The other discrepancy is that DSM-IV 
lists code 312.8 but the 1997 version of ICD-9-CM requires an 
additional digit (1, 2, or 9) in the fifth position.
    We had proposed, in Sec. 410.155(a), to continue defining a 
``mental, psychoneurotic, or personality disorder'' which is subject to 
the outpatient mental health treatment limitation as the specific 
psychiatric conditions described in the American Psychiatric 
Association's Diagnostic and Statistical Manual--Mental Disorders. 
Those conditions are represented in the code range 290 through 319. 
Since DSM-IV and ICD-9-CM code numbers are now compatible, we agree 
that it is appropriate to recognize a definition that is consistent 
with both coding systems.
    Because the American Psychiatric Associations's Manual is updated 
periodically and ICD-9-CM is updated annually, it seems desirable to 
avoid specifying any particular edition of either coding system. 
Therefore, this final rule removes the definition of ``mental, 
psychoneurotic, or personality disorder'' from Sec. 410.155(a), and, 
instead, specifies in Sec. 410.155(b) that ``mental, psychoneurotic, or 
personality disorder'' means any condition identified by a diagnosis 
code within the range of 290 through 319. This should contribute to the 
ease of understanding and operational simplicity, as well as avoid the 
need to update the regulation merely due to periodic code revisions 
within the overall range.
    In addition, we are removing proposed Sec. 410.71(d) because that 
paragraph made distinctions, based on date of service, as to who may 
bill for CP services furnished to hospital inpatients. That distinction 
is no longer necessary.
    In the preamble of the December 1993 proposed rule we stated our 
intent to require CPs and CSWs to use ICD-9-CM coding when submitting 
Medicare claims. However, as an oversight, we failed to state how we 
would revise our regulations to set forth this requirement. This final 
rule revises Sec. 424.32(a)(2) to add that claims for CP services or 
CSW services must include appropriate diagnostic coding using ICD-9-CM. 
Since the numerical codes under both ICD-9-CM and DSM-IV are identical, 
this should not create a burden for the submitters of claims.

G. The Clinical Social Worker Definition (Sec. 410.73(a))

    Comment: We received several comments informing us that, while all 
States provide for some form of licensure or certification, not all 
States use the term ``clinical social worker'' to refer to master's or 
doctorate level social workers who have been licensed by the State. For 
example, in Kentucky the highest level of State licensure is called 
``Independent Practice (Clinical).'' Accordingly, no person may hold 
himself or herself out to the public as a CSW in Kentucky unless he or 
she has been certified for independent practice by the Kentucky State 
Board of Examiners. The commenters asked whether a Board certified 
person in Kentucky would be recognized under Medicare as a CSW entitled 
to provide services under the program if the individual is not 
literally licensed as a CSW.
    We were similarly informed that, in New York the title awarded by 
the State to individuals who meet the CSW qualifications is ``Certified 
Social Worker.'' It was suggested, therefore, that the easiest way to 
address the lack of uniformity of titles for social workers would be to 
amend one of the requirements under the CSW qualifications to read that 
the individual is either licensed or certified as a CSW (or at the 
highest level of practice provided by State law).
    Response: We understand this concern, but the proposed definition 
was based on explicit language in the Federal statute. Therefore, we 
will continue to provide, as one way of meeting the definition, 
licensure or certification specifically as a CSW. However, under the 
authority of section 1861(hh)(1)(C)(ii)(II) of the Act, this final rule 
provides an alternative route to Medicare qualification. That is, this

[[Page 20123]]

final rule revises proposed Sec. 410.73(a)(3) to provide, in the case 
of an individual in a State that does not provide for licensure or 
certification as a clinical social worker, that the individual meets 
the definition of ``clinical social worker'' if the individual--
    <bullet> Is licensed or certified at the highest level of practice 
provided by the laws of the State in which the services are performed; 
and
    <bullet> Has completed at least 2 years or 3,000 hours of post 
master's degree supervised clinical social work practice under the 
supervision of a master's degree level social worker in an appropriate 
setting, such as a hospital, SNF, or clinic.

Thus, individuals in States such as Kentucky or New York can qualify as 
CSWs.

H. Definition of CSW Services (Secs. 410.73(b) and (c)(2))

    In the December 1993 proposed rule, we discussed the difficulty we 
encountered in addressing the statutory definition of CSW services that 
excludes services furnished to SNF inpatients that an SNF is required 
to provide as a requirement for participation. We invited public 
comment and suggestions on the question of whether it is possible to 
identify any CSW services (that is, services that would be covered if 
furnished by a CSW to other than hospital or SNF inpatients) that an 
SNF is not required to provide.
    Although, we asked specifically for comments on the SNF social 
services versus CSW services issue, we also received comments about the 
statutory coverage exclusion of CSW services to hospital inpatients.
    Comment: One professional association commented, on behalf of 
social workers, that the proposed rule places an unnecessary emphasis 
on the site of services, rather than the availability of CSW services 
to Medicare beneficiaries. This association contends that section 
1861(hh)(2) of the Act provides the specificity to avoid the confusion 
between social services and CSW services by limiting direct payment 
under the Part B outpatient mental health benefit to the diagnosis and 
treatment of mental illnesses as performed by CSWs who meet the 
qualifications of section 1861(hh)(1).
    Additionally, this association asserted that the diagnosis and 
treatment of mental illnesses is not analogous to the broad range of 
tasks expected of an SNF's social services staff and neither is it 
analogous to the overall requirement that the SNF provide medically 
related social services to attain or to maintain the highest 
practicable physical, mental, or psychosocial well-being of each 
resident. It also asserted that, if this analogy were true, the need 
for clarification would extend far beyond the issue of reimbursement 
for CSW services in SNFs; the issue would become whether payment, under 
Part B, would be allowed for the diagnosis and treatment of mental 
illnesses of SNF residents by any mental health professional recognized 
by the statute, including CPs and psychiatrists.
    Therefore, this association stated that, when submitting Medicare 
Part B claims, CSW services may be easily distinguished from the social 
services requirement of SNFs by the use of the ICD-9-CM coding system 
to describe the diagnosed mental illnesses and mental disorders, with 
the therapeutic services furnished reported using the appropriate CPT 
psychiatry codes. (CPT stands for [Physicians'] Current Procedural 
Terminology, 4th Edition, 1993 (copyrighted by the American Medical 
Association).) The association stated its belief that some functions of 
the SNF social services staff could be described by the E/M 
(evaluation/management) CPT codes, rather than the CPT psychiatry 
codes.
    One commenter expressed the opinion that the qualifications 
required of a social worker who is hired by an SNF to furnish social 
services are far less than those of a CSW. A national federation 
representing CSWs commented that the social work services that SNFs are 
required to provide without additional charge to the patient include 
psychosocial assessment and treatment planning, linkage with other 
professional and community services, and supportive counseling; they do 
not include the formal diagnosis and treatment of mental or emotional 
disorders. Therefore, they have recommended that, whenever CSWs 
independently diagnose or treat a mental or emotional disorder, these 
services be paid separate and apart from the payment to the facility. 
This federation also suggested that separately paid services can be 
easily distinguished from social services by reference to the 
appropriate Medicare procedure codes; namely, 90801 for diagnosis and 
90841 through 90853 for treatment.
    One medical center recommended that social services that are 
required under the SNF requirements for participation include: 
psychosocial assessment, discharge planning, general casework services, 
case consultation, community contacts, patient correspondence, and 
patient referral. In contrast, CSW services that would be covered when 
furnished to SNF patients would include: individual therapy (treatment 
of adjustment disorders, personality disorders, psychoneurosis, and 
complicated grief/illness reactions), crisis intervention, family 
therapy, and group therapy.
    Lastly, one professional association commented that it recognized 
our difficulty in distinguishing the SNF required social services from 
CSW services when furnished in an SNF setting. This association 
suggested that we consider using information contained in the Pre-
Admission Screening and Annual Resident Review instrument or the annual 
resident assessment instrument to assist in documenting variances 
between these services.
    Response: The emphasis on site of service is directly due to the 
distinctions that the statute makes on that basis. We must reiterate 
that the definition of CSW services in 1861(hh)(2) excludes services 
furnished to an inpatient of an SNF which the facility is required to 
provide as a requirement for participation.
    We agree with the general consensus that medically related social 
services for SNF residents, identified in section 1819(b)(4)(A)(ii) of 
the Act and at 42 CFR 483.15(g), should not be covered as CSW services. 
These services involve assisting residents in maintaining or improving 
their ability to manage their everyday physical, mental, and 
psychosocial needs. They include discharge planning, counseling, 
assessment, and care planning. These services generally do not require 
performance by a CSW.
    However, the commenters did not acknowledge that section 
1819(b)(4)(A)(i) requires an SNF also to provide specialized 
rehabilitative services in order to fulfill the resident's plan of 
care. These services include mental health rehabilitative services for 
mental illness, as detailed in Sec. 483.45. Our guidance to surveyors 
describes the intent of this requirement in the following terms: 
``Specialized rehabilitative services are considered a facility service 
and are, thus, included within the scope of facility services.'' These 
services are described in the guidelines as including (among other 
services) individual, group, and family psychotherapy.
    Individual and group psychotherapy comprise nearly all the services 
for which Medicare pays CSWs, in covered settings. As noted, these 
services are among the specialized mental health rehabilitative 
services that SNFs are required to provide. While data indicates that 
very few CSWs furnish services to SNF inpatients, that does not

[[Page 20124]]

diminish the fact that the few services they do furnish in SNFs are 
services that SNFs are required to provide.
    The procedure codes used on Part B Medicare claims include CPT 
codes as a subset of the HCFA Common Procedure Coding System (HCPCS). 
No meaningful distinction regarding services furnished by CSWs to SNF 
inpatients can be made based on the use of HCPCS psychiatry procedure 
codes, because the same codes are used to report CSW services in 
various settings.
    We cannot accept the suggestion that CSWs should be paid separate 
and apart from payment to the SNF for independently diagnosing or 
treating mental disorders of SNF patients, nor can we accept the 
suggestion that psychotherapy services furnished by CSWs to patients 
who have diagnosis codes indicating mental illness should be covered as 
CSW services rather than viewed as services that SNFs are required to 
provide. SNFs are explicitly required to provide not only medically 
related social services, but also mental health rehabilitative services 
for mental illness, as detailed in Sec. 483.45.
    We could not determine how information in the Pre-Admission 
Screening and Annual Resident Review instrument, or in the annual 
resident assessment instrument, could be used to distinguish any 
services that SNFs are not required to provide.
    With respect to the concern regarding the distinction between 
services furnished to SNF inpatients by CSWs and similar services 
furnished by CPs and physicians, we must point out that this 
distinction is based on the statutory parallels between hospital and 
SNF services. Section 1861(b) of the Act excludes the services of 
physicians and CPs from coverage as inpatient hospital services, yet 
1862(a)(14) of the Act compels a hospital to include CSW services in 
its billing. Section 1861(h) of the Act defines extended care services 
(the inpatient services for which SNFs are paid under Part A) as 
excluding any service that would not be included under 1861(b) if 
furnished to an inpatient of a hospital. Thus, the services of 
physicians and CPs are likewise excluded from coverage as SNF services, 
while the services of CSWs can be included.
    The statute uses the identical term, ``medical social services,'' 
in defining both inpatient hospital services and extended care 
services. For hospitals, this term implicitly includes the full range 
of services furnished by CSWs. There is no basis for concluding that 
the term has a different meaning for SNFs.
    Although physicians and CPs can be paid directly for services they 
furnish to SNF inpatients, CSWs are subject to a statutory restriction. 
The fact that a physician or CP can be paid directly for certain 
services does not lead to a conclusion that a CSW should be paid 
directly for similar services despite the CSW benefit restriction. An 
SNF cannot include physician or CP services as facility services, but 
it can include services performed by a CSW in its facility services.
    After thoroughly examining this issue and the suggestions received, 
we are unable to identify any specific service performed by CSWs for 
SNF inpatients that SNFs are not required to provide. Consequently, we 
conclude that CSW services exclude all services furnished to SNF 
inpatients.
    Comment: A major professional association commented that it is 
aware that medical social services are required services in hospitals 
and that medical social services are bundled into the hospital's 
payment rate. However, neither the Medicare statute nor regulations 
define the medical social services requirement nor the qualifications 
of professionals who may provide these services in the hospital. 
Accordingly, this association is concerned about the bundling issue as 
it relates to the Medicare Part B outpatient benefit for CSW services, 
particularly in psychiatric hospital outpatient departments. Therefore, 
the association asked that, if the diagnosis and treatment of mental 
illnesses and mental disorders provided by CSWs are indeed factored 
into the hospital's overall payment rate, how are CSW services 
currently mandated in outpatient hospital settings and what are the 
quality assurance mechanisms that ensure CSW services are made 
available to Medicare beneficiaries in hospital outpatient departments.
    Response: In regard to the question about whether CSW services are 
currently mandated in the hospital outpatient setting, there is no 
mandate specifically for CSW services in this setting. However, the 
quality assurance conditions of participation for hospitals (which 
apply to both the inpatient and outpatient setting) under 
Sec. 482.21(b) require the hospital to have an ongoing plan, consistent 
with available community and hospital resources, to provide, or make 
available, social work, psychological, and educational services to meet 
the medically related needs of its patients. The hospital must also 
have an effective, ongoing discharge planning program that facilitates 
the provision of followup care. Furthermore, the hospital must take and 
document appropriate remedial action to address deficiencies found 
through the quality assurance program, as well as document the outcome 
of the remedial action taken.
    In addition to meeting the same quality assurance conditions of 
participation as general hospitals, psychiatric hospitals must meet the 
conditions at Sec. 482.62 that pertain to the special staff 
requirements for psychiatric hospitals. Section 482.62(f) requires 
psychiatric hospitals to have on staff a director of social services 
who monitors and evaluates the quality and appropriateness of the 
social services furnished. The services must be furnished in accordance 
with accepted standards of practice and established policies and 
procedures.
    The director of the social work department or services must have a 
master's degree from an accredited school of social work or must be 
qualified by education and experience in the social services needs of 
the mentally ill. If the director does not hold a master's degree in 
social work, at least one staff member must have this qualification. 
Additionally, the social service staff responsibilities must include, 
but are not limited to, participation in discharge planning, arranging 
for follow-up care, and developing mechanisms for exchange of 
appropriate information with sources outside the hospital. Conceivably, 
a CSW could serve as a social services staff director or staff member 
of a psychiatric hospital.
    Comment: Another commenter suggested that the coverage exclusion of 
CSW services furnished to hospital inpatients under the Part B CSW 
benefit not pertain to nonparticipating hospitals. As rationale, the 
commenter stated that, since nonparticipating hospitals receive no Part 
A payment, there would be no risk of duplicate payment by both the 
intermediary and the carrier. Therefore, the commenter concluded that 
Medicare should make payment under Medicare Part B to nonparticipating 
hospitals for CSW services.
    Response: We agree that, because ``bundling'' is not an issue for 
nonparticipating hospitals, there is no risk of duplicate payment in 
the case of services furnished in nonparticipating hospitals. However, 
we disagree with the conclusion the commenter reached concerning to 
whom payment should be made. Because the services of a CSW furnished to 
a patient in a nonparticipating hospital are covered, under section 
1861(s)(2)(N) of the Act, as ``medical and other health services'' 
payment for these services is made directly to the CSW. This final rule 
clarifies that CSW services do not

[[Page 20125]]

include services furnished to inpatients of a Medicare participating 
hospital.

I. CSW Services Furnished in End Stage Renal Disease facilities 
(Sec. 410.73(c)(3))

    As stated earlier, payment for social worker services is included 
in the composite rate payment made to the dialysis facility. Therefore, 
CSWs cannot bill directly for those services. We invited public 
comment, however, on whether any CSW services to dialysis patients can 
be distinguished from the required facility services.
    Comment: A national federation representing CSWs commented that CSW 
services furnished in ESRD facilities should be treated the same way 
they are treated when furnished in SNFs. That is, whenever CSWs 
independently diagnose or treat a mental or emotional disorder, these 
services should be paid separately and apart from the composite rate 
paid to the ESRD facility. The federation recommended that CSW services 
be distinguished from ESRD required social worker services by reference 
to the appropriate Medicare procedure codes; namely, 90801 for 
diagnosis and 90841 through 90853 for treatment.
    Similarly, another commenter recommended that the same guidelines 
and payment be established for CSW services under Part B to dialysis 
patients as those established for CSW services to SNF patients. Many 
dialysis patients, especially newly diagnosed or unstable patients, 
require and benefit from individualized CSW services. This commenter 
believed that the composite rate currently paid to dialysis facilities 
does not come close to covering these specialized services and therapy 
for treatment of a mental, psychoneurotic, or personality disorder.
    Response: After examining the issue of CSW services to SNF 
inpatients, it is apparent that the issue of CSW services for patients 
of dialysis facilities differs significantly. The statutory site-based 
restrictions on CSW services apply only to inpatient settings--
inpatient hospital and inpatient SNF. Inpatient facilities are expected 
to meet all of their patient's needs (including both social services 
and specialized rehabilitative services). In contrast, the statutory 
definition of CSW services does not restrict CSW professional services 
in other settings, such as dialysis facilities.
    Dialysis facilities are expected to meet solely dialysis-related 
needs. Dialysis facilities are required, at Sec. 405.2163(c), merely to 
provide ``social services'' that are directed at supporting and 
maximizing the social functioning and adjustment of the patient. Under 
these dialysis facility required social services, a qualified social 
worker (who need not be a CSW) is responsible for conducting 
psychosocial evaluations, participating in team review of patient 
progress and recommending changes in treatment based on the patient's 
current psychosocial needs, providing casework and groupwork services 
to patients and their families in dealing with the special problems 
associated with ESRD, and identifying community social agencies and 
other resources and assisting patients and families to use them. A 
dialysis facility, however, is not required to provide the full scope 
of services comparable to the specialized rehabilitative services for 
mental illness that section 1819(b)(4)(A)(i) of the Act requires an SNF 
to provide.
    Accordingly, it would not be appropriate to require that all 
services that a CSW might furnish to a dialysis patient be bundled into 
the composite rate. Therefore, it is appropriate for a CSW to bill the 
Part B carrier separately for only those individualized professional 
mental health diagnostic and treatment services furnished to dialysis 
facility patients that are not included in the composite rate. This 
retains the current policy; CSWs have been permitted to bill the 
carrier directly for their individual professional mental health 
diagnostic and treatment services that do not reflect services that are 
included in the ESRD composite rate. However, carriers will deny any 
claims for services that reflect the dialysis-related social services 
that dialysis facilities are required to provide under 
Sec. 405.2163(c). Thus, there will be no change in coverage for CSW 
services furnished to patients in dialysis facilities.

J. Regulatory Impact Analysis

    We received comments concerning the regulatory impact analysis. We 
present and respond to those comments in section VI. of this document.

IV. Provisions of the Final Rule

    The proposed rule is adopted, with the changes listed below. Many 
of these changes are discussed in section III of this preamble. If the 
change is not discussed in section III, the reason for the change is 
given below.

Changes to Proposed Sec. 410.71

    We revise the example in paragraph (a)(2)(iv).
    We delete proposed paragraph (d) since the provision is dated.
    In paragraph (e)(1), now designated as paragraph (d), we revise the 
requirements for qualification as a CP.
    We designate proposed paragraph (e)(2) as paragraph (e) and revise 
the consultation requirements.

Changes to Proposed Sec. 410.73

    We revise paragraph (a)(3) to provide that, in the case of an 
individual in a State that does not provide for licensure or 
certification as a clinical social worker, an individual may meet the 
licensure/certification requirement if he or she is licensed or 
certified ``at the highest level of practice provided by the laws of 
the State in which the services are performed''.
    We restructure proposed paragraphs (b) and (c)(1) through (c)(3) to 
combine their contents into a new paragraph (b) and the contents of 
paragraph (c)(4) and (c)(5) into a new paragraph (d). We believe the 
new paragraphs set forth the provisions in a clearer manner.
    We designate proposed paragraph (d) as paragraph (c) and, rather 
than set forth the consultation requirements in detail, we cross refer 
to the requirements set forth in Sec. 410.71(f).

Changes to Proposed Sec. 410.152

    The changes we proposed to make to paragraphs (a)(2) and (b) are 
not made. Further, paragraphs (k) through (m) are not added. These 
proposed provisions, which concern payment, are addressed for clinical 
psychologists in the final CP fee schedule rule published on October 
31, 1997 (62 FR 59260). That rule also addresses, indirectly, payment 
provisions for clinical social workers since they are paid at 75 
percent of the CP fee schedule.

Changes to Proposed Sec. 410.155

    We are not making the proposed changes to paragraph (a), 
``Definitions.'' That is, we are not adding a definition of ``mental 
health treatment.'' In addition, we are removing the definition of 
``hospital.'' We do not believe it is necessary to define these terms 
since they do not have a meaning that is different from the meaning 
either given in the Medicare statute or as used elsewhere in our 
regulations. Also, as discussed earlier, we now define ``mental, 
psychoneurotic, or personality disorder'' in paragraph (b). Therefore, 
existing Sec. 410.155(a) is removed in its entirety.
    Proposed paragraph (b) is revised to improve its readability. In 
addition, we add that medical management, as opposed to psychotherapy, 
furnished to a patient diagnosed with Alzheimer's disease or a related 
disorder, is not subject to the mental health treatment limitation.

[[Page 20126]]

    Proposed paragraph (c) is revised to improve its readability, and 
it is designated as new paragraph (a).
    The examples in proposed paragraph (d) are revised to add greater 
clarity, and the paragraph is designated as paragraph (c).

Revision of Existing Sec. 424.32(a)

    We revise existing Sec. 424.32(a) to specify that claims for CP 
services or CSW services must contain appropriate diagnostic coding 
using ICD-9-CM.

Conforming Change

    This final rule revises paragraph (c), ``Standard: Care of 
patients,'' of Sec. 482.12, ``Conditions of participation: Governing 
Body'' to specify that a Medicare patient in a Medicare-participating 
hospital who is receiving qualified psychologist services may be under 
the care of a CP with respect to those services, to the extent 
permitted under State law. This revision is made to conform our 
regulations to section 104 of the Social Security Act Amendments of 
1994, described in section I.A.1 of this preamble.

Other Changes

    We have also made several editorial changes to improve the 
readability of the regulations. These changes do not affect the 
substance of the provisions.

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, agencies are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
    <bullet> Whether the information collection is necessary and useful 
to carry out the proper functions of the agency;
    <bullet> The accuracy of the agency's estimate of the information 
collection burden;
    <bullet> The quality, utility, and clarity of the information to be 
collected; and
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    Therefore, we are soliciting public comment on each of these issues 
for the proposed information collection requirements discussed below.
    The title and description of the individual information collection 
requirements are shown below with an estimate of the annual reporting 
and recordkeeping burden. Included in the estimate is the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    As indicated earlier in this preamble, Sec. 410.71(e) references 
the education, training, and experience requirements necessary to 
participate in the Medicare program as a clinical psychologist. The 
specific information necessary to determine compliance with the 
requirements referenced in Sec. 410.71(e) are captured on the Provider/
Supplier Enrollment Application (HCFA-855), which is currently approved 
under OMB approval number 0938-0685 with an expiration date of May 31, 
1998.
    We estimate that the completion of form HCFA-855 will impose a one-
time burden of approximately 90 minutes.
    Again, we welcome comments on all aspects of the above material. 
Organizations and individuals that wish to submit comments on the 
information and recordkeeping requirements captured on the HCFA-855 as 
they relate to Sec. 410.71(e) should direct them to the following 
address: Health Care Financing Administration, Office of Information 
Systems, Division of HCFA Enterprise Standards, Room C2-26-17, 7500 
Security Boulevard, Baltimore, MD 21244-1850.

VI. Regulatory Impact Analysis

    We have examined the impacts of this rule as required by Executive 
Order 12866 and the Regulatory Flexibility Act (RFA) (Public Law 96-
354). Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts; and equity). The RFA requires agencies 
to analyze options for regulatory relief of small businesses. For 
purposes of the RFA, we consider all psychologists, social workers, and 
hospitals to be small entities.
    In addition, section 1102(b) of the Act requires the Secretary to 
prepare a regulatory impact analysis for any rule that may have a 
significant impact on the operation of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital that is located outside of 
a Metropolitan Statistical Area and has fewer than 50 beds. We are not 
preparing a rural impact statement since we have determined, and the 
Secretary certifies, that this rule will not have a significant impact 
on the operations of a substantial number of small rural hospitals.
    In accordance with sections 1861(s)(2)(M) and 1861(ii) of the Act, 
this rule allows payment to be made directly to a CP for qualified 
psychologist services furnished by the CP or (except for services 
furnished to hospital patients) as an incident to the CP's services. 
Further, under the authority of section 1861(ii), which looks to the 
Secretary to define ``clinical psychologist,'' this rule specifies that 
a CP is an individual who--
    (1) Holds a doctoral degree in psychology, and
    (2) Is licensed or certified, on the basis of the doctoral degree 
in psychology, by the State in which he or she practices, at the 
independent practice level of psychology to furnish diagnostic, 
assessment, preventive, and therapeutic services directly to 
individuals.
    In accordance with sections 1861(s)(2)(N) and 1861(hh) of the Act, 
this rule allows payment to be made directly to a CSW for the services 
he or she furnishes, except for services furnished to an inpatient of a 
Medicare-participating hospital and certain services furnished to an 
inpatient of a Medicare-participating SNF or ESRD facility. Also, based 
on the definition of ``clinical social worker'' at section 1861(hh) of 
the Act, this rule establishes in regulations the qualifications a CSW 
must meet under Medicare.
    In accordance with section 6113 of OBRA '89, as amended by SSA '94, 
this rule requires that CPs and CSWs agree to consult with the 
beneficiary's attending or primary care physician, if the beneficiary 
consents to the consultation, and establishes criteria regarding the 
consultation.
    In accordance with section 1833(c) of the Act, this rule revises 
our regulations to eliminate the dollar limitation on payment for 
outpatient mental health treatment but retains the 62\1/2\ percent 
limitation.
    This rule also requires that CPs and CSWs use ICD-9-CM coding when 
submitting Medicare Part B claims.
    Lastly, this rule conforms our regulations to section 1861(e)(4) of 
the Act by providing that a Medicare patient in a Medicare-
participating hospital who is receiving qualified psychologist services 
may be under the care of a CP with respect to those services, to the 
extent permitted under State law.
    As stated in the December 1993 proposed rule, it has been a long-

[[Page 20127]]

standing requirement that, in order for his or her services to be 
covered under Medicare, the CP possess a doctoral degree from a program 
in clinical psychology. The literal wording of this requirement would 
exclude many qualified practitioners of psychology whose doctoral 
degrees are not labeled ``clinical psychology'' but who have analogous 
training and practical experience that qualifies them to practice 
clinical psychology.
    However, as we discussed in the regulatory impact analysis section 
of the December 1993 proposed rule, in the absence of final regulations 
defining the criteria a CP must meet for Medicare purposes, the 
Medicare carriers have had the authority to determine whether a 
particular doctorate-level psychologist qualified to have services 
covered by Medicare. In using this authority, the carriers decided if 
the educational background and experience of a particular psychologist 
qualified him or her as a CP. In the proposed rule, we estimated that 
two-thirds of the carriers had recognized psychologists based on the 
education and experience factors that we proposed and we took that 
factor, along with others, into consideration in our estimate of 
Medicare expenditures for CP and CSW services during fiscal years 1994 
through 1997.
    We received two comments on the regulatory impact analysis 
contained in the proposed rule. The comments came from major 
associations; one represents psychiatrists and the other represents 
psychologists.
    Comment: Although the impact analysis did not state how many 
psychologists we estimated might be added to the Medicare program 
because of our proposed definition, one commenter suggested that we may 
have underestimated the increase. (The commenter did not provide any 
data in this regard.) The commenter maintained that two different 
estimates should have been included, one with the proposed definition 
and one based upon the previously existing definition.
    This same commenter disagreed with HCFA's statement that the 
anticipated increase in expenditures would be due primarily to an 
increase in the number of users rather than an increase in the average 
charge per service or the average number of services per beneficiary. 
The commenter cited a 1993 article that concluded that therapist supply 
creates demand rather than vice versa. (Behavioral HealthCare Tomorrow, 
November/December 1993, prepaid plan. 26-32). The commenter believed 
that we need to reevaluate the potential for significant cost increases 
because of increasing the number of CPs.
    Additionally, this commenter was concerned that, in the impact 
analysis, we maintained that, because of the availability of the 
services of CPS and CSWs, these professionals would substitute for the 
services of psychiatrists and, thus, there would be an offsetting 
effect in terms of program outlays. The commenter stated that we 
offered no support for this assertion. Moreover, the commenter 
contended that while these nonphysician practitioners may furnish 
services within their limited training and ability, they do not 
substitute for the services of psychiatrists.
    Response: In the proposed rule, we advised the public of our 
estimate of the budgetary effect of the legislative changes that 
removed the site of service restrictions, added coverage for additional 
providers, and eliminated the annual dollar limitation. Recent data 
indicate that, rather than underestimating, we greatly overestimated 
the effect of the changes. For example, we estimated that, as a result 
of these legislative changes concerning Medicare expenditures for CP 
and CSW services would increase by $260 million in fiscal year (FY) 
1994, by $320 million in FY 1995, and by $390 million in FY 1996. 
Available data now indicate that the actual increases were far less, 
only $50 million in FY 1994, $60 million in FY 1995, and $30 million in 
FY 1996.
    In the proposed rule, we stated that we believed that the increase 
in expenditures would be due primarily to an increase in the number of 
users rather than an increase in the average charge per service or the 
average number of services per beneficiary. More recent data indicates 
that, after factoring out the increase in population, there also has 
been a small increase in the total number of allowed services.
    We also stated, in the proposed rule, that we expected that, 
because of the increased availability of CPs and CSWs, the services of 
these professionals would substitute for some of the services 
previously furnished by psychiatrists, thus, having an offsetting 
effect in terms of total program outlays. However, we also noted our 
expectation that the services of CSWs would be in addition to those of 
psychiatrists and CPs, rather than a substitute for them. While it does 
appear that the volume of some psychotherapy services performed by 
psychiatrists has decreased relative to the historic trend line, the 
volume of many other services performed by psychiatrists (services that 
require physician performance) has been gradually increasing relative 
to the overall increases in total physician services. Recent data show 
that, between 1992 and 1995, allowed services for CSWs, CPs, and 
psychiatrists continued to increase, and that, while the rate of growth 
in CP and CSW services showed a slight downward trend, there was a 
slight increase in the rate of growth in psychiatrist services.
    Comment: Another commenter recommended that, in analyzing the 
budgetary effect of these changes, we keep in mind that mental health 
treatment intervention reduces overall health care costs and conserves 
valuable health care resources. The commenter stated that an accurate 
and complete analysis of the budgetary effect of the changes should 
include an analysis of the anticipated offset to overall health care 
costs that is likely to occur.
    Response: With regard to the effect of early mental health 
treatment intervention on overall health care costs, we believe that 
because no data exist to separately identify the effect of this factor 
in comparison to the concurrent effects of the many other variables 
that affect overall health care costs, the budgetary analysis suggested 
by the commenter is not possible.
    In addition to the above comments, we received comments related to 
payment issues (for example, the effect of the lack of a CP fee 
schedule on Medicare expenditures). Because payment for CP and CSW 
services was addressed in a proposed rule on the CP fee schedule on 
June 18, 1997 (62 FR 33158), and we addressed comments on this issue in 
the final fee schedule on October 31, 1997 (62 FR 59260), we are not 
addressing these comments in this document.
    In general, this final rule merely conforms our regulations to 
statutory provisions and, in addition, relies on State licensure 
requirements when determining CP qualifications. Therefore, we believe 
it will have a negligible economic impact on CP, CSW, and other 
practitioners. Therefore, we are not preparing analyses for the RFA, 
and the Secretary certifies that this rule will not result in a 
significant economic impact on a substantial number of small entities.
    In accordance with the provisions of Executive Order 12866, this 
final rule was reviewed by the Office of Management and Budget.

VII. Waiver of Proposed Rulemaking

    As required by the Administrative Procedure Act, we generally 
provide notice and opportunity for comments on regulations unless we 
can find good

[[Page 20128]]

cause for waiving the notice-and-comment procedure as impracticable, 
unnecessary, or contrary to the public interest. This final rule 
revises paragraph (c), ``Standard: Care of patients,'' of Sec. 482.12, 
``Conditions of participation: Governing Body'' to specify that a 
Medicare patient in a Medicare-participating hospital who is receiving 
qualified psychologist services may be under the care of a CP with 
respect to those services, to the extent permitted under State law. 
This revision is made to conform our regulations to section 1861(e)(4) 
of the Act. The language of section 1861(e)(4) is so specific that it 
leaves no room for alternative interpretations. Accordingly, we find 
good cause to waive the notice-and-comment procedure with regard to 
this change to our regulations as unnecessary.

List of Subjects

42 CFR Part 410

    Health facilities, Health professions, Kidney diseases, 
Laboratories, Medicare, Rural areas, X-rays.

42 CFR Part 417

    Administrative practice and procedure, Grant programs--health, 
Health care, Health facilities, Health insurance, Health maintenance 
organizations (HMO), Loan programs--health, Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
Medicare.

42 CFR Part 482

    Grant programs--health, Hospitals, Medicaid, Medicare, Reporting 
and recordkeeping requirements.
    For the reasons set forth in the preamble, 42 CFR chapter IV is 
amended as follows:

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

    1. The authority citation for part 410 is revised to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

Subpart B--Medical and Other Health Services

    2. In Sec. 410.10, the introductory text is republished, and new 
paragraphs (v) and (w) are added to read as follows:


Sec. 410.10  Medical and other health services: Included services.

    Subject to the conditions and limitations specified in this 
subpart, ``medical and other health services'' includes the following 
services:
* * * * *
    (v) Clinical psychologist services and services and supplies 
furnished as an incident to the services of a clinical psychologist, as 
provided in Sec. 410.71.
    (w) Clinical social worker services, as provided in Sec. 410.73.
    3. New Secs. 410.71 and 410.73 are added to read as follows:


Sec. 410.71  Clinical psychologist services and services and supplies 
incident to clinical psychologist services.

    (a) Included services. (1) Medicare Part B covers services 
furnished by a clinical psychologist, who meets the requirements 
specified in paragraph (d) of this section, that are within the scope 
of his or her State license, if the services would be covered if 
furnished by a physician or as an incident to a physician's services.
    (2) Medicare Part B covers services and supplies furnished as an 
incident to the services of a clinical psychologist if the following 
requirements are met:
    (i) The services and supplies would be covered if furnished by a 
physician or as an incident to a physician's services.
    (ii) The services or supplies are of the type that are commonly 
furnished in a physician's or clinical psychologist's office and are 
either furnished without charge or are included in the physician's or 
clinical psychologist's bill.
    (iii) The services are an integral, although incidental, part of 
the professional services performed by the clinical psychologist.
    (iv) The services are performed under the direct supervision of the 
clinical psychologist. For example, when services are performed in the 
clinical psychologist's office, the clinical psychologist must be 
present in the office suite and immediately available to provide 
assistance and direction throughout the time the service is being 
performed.
    (v) The individual performing the service must be an employee of 
either the clinical psychologist or the legal entity that employs the 
supervising clinical psychologist, under the common law control test of 
the Act as more fully set forth in 20 CFR 404.1007.
    (b) Application of mental health treatment limitation. The 
treatment services of a clinical psychologist and services and supplies 
furnished as an incident to those services are subject to the 
limitation on payment for outpatient mental health treatment services 
set forth in Sec. 410.155.
    (c) Payment for consultations. A clinical psychologist or an 
attending or primary care physician may not bill Medicare or the 
beneficiary for the consultation that is required under paragraph (e) 
of this section.
    (d) Qualifications. For purposes of this subpart, a clinical 
psychologist is an individual who--
    (1) Holds a doctoral degree in psychology; and
    (2) Is licensed or certified, on the basis of the doctoral degree 
in psychology, by the State in which he or she practices, at the 
independent practice level of psychology to furnish diagnostic, 
assessment, preventive, and therapeutic services directly to 
individuals.
    (e) Agreement to consult. A clinical psychologist who bills 
Medicare Part B must agree to meet the requirements of paragraphs 
(e)(1) through (e)(3) of this section. The clinical psychologist's 
signature on a Medicare provider/supplier enrollment form indicates his 
or her agreement.
    (1) Unless the beneficiary's primary care or attending physician 
has referred the beneficiary to the clinical psychologist, to inform 
the beneficiary that it is desirable for the clinical psychologist to 
consult with the beneficiary's attending or primary care physician (if 
the beneficiary has such a physician) to consider any conditions 
contributing to the beneficiary's symptoms.
    (2) If the beneficiary assents to the consultation, in accordance 
with accepted professional ethical norms and taking into consideration 
patient confidentiality--
    (i) To attempt, within a reasonable time after receiving the 
consent, to consult with the physician; and
    (ii) If attempts to consult directly with the physician are not 
successful, to notify the physician, within a reasonable time, that he 
or she is furnishing services to the beneficiary.
    (3) Unless the primary care or attending physician referred the 
beneficiary to the clinical psychologist, to document, in the 
beneficiary's medical record, the date the patient consented or 
declined consent to consultation, the date of consultation, or, if 
attempts to consult did not succeed, the date and manner of 
notification to the physician.


Sec. 410.73  Clinical social worker services.

    (a) Definition: clinical social worker. For purposes of this part, 
a clinical

[[Page 20129]]

social worker is defined as an individual who--
    (1) Possesses a master's or doctor's degree in social work;
    (2) After obtaining the degree, has performed at least 2 years of 
supervised clinical social work; and
    (3) Either is licensed or certified as a clinical social worker by 
the State in which the services are performed or, in the case of an 
individual in a State that does not provide for licensure or 
certification as a clinical social worker--
    (i) Is licensed or certified at the highest level of practice 
provided by the laws of the State in which the services are performed; 
and
    (ii) Has completed at least 2 years or 3,000 hours of post master's 
degree supervised clinical social work practice under the supervision 
of a master's degree level social worker in an appropriate setting such 
as a hospital, SNF, or clinic.
    (b) Covered clinical social worker services. Medicare Part B covers 
clinical social worker services.
    (1) Definition. ``Clinical social worker services'' means, except 
as specified in paragraph (b)(2) of this section, the services of a 
clinical social worker furnished for the diagnosis and treatment of 
mental illness that the clinical social worker is legally authorized to 
perform under State law (or the State regulatory mechanism provided by 
State law) of the State in which the services are performed. The 
services must be of a type that would be covered if they were furnished 
by a physician or as an incident to a physician's professional service 
and must meet the requirements of this section.
    (2) Exception. The following services are not clinical social 
worker services for purposes of billing Medicare Part B:
    (i) Services furnished by a clinical social worker to an inpatient 
of a Medicare-participating hospital.
    (ii) Services furnished by a clinical social worker to an inpatient 
of a Medicare-participating SNF.
    (iii) Services furnished by a clinical social worker to a patient 
in a Medicare-participating dialysis facility if the services are those 
required by the conditions for coverage for ESRD facilities under 
Sec. 405.2163 of this chapter.
    (c) Agreement to consult. A clinical social worker must comply with 
the consultation requirements set forth at Sec. 410.71(f) (reading 
``clinical psychologist'' as ``clinical social worker'').
    (d) Prohibited billing. (1) A clinical social worker may not bill 
Medicare for the services specified in paragraph (b)(2) of this 
section.
    (2) A clinical social worker or an attending or primary care 
physician may not bill Medicare or the beneficiary for the consultation 
that is required under paragraph (c) of this section.

Subpart E--Payment of SMI Benefits

    4. In Sec. 410.150, the introductory text of paragraph (b) is 
republished, new paragraphs (b)(14) through (b)(16) are added and 
reserved, and new paragraphs (b)(17) and (b)(18) are added to read as 
follows:


Sec. 410.150  To whom payment is made.

* * * * *
    (b) Specific rules. Subject to the conditions set forth in 
paragraph (a) of this section, Medicare Part B pays as follows:
* * * * *
    (14) [Reserved.]
    (15) [Reserved.]
    (16) [Reserved.]
    (17) To a clinical psychologist on the individual's behalf for 
clinical psychologist services and for services and supplies furnished 
as an incident to his or her services.
    (18) To a clinical social worker on the individual's behalf for 
clinical social worker services.
    5. In Sec. 410.152, paragraph (a)(1) introductory text is 
republished, and paragraph (a)(1)(iv) is revised to read as follows:


Sec. 410.152  Amount of payment.

    (a) General provisions--(1) Exclusion from incurred expenses. As 
used in this section, ``incurred expenses'' are expenses incurred by an 
individual, during his or her coverage period, for covered Part B 
services, excluding the following:
* * * * *
    (iv) Expenses in excess of the outpatient mental health treatment 
limitation described in Sec. 410.155.
* * * * *
    6. Section 410.155 is revised to read as follows:


Sec. 410.155  Outpatient mental health treatment limitation.

    (a) Limitation. Only 62\1/2\ percent of the expenses incurred for 
services subject to the limit as specified in paragraph (b) of this 
section are considered incurred expenses under Medicare Part B when 
determining the amount of payment and deductible under Secs. 410.152 
and 410.160, respectively.
    (b) Application of the limitation--(1) Services subject to the 
limitation. Except as specified in paragraph (b)(2) of this section, 
the following services are subject to the limitation if they are 
furnished in connection with the treatment of a mental, psychoneurotic, 
or personality disorder (that is, any condition identified by a 
diagnosis code within the range of 290 through 319) and are furnished 
to an individual who is not an inpatient of a hospital:
    (i) Services furnished by physicians and other practitioners, 
whether furnished directly or as an incident to those practitioners' 
services.
    (ii) Services provided by a CORF.
    (2) Services not subject to the limitation. Services not subject to 
the limitation include the following:
    (i) Services furnished to a hospital inpatient.
    (ii) Brief office visits for the sole purpose of monitoring or 
changing drug prescriptions used in the treatment of mental, 
psychoneurotic, or personality disorders.
    (iii) Partial hospitalization services not directly provided by a 
physician.
    (iv) Diagnostic services, such as psychological testing, that are 
performed to establish a diagnosis.
    (v) Medical management, as opposed to psychotherapy, furnished to a 
patient diagnosed with Alzheimer's disease or a related disorder.
    (c) Examples. (1) A clinical psychologist submitted a claim for 
$200 for outpatient treatment of a beneficiary's mental disorder. The 
Medicare approved amount was $180. Since clinical psychologists must 
accept assignment, the beneficiary is not liable for the $20 in excess 
charges. The beneficiary previously satisfied the $100 annual Part B 
deductible. The limitation reduces the amount of incurred expenses to 
62\1/2\ percent of the approved amount. After subtracting any unmet 
deductible, Medicare pays 80 percent of the remaining incurred 
expenses. Medicare payment and beneficiary liability are computed as 
follows:

------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
1. Actual charges.............................................   $200.00
2. Medicare approved amount...................................    180.00
3. Medicare incurred expenses (0.625  x  line 2)..............    112.50
4. Unmet deductible...........................................      0.00
5. Remainder after subtracting deductible (line 3 minus line            
 4)...........................................................    112.50
6. Medicare payment (0.80  x  line 5).........................     90.00
7. Beneficiary liability (line 2 minus line 6)................     90.00
------------------------------------------------------------------------

    (2) A clinical social worker submitted a claim for $135 for 
outpatient treatment of a beneficiary's mental disorder. The Medicare 
approved amount was $120. Since clinical social workers must

[[Page 20130]]

accept assignment, the beneficiary is not liable for the $15 in excess 
charges. The beneficiary previously satisfied $70 of the $100 annual 
Part B deductible, leaving $30 unmet.

------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
1. Actual charges.............................................   $135.00
2. Medicare approved amount...................................    120.00
3. Medicare incurred expenses (0.625  x  line 2)..............     75.00
4. Unmet deductible...........................................     30.00
5. Remainder after subtracting deductible (line 3 minus line            
 4)...........................................................     45.00
6. Medicare payment (0.80  x  line 5).........................     36.00
7. Beneficiary liability (line 2 minus line 6)................     84.00
------------------------------------------------------------------------

    (3) A physician who did not accept assignment submitted a claim for 
$780 for services in connection with the treatment of a mental disorder 
that did not require inpatient hospitalization. The Medicare approved 
amount was $750. Because the physician did not accept assignment, the 
beneficiary is liable for the $30 in excess charges. The beneficiary 
had not satisfied any of the $100 Part B annual deductible.

------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
1. Actual charges.............................................   $780.00
2. Medicare approved amount...................................    750.00
3. Medicare incurred expenses (0.625  x  line 2)..............    468.75
4. Unmet deductible...........................................    100.00
5. Remainder after subtracting deductible (line 3 minus line            
 4)...........................................................    368.75
6. Medicare payment (0.80  x  line 5).........................    295.00
7. Beneficiary liability (line 1 minus line 6)................    485.00
------------------------------------------------------------------------

    (4) A beneficiary's only Part B expenses during 1995 were for a 
physician's services in connection with the treatment of a mental 
disorder that initially required inpatient hospitalization. The 
remaining services were furnished on an outpatient basis. The 
beneficiary had not satisfied any of the $100 annual Part B deductible 
in 1995. The physician, who accepted assignment, submitted a claim for 
$780. The Medicare-approved amount was $750. The beneficiary incurred 
$350 of the approved amount while a hospital inpatient and incurred the 
remaining $400 of the approved amount for outpatient services. Only 
$400 of the approved amount is subject to the 62\1/2\ percent 
limitation because the statutory limitation does not apply to services 
furnished to hospital inpatients.

------------------------------------------------------------------------
                                                                        
------------------------------------------------------------------------
1. Actual charges.............................................   $780.00
2. Medicare approved amount...................................   $750.00
  2A. Inpatient portion.......................................      $350
  2B. Outpatient portion......................................      $400
3. Medicare incurred expenses.................................   $600.00
  3A. Inpatient portion.......................................      $350
  3B. Outpatient portion (0.625  x  line 2B)..................      $250
4. Unmet deductible...........................................   $100.00
5. Remainder after subtracting deductible (line 3 minus line            
 4)...........................................................   $500.00
6. Medicare payment (0.80  x  line 5).........................   $400.00
7. Beneficiary liability (line 2 minus line 6)................   $350.00
------------------------------------------------------------------------

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

    1. The authority citation for part 417 is revised to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh), secs. 1301, 1306, and 1310 of the Public 
Health Service Act (42 U.S.C. 300e, 300e-5, and 300e-9), and 31 
U.S.C. 9701.

    2. In Sec. 417.416, the introductory text of paragraph (d) is 
republished; paragraph (d)(2) is revised; and a new paragraph (d)(3) is 
added to read as follows:


Sec. 417.416  Qualifying condition: Furnishing of services.

* * * * *
    (d) Exceptions to physician supervision requirement. The following 
services may be furnished without the direct personal supervision of a 
physician:
* * * * *
    (2) When furnished by an HMO or CMP, services of clinical 
psychologists who meet the qualifications specified in Sec. 410.71(d) 
of this chapter, and the services and supplies incident to their 
professional services.
    (3) When an HMO or CMP contracts on--
    (i) A risk basis, the services of a clinical social worker (as 
defined at Sec. 410.73 of this chapter) and the services and supplies 
incident to their professional services; or
    (ii) A cost basis, the services of a clinical social worker (as 
defined in Sec. 410.73 of this chapter). Services incident to the 
professional services of a clinical social worker furnished by an HMO 
or CMP contracting on a cost basis are not covered by Medicare and 
payment will not be made for these services.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

    1. The authority citation for part 424 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. In Sec. 424.32, paragraph (a) introductory text is republished, 
and paragraph (a)(2) is revised to read as follows:


Sec. 424.32  Basic requirements for all claims.

    (a) A claim must meet the following requirements:
    (1) * * *
    (2) A claim for physician services, clinical psychologist services, 
or clinical social worker services must include appropriate diagnostic 
coding for those services using ICD-9-CM.
* * * * *
    3. In Sec. 424.55, paragraph (b) introductory text is republished, 
and paragraphs (b)(1) and (b)(2) are revised to read as follows:


Sec. 424.55  Payment to the supplier.

* * * * *
    (b) In accepting assignment, the supplier agrees to the following:
    (1) To accept, as full charge for the service, the amount approved 
by the carrier as the basis for determining the Medicare Part B payment 
(the reasonable charge or the lesser of the fee schedule amount and the 
actual charge).
    (2) To limit charges to the beneficiary or any other source as 
follows:
    (i) To collect nothing for those services for which Medicare pays 
100 percent of the Medicare approved amount.
    (ii) To collect only the difference between the Medicare approved 
amount and the Medicare Part B payment (for example, the amount of any 
reduction in incurred expenses under Sec. 410.155(c), any applicable 
deductible amount, and any applicable coinsurance amount) for services 
for which Medicare pays less than 100 percent of the approved amount.
* * * * *

PART 482--CONDITIONS OF PARTICIPATION FOR HOSPITALS

    1. The authority citation for part 482 continues to read as 
follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).

    2. In Sec. 482.12, paragraph (c) introductory text and (c)(1) 
introductory text are republished; the period at the end of paragraph 
(c)(1)(v) is removed and ``; and'' is added in its place; paragraph 
(c)(1)(vi) is added; paragraph (c)(4) introductory text is republished; 
and paragraph (c)(4)(ii) is revised to read as follows:


Sec. 482.12  Conditions of participation: Governing body.

* * * * *
    (c) Standard: Care of patients. In accordance with hospital policy, 
the

[[Page 20131]]

governing body must ensure that the following requirements are met:
    (1) Every Medicare patient is under the care of:
* * * * *
    (vi) A clinical psychologist as defined in Sec. 410.71 of this 
chapter, but only with respect to clinical psychologist services as 
defined in Sec. 410.71 of this chapter and only to the extent permitted 
by State law.
* * * * *
    (4) A doctor of medicine or osteopathy is responsible for the care 
of each Medicare patient with respect to any medical or psychiatric 
problem that--
    (i) * * *
    (ii) Is not specifically within the scope of practice of a doctor 
of dental surgery, dental medicine, podiatric medicine, or optometry; a 
chiropractor; or clinical psychologist, as that scope is--
    (A) Defined by the medical staff;
    (B) Permitted by State law; and
    (C) Limited, under paragraph (c)(1)(v) of this section, with 
respect to chiropractors.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.774 
Medicare--Supplementary Medical Insurance)

    Dated: December 2, 1997.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.

    Dated: December 11, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 98-10591 Filed 4-22-98; 8:45 am]
BILLING CODE 4120-01-P