Case Overview, Medicare Payments for Clinical Social Workers

This document provides background information and summarizes the debate over Medicare payments for clinical social workers. The links to the left will lead you to public documents that we have found.



          With the passage of the Balanced Budget Act of 1997, Congress required that all reimbursable Medicare services provided through skilled nursing facilities be billed in a bundled invoice. This way the Health Care Financing Agency (HCFA) could cut administrative costs and complexity by writing a single check for services to nursing facilities. When this change was being formulated during the development of the broader budget legislation, the American Medical Association worked vigorously to get Congress to exempt physicians from the bundling provision. Doctors wanted to be able to bill Medicare separately. Physicians were worried that their reimbursements might end up being less than the maximum allowed if their services were bundled along with everything else the nursing home was charging to Medicare. Staff on the House Ways and Means Committee and Senate Finance Committee looked for a precise list of specialties that would fall under such an exclusion from bundling. They quickly settled on the hospital DRG list—essentially a government price list for various medical procedures. Clinical social workers were not on this list because they are not service providers in hospitals, and they were not recognized as legitimate providers of service under Medicare until 1989, after the DRG list was developed. As this provision of the new law was finally written, practitioners on the DRG list bill Medicare individually. All other practitioners in a skilled nursing facility are paid through the bundled payment from Medicare to their employer.

          The organized interests that represent clinical social workers were slow to react to the bundling exemption. The Balanced Budget Act was a vast and complex piece of legislation and by the time these organizations found out what was in the bill, it had been finalized and clinical social workers had been left out of the bundling exemption. The clinical social workers’ groups protested the change because by being bundled with other services, clinical social workers believed they would receive less money for their services than they would if they could bill Medicare individually (they would be paid the per diem rate authorized by the Medicare Prospective Payment System).

          After the Balanced Budget Act was passed the social workers’ lobbies approached HCFA and asked to be added to the list of professionals exempted from bundling. HCFA determined that the law does not allow the agency to make an administrative decision to add providers to the list of those allowed bill Medicare individually. Given HCFA’s decision, the social work groups had no choice but to go to Congress to try to get legislation passed to broaden the exempt list.

          As efforts for a "legislative fix" were underway, HCFA took action that complicated the clinical social workers’ efforts. In April of 1998, HCFA published a proposed rule indicating that Medicare would not make any additional payments for social work services performed in skilled nursing facilities because these nursing homes are required to have social workers on staff and, thus, the general reimbursement by the government covers such costs. Importantly, this rule does not differentiate traditional social workers from clinical social workers. Clinical social workers provide mental health and psychological services while traditional social workers generally provide assistance with financial and family support issues. Clinical social work counseling is thus an extra service not covered in the general reimbursement agreement between skilled nursing facilities and Medicare. This rule caught the attention of clinical social work organizations because if it went through, the legislation they sought to exempt them from bundling would no longer accomplish their objective of direct reimbursement. Organizations representing clinical social workers mobilized their members to contact HCFA about the rule and eventually HCFA agreed to delay its implementation until July 2000.

          At the end of 1998, Representative Pete Stark (D-CA), the ranking member of the House Ways and Means Committee’s Subcommittee on Health, subsequently introduced legislation that would amend Title XVIII of the Social Security Act to exempt clinical social workers from the bundled payment rules and to establish separate payment rules for clinical and traditional social workers. Republican Rep. Jim Leach of Iowa co-sponsored the bill. Senator Barbara Mikulski (D-MD) has introduced companion legislation in the Senate. At this time (July 2000), both bills are still in committee and no further action has been taken.



          The two leading groups representing social workers, the National Association of Social Workers (NASW) and the Clinical Social Workers Federation (CSWF), have worked together to try to get legislation passed. Both the NASW and CSWF are large organizations and they have made this issue a priority because of their members’ concern about their livelihood.

          As noted above Stark, Leach, and Mikulski are the principal supporters in Congress. Rep. Leach is a well-respected advocate for mental health services, but so far he has been unable to attract much Republican support for the social workers’ legislation. A further issue making it difficult to build support for this legislation is that the recipient of clinical social worker services in skilled nursing facilities—mentally ill seniors—have no realistic capacity to organize to push Congress. On this issue, who isn’t participating is as important as who is.



          The proponents’ chief argument is that clinical social workers provide critical services to the frail, elderly population. Ten percent of all clinical social workers operate in skilled nursing facilities. In contrast only 1 percent of psychologists and psychiatrists operate in comparable nursing homes. A letter from the presidents of the NASW and the CSWF sent to Representatives Stark and Leach warned that “Many nursing home patients could lose access to services provided by clinical social workers because of these very changes.” Since social workers are more willing to work in nursing homes, and they’re a lot cheaper—they cost just 75% of what a psychologist or psychiatrist charges—government should do what it can to ensure that they continue to serve this vulnerable population. Moreover, in rural areas, psychologists and psychiatrists are even less likely to provide services to these facilities. The NASW’s web site noted "With social workers being the largest providers of mental health services in the United States and the only professionally licensed provider of mental health services in many rural counties, this could have serious adverse effects on the residents of skilled nursing facilities."

          A secondary argument used by active groups is that the omission of clinical social workers from the list of the providers able to directly bill Medicare was simply a technical error. As the presidents of NASW and CSWF put it, “Unfortunately, due to a unintentional oversight in drafting the legislation, the mental health services provided through clinical social work services were not placed on this exclusion list.” In their minds, the legislative change can be effectuated through one of the routine error correction bills that follow in the wake of major tax or budget overhauls.

          Several arguments stand in the way of passing this legislation, but the principle issue is cost. When the Congressional Budget Office “scores” this legislation, it will label it as a cost increase to Medicare. In addition, supporters of the legislation somehow need to convince the committees that they should make this change without implying that the committees initially made a mistake. As one lobbyist noted, "We’re asking the same people who passed this bill to change it. They could say we’ve already addressed this problem and we’re trying to save money so it’s unfortunate for you."

          Another problem is the reluctance of some members to support a mental health issue, which can be seen as taboo. In the words of one lobbyist, "On top of everything else, there’s the difficulty of this being a mental health issue—there’s a stigma associated with mental health and it’s deemed a less important issue." Many people don’t appreciate that mental health services are preventative health services, and it is especially difficult to show that mental health has an impact on physical health. Finally, few patients have thus far complained since there have not been any disruptions in services because of a delay in the implementation of this provision of the law.

          A striking feature of this issue is that there are no interest groups working against the social workers. The NASW and the CSWF don’t have to fight opposition groups trying to achieve a contrary policy. The nursing home industry doesn’t like any exemptions from consolidated billing to Medicare, but the organizations representing nursing homes have other priorities in terms of their advocacy in Washington and have not actively worked on this issue. The biggest impediment for the groups representing clinical social workers seems to be getting enough people in Congress to pay attention to their problem and to make legislators believe that there are serious consequences for the elderly if a change isn’t made.



          The principal venues have been the Congress, especially the House Ways and Means Committee and the Senate Finance Committee, and HCFA. Since HCFA refused to make the changes requested by the social workers, the ball has been thrown back in Congress’s court. If action is taken, it will likely be initiated by either Ways and Means’ Subcommittee on Health and or the House Commerce Committee, which has jurisdiction over Medicare Part B. In the Senate the Finance Committee remains as the main venue.


Lobbying Activities and Tactics

          The organizations involved on this issue are working to build much greater support than they now have to get legislation through Congress on this narrow, technical issue. To try to accomplish this, the groups have begun to reach out to Republicans because GOP legislators traditionally have not been as active as liberal Democrats on behalf of social workers. Among the Republicans approached on this issue are those who are active on issues affecting seniors, such as Senator Charles Grassley (R-IA), chair of the Aging Committee. Member of the House Rural Caucus and members of Congress who are open about relevant mental health issues in their past (such as a problem with alcohol) have also been approached for support.

          The NASW and CSWF have also utilized a grassroots strategy, providing materials on their web sites that clinical social workers can send to their legislators urging them to support the legislation proposed by Stark, Leach and Mikulski.