Medicare Enrollment

Psychologists who choose to become Medicare providers must accept assignment upon becoming Medicare providers. This means that the total amount that may be collected for a procedure is what Medicare allows for that procedure.  It is not permissible to bill the patient for the difference between the Medicare allowable amount and the practitioner’s usual fee if it is higher than the allowable amount. Once enrolled with Medicare, a provider must bill Medicare for all clients with Medicare; the provider cannot arrange for private pay with any client who has Medicare.

It is necessary to apply for a provider number with Medicare, as well as apply for a National Provider Identifier (NPI).


Medicare Part B covers mental health services. Initial diagnostic interviews,  psychological testing, and all psychotherapy and health and behavior interventions are paid at 80% of the Medicare allowable (i.e., the maximum amount allowed for a procedure). The remaining co-payment may be picked up by a Medi-gap policy (i.e., private secondary payer), by Medicaid, or by the patient. If Medicaid is part of the payer mix, the practitioner may not bill the Medicaid patient directly for the unpaid balance.

While many practitioners manage their own billing, a mental health practitioner can arrange for private billing for services. Medical billers typically charge 8 – 10% of collections and can be found locally and on the internet. When considering an outside biller’s responsibilities, it is important to ask about their policy on billing secondary payers, verifying patients’ insurance eligibility, assisting with enrollment in third party plans, and following up on denials and disallowed services. Arrangements can be made with practice management organizations (i.e., medical services organizations, or MSOs) that provide the practice locations, medical records, billing, and clinical and administrative support, all of which allow the practitioner to do his or her clinical work without managing the details of operating and building a long term care practice.

Lastly, a practitioner should always be prepared for possible Medicare reviews and audits. These may occur up to seven years following the date of services and may occur pre-payment or post-payment. The practitioner must be able to justify that each service that was billed met medical necessity criteria and was in full compliance with Medicare regulations. Avoiding exposure for “unnecessary” services and the recoupment of over-payments from Medicare requires expertise, diligence, and a healthy respect for the “honor system” under which Medicare works.

Written by Joseph M. Casciani, PhD


Dr. Tony Puente presented a webinar on Coding, Billing, & Documenting Professional Psychological Services: Introduction to the CPT on May 14, 2014.  Associated slides are available here.

Also, view the Medicare page of our Policy & Advocacy section.

Fee reductions due to Sequestration:
If you read your Remittance Notices carefully, this will help you understand the fee reduction due to the sequestration: