Psychotherapy Finances is a nationally circulated newsletter for psychologists and other mental health care providers in private practice. Below is an article I wrote for the December 2011 edition on Medicare reimbursement. The article on non-compete clauses was published in the January 2011 issue.
To read the Psychotherapy Finances blog, updated every Friday, click here.
MEDICARE: Congress playing out its annual fee cut ritual
Fix in place - for now ...
In the December, 2011, issue of Psychotherapy Finances, we discuss the potential Medicare fee reductions that threaten mental health providers each year. Most problematic is the 27.4% reimbursement cut mandated by the Balanced Budget Act of 1997. At the end of each year since the Act was passed, the House and Senate have come through with the so-called “Doc Fix” that avoids the reduction under Medicare “Sustainable Growth Rate” language in the budget law.
As 2011 came to an end, we predicted that the same thing would happen this year -- but reps from the American Psychological Association (APA) and the Clinical Social Work Association (CSWA) pointed out that the budget tightening mood in Washington made the situation more volatile than in years past.
At the last minute Congress held up the fee cuts and kicked the can down the road until February 2012. We'll keep you posted.
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As the year comes to an end, psychologists and clinical social workers are taking part in a new holiday tradition: watching to see how Congress deals with the scheduled 27.4% cut mandated by the Balanced Budget Act in 1997. Every year since the Act was passed, the House and Senate have come through at the last minute with the “doc fix” that avoids the reduction under Medicare “Sustainable Growth Rate” language in the budget law.
The same thing is expected to happen this year, but professional associations are a little less confident than they usually are because of the budget tightening mood in Washington.
A 5% cut for of psychotherapy services--which Congress has been kicking down the road annually since 2007--also remains in limbo. (That was first introduced to help finance a fee increase for primary care docs.)
On top of that, the failure of the so-called “Super Committee” to identify cuts to the federal budget means that Medicare providers could be looking at an additional 2% cut starting January 1, 2013.
So in theory, if you add the three reductions together, non-MD practitioners could be facing Medicare cuts of 34.4% over the next 13 months. Is such a thing really possible?
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LEGAL ISSUES: Non-compete clauses are problematic for both parties
In the November, 2010, PsyFin, we featured an Illinois therapist who was not permitted to call herself a therapist. When she left her job with a large group practice, the group owner invoked the strict terms of her original contract--which said that if she wanted to set up a solo practice in town, she had to market herself as a “coach” rather than a therapist for 12 months.
Since then, we’ve heard from a number of curious clinicians who: A) are being asked to sign such a contract; B) have already signed one and wonder if they have to honor it; or C) are running group practices themselves and would like to bind their new employees this way.
Below, we talk to a pair of experts who walk us through some of the problems inherent in non-compete contracts. But first, there are two big ideas you should keep in mind:
● Rules governing such arrangements are set by each state. So if you’re dealing with this issue now, your first move is to find out what the law says. Your state professional association ought to be able to help you there. If not, you can try the state attorney general’s office.
● There is no such thing as a “standard non-compete arrangement.” Everything’s negotiable. So if you’re asked to sign one, don’t be afraid to ask for better terms, or even try to eliminate it. And if you’re the employer who wants a clinician to sign on the dotted line, bear in mind that the more onerous you make the restriction, the more likely it is that your future ex-employee will fight it later on--or just ignore it altogether.
The Illinois clinician referred to above is a little unusual--since she was simply limited in how she was permitted to market herself. Most of the non-competes we’ve seen have actually been stricter than that, saying that the clinician was not permitted to practice at all within a certain distance of the employer for periods of between 12 and 36 months.
And often, according to David Ballard, assistant executive director for marketing and business development with the American Psychological Association, the non-compete goes hand-in-hand with a non-solicitation or confidentiality clause. He explains: “The contract will say explicitly that for X amount of time, the practitioner is not allowed to contact any of the clients or try to get them to leave that practice for another practice. Client lists are proprietary and the therapist is prohibited from copying them.”
But are these clauses enforceable? Maybe not. First of all, no one wants to go to court. And it’s unlikely that even an agency or large group is going to sue a former employee over something like this unless they stand to lose a lot of money. And then, Ballard points out, non-competes are sometimes written in a way that violates the law.
“If someone has a specific specialty and they’re one of only a few in a geographic area, [the clause] may be considered excessive by the courts.” And there are patient rights to consider.
Glennon Karr, an Ohio attorney who works frequently with mental health professionals, tells us that non-competes can be considered “unreasonable” when they deny a patient the opportunity to continue therapy with the clinician who’s leaving the group. On the other hand, Karr tells us, he’s been involved with cases where that issue was settled in a way the therapist didn’t much like: “One of the remedies I’ve seen was that the former employee could see the client--but any ‘profits’ would have to be turned over to the agency.”
Referring to the Illinois therapist discussed earlier, Ballard says calling yourself a coach may be a viable option. Karr, on the other hand, sees “a potential bag of worms.” Clinicians may be legally vulnerable if they advertise coaching services while also listing credentials such as PhD, CSW, etc. That may mean their work still falls under the jurisdiction of the state licensing board. That can spell trouble because, as Karr notes: “A big agency or group practice may have a presence on the licensing board.”
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