NAAOP Government Relations Update

2004 has been far less active than 2003 on the legislative front but significant regulatory activity is beginning to develop, largely as a result of enactment of the Medicare Modernization Act (MMA) on December 8, 2003. Although treatment of professional orthotic and prosthetic care in the Medicare bill can generally be considered a “mixed bag,” there are clearly some important victories in the bill. In addition to the Medicare bill and monitoring its implementation, NAAOP continues to be active on several regulatory fronts including a victory earlier this year on an orthotic “coding clarification” issued by the SADMERC.

Competitive Bidding Becomes Law, O&P Spared Major Impact: The MMA established nationwide “competitive bidding” starting in 2007 for all DME, supplies, and “off-the-shelf” orthotics. The inclusion of a relatively narrow definition of “off-the-shelf” orthotics, at NAAOP and other groups’ urging, should be considered a victory for the O&P profession since most orthotics and all prosthetics will not be subject to the nationwide system of Medicare competitive bidding that begins in 2007. Many aspects of how that competitive bidding system will work are currently being discussed at the Centers for Medicare and Medicaid Services (CMS) but little has been settled. It is the O&P community’s responsibility to meet with CMS and assist them in appropriately applying to “off-the-shelf orthotics” a competitive bidding system that will be designed primarily for DME.

Call for Nominations for DME Competitive Bidding Advisory Board: The MMA requires the Secretary to establish and administer a Program Advisory and Oversight Committee (PAOC) that will provide advice on the development and implementation of the Competitive Acquisition Program. On May 28, 2004, CMS announced that it is requesting nominations for individuals to serve on the Program Advisory Oversight Committee. The notice will be published in the Federal Register on June 2. Applications for the 12 to 15-member panel will be accepted through 5:00 PM (EST) on June 28, 2004.

O&P Medicare Fee Schedule Frozen through 2006, but Longer-Term Freeze and FEHBP Pricing Avoided: The most immediate ramification stemming from the Medicare reform legislation was a freeze of the entire O&P fee schedule, along with all DME and supplies, at 2003 rates for three years (2004-2006). Despite objections from NAAOP and other interest groups, the provision freezing all O&P was included in the final bill. However, the fee freeze under the Medicare bill continues through 2008 for certain items of DME, clearly indicating a separation between treatment of DME and professional O&P care. Also, O&P was spared application of a provision mandating a cut in reimbursement for the top five utilized DME items in 2005 to the median price reimbursed by the Federal Employees Health Benefits Plan, which would represent a cut in fees of approximately 20% under current levels.

Negotiated Rulemaking Process “Trumped” by Medicare Bill, Analysis Ongoing: The Medicare bill includes a provision that appears to “trump” the Negotiated Rulemaking process that ultimately ended in a stalemate last summer. The MMA seems to favor the position that all O&P care must be provided by health care professionals certified/accredited in the practice of orthotics and prosthetics. This is consistent with the position that NAAOP took during the Negotiated Rulemaking Committee.

The Negotiated Rulemaking process concluded in July of 2003 without resolution of the key sticking point in negotiations-the definition of which providers of O&P care would be considered “qualified practitioners.” NAAOP will continue to analyze the provision for its specific impact on O&P practice, and continue to meet with CMS officials as the regulations on this provision are implemented.

SADMERC Add-On Coding Clarification Rescinded: NAAOP actively participated in an effort in December 2003 to convince the SADMERC to rescind a “coding clarification” relating to “add-on” orthotic codes. The coding clarification had stated that suppliers of orthotic services may not use add-on L codes in conjunction with “prefabricated” orthotic codes. NAAOP aggressively worked with the SADMERC to explain how the “clarification” would have adversely impacted practitioners and the Medicare program, and would have deprived patients of necessary options that enhance comfort, stability, and, most-importantly, function of orthoses. NAAOP will continue to monitor and react to potentially similar actions in the future.

Direct Access Provision in Medicare Bill Watered Down, MedPAC to Issue Study: The Medicare bill addressed the issue of “direct access” to physical therapists without a physician’s prescription by rejecting a demonstration project and, instead, requiring a study of the issue. Rather than changing the law to allow for direct access or propose a demonstration project, as was included in the original Senate bill, the final bill authorized a study by the Medicare Payment Advisory Commission (MedPAC) on whether physical therapists should be able to self prescribe their services under Medicare, including, potentially, O&P services and devices.

Final 75% Rule Issued by CMS; Major Problems Remain: The 75% Rule, which governs whether a hospital or unit is considered a rehabilitation hospital or unit, and, thus, paid in a different manner, was issued in final form in late April, capping a long battle between CMS and the rehabilitation industry. The new rule will go into effect beginning July 1st. The rule reduced to 50% the number of patients that must meet one of 13 conditions commonly treated in the inpatient setting in order to be paid as a rehabilitation hospital, rather than an acute care hospital. But this percentage steadily increases until in 2007 when the 75% rule will be fully reinstated. The impact of this rule is expected to be dramatic over the coming years, as significant numbers of rehabilitation patients will likely be denied an inpatient rehabilitation course of treatment. Because the rule, combined with the local medical review policies (discussed below), will have the effect of tightening medical necessity requirements, it is quite possible that some amputees and others requiring orthotic care will not be able to access inpatient rehabilitation. The rehabilitation interest groups, including the NAAOP, continue to fight for appropriate access to inpatient rehabilitation.

Concern over LMRP Issue Continues: Amidst CMS’s issuance of new rules regarding the 75% Rule, some Medicare fiscal intermediaries (FIs) are drafting local medical review policies (LMRPs) intended to constrain and limit the coverage guidelines set by CMS for inpatient rehabilitation. Depending on how the final versions of these policies are drafted, they may have a significant impact on O&P patient care in this setting. NAAOP will continue to work to ensure that these policies are appropriate and do not restrict access to inpatient rehabilitation.

If you have questions regarding these issues, please contact Peter Thomas, NAAOP General Counsel, or Dustin May, Legislative Director, Powers, Pyles Sutter, and Verville, PC, at 1-800-622-6740.

  • Written by NAAOP

Medicaid Reform Update: Budget Resolution Slated to Cut Medicaid

To: National Association for the Advancement of Orthotics and Prosthetics

From: Peter W. Thomas, Dustin W.C. May

Date: April 5, 2004

Re: Medicaid Reform Update: Budget Resolution Slated to Cut Medicaid

The past several weeks have been very busy in Congress as lawmakers are wrestling with attempts to reduce overall funding to entitlement programs in the FY 2005 Congressional Budget, particularly Medicaid. The Senate recently approved an amendment that removed $11 billion in cuts to Medicaid. This week, however, the House of Representatives is slated to consider its version of the budget, which would cut $2.2 billion from Medicaid over 5 years. As the competing budget resolutions head toward a conference committee, Congress appears likely to approve some form of Medicaid cuts, assuming a final budget resolution is approved.

The annual Congressional budget resolution sets spending priorities for Congress and provides Congressional committees with “reconciliation” instructions on funding levels for various programs, including entitlements like Social Security, Medicare, and Medicaid. While the reconciliation instructions are non-binding, committees often comply with the instructions by passing legislation that concurs or “reconciles” with the budget resolution. Legislation that would spend federal funds in excess of the Congressionally-approved budget resolution is subject to additional procedural hurdles and is unlikely to pass.

This year, the budget resolution is shaping up to include a modest amount of tax cuts, approximately $100 billion over 5 years, and spending increases on other priority programs, such as defense. As a result, both the House and Senate Budget Committees are recommending cuts to entitlement programs over the next 5 years in order to offset the new spending.

Amidst the budget debate are increasing concerns over “waste, fraud, and abuse” in the Medicaid program. President Bush’s FY 2005 budget also highlighted several quasi-legal Medicaid funding streams that states have used to secure federal Medicaid matching funds, such as use of Intergovernmental Transfers and the Upper Payment Limit. These Medicaid payment issues, which have been the subject of debate in Congress for several years, combined with a desire not to initiate cuts to popular entitlements like Medicare and Social Security, leave lawmakers with an attractive alternative to reducing entitlement spending in an election year.

The Senate originally crafted a budget resolution that would have effectively cut approximately $11 billion from Medicaid over the next 5 years. However, many Governors, Medicaid providers and consumers expressed fear that reductions in federal Medicaid contributions would only exacerbate the number of uninsured persons and increase state health care deficits.

Ranking Member of the Senate Finance Committee, Senator Max Baucus (D-MT), countered the Budget Committee’s instructions on the Senate floor with an amendment that stopped $11 billion in Medicaid cuts. The amendment was passed in the Senate by a 53 to 43 margin, collecting 8 Republican votes. The success of the amendment is largely attributable to efforts of groups like NAAOP. NAAOP was very active in supporting the Baucus amendment and signed onto a letter sponsored by FamiliesUSA.

Senator John D. Rockefeller (D-WV) sponsored a different amendment that would have set aside special funding to continue the state fiscal relief (FMAP) originally passed in the 2003 tax bill. His amendment, however, was ruled out of order on procedural grounds. Early Friday, March 12, the Senate passed its $2.4 trillion budget package by a final vote of 51-45.

The House begins consideration of the FY 2005 budget resolution on the floor the week of March 22. Last week the House Budget Committee approved, on a party-line vote, a budget that purports to cut $2.2 billion from Medicaid and other entitlement programs. The House budget resolution’s cuts, which had originally been forecast to cut $13 billion from Medicaid, appear to have been mollified due to pressure from many House Republicans and interest group efforts. Nevertheless, the budget still contains $2.2 billion in cuts and is expected to pass the House by the end of this week.

Attempts by lawmakers to carry the Senate’s pro-Medicaid momentum and strip the Medicaid cuts on the floor will be difficult to sustain with House rules likely to limit consideration of a Medicaid restoration amendment.

Medicaid appears to be a safe target for cuts this year as Congress tackles a looming budget deficit and crafts an election-year tax package. NAAOP continues to work diligently to stave off cuts to Medicaid as the budget resolution continues to work through Congress and moves toward an eventual conference committee. As states continue to have additional fiscal pressure to cut Medicaid funding and the federal government continues to cut Medicaid in light of “waste, fraud, and abuse,” providers will continue to face fiscal challenges.

We will keep you updated on events on the budget and on Medicaid in the future.

  • Written by NAAOP

NAAOP Government Relations Update

2003 was a very active year for NAAOP’s legislative and regulatory efforts. Clearly the largest issue of the year was Medicare reform, which was enacted on December 8, 2003 and is in the process of being implemented by CMS this year. Although treatment of professional orthotic and prosthetic care in the Medicare bill can generally be considered a “mixed bag,” there are clearly some important victories in the bill. In addition to the Medicare bill and monitoring its implementation, NAAOP continues to be active on several regulatory fronts including a recent victory on an orthotic “coding clarification” issued by the SADMERC.

SADMERC Add-On Coding Clarification Rescinded: NAAOP actively participated in an effort in December 2003 to convince the SADMERC to rescind a “coding clarification” relating to “add-on” orthotic codes. The coding clarification had stated that suppliers of orthotic services may not use add-on L codes in conjunction with “prefabricated” orthotic codes. NAAOP aggressively worked with the SADMERC to explain how the “clarification” would have adversely impacted practitioners and the Medicare program, and would have deprived patients of necessary options that enhance comfort, stability, and, most-importantly, function of orthoses. NAAOP will continue to monitor and react to potentially similar actions in the future.

Competitive Bidding Becomes Law, O&P Spared Major Impact: The recently enacted Medicare bill established nationwide “competitive bidding” starting in 2007 for all DME, supplies, and “off-the-shelf” orthotics. The inclusion of a narrow definition of “off-the-shelf” orthotics, at NAAOP and other groups’ urging, should be considered a victory for the O&P profession since most orthotics and all prosthetics will not be subject to the nationwide system of Medicare competitive bidding that begins in 2007.

O&P Medicare Fee Schedule Frozen through 2006, but Longer-Term Freeze and FEHBP Pricing Avoided: The most immediate ramification stemming from the Medicare reform legislation was a freeze of the entire O&P fee schedule, along with all DME and supplies, at 2003 rates for three years (2004-2006). Despite protests by NAAOP and other interest groups, the provision freezing all O&P was included in the final bill. However, the fee freeze under the Medicare bill continues through 2008 for certain items of DME, clearly indicating a separation between treatment of DME and professional O&P care. Also, O&P was spared application of a provision mandating a cut in reimbursement for the top five utilized DME items in 2005 to the median price reimbursed by the Federal Employees Health Benefits Plan, which would represent a cut in fees of approximately 20% under current levels.

Negotiated Rulemaking Process “Trumped” by Medicare Bill, Analysis Ongoing: The Medicare bill includes a provision that appears to “trump” the failed Negotiated Rulemaking dispute in favor of the position that all O&P care must be provided by health care professionals certified/accredited in the practice of orthotics and prosthetics. The Negotiated Rulemaking process concluded in July of 2003 without resolution of the key sticking point in negotiations-the definition of which providers of O&P care would be considered “qualified providers.” Whether or not Congress intended to settle this issue in the Medicare bill, the provision appears to be very favorable to NAAOP’s position on the issue of the definition of a “qualified provider.” NAAOP will continue to analyze the provision for its specific impact on O&P practice, and continue to meet with CMS officials as the regulations on this provision are implemented.

Direct Access Provision in Medicare Bill Watered Down, MedPAC to Issue Study: The Medicare bill addressed the issue of “direct access” to physical therapists without a physician’s prescription by rejecting a demonstration project and, instead, requiring a study of the issue. Rather than changing the law to allow for direct access or propose a demonstration project, as was included in the original Senate bill, the final bill authorized a study by the Medicare Payment Advisory Commission (MedPAC) on whether physical therapists should be able to self prescribe their services under Medicare, including, potentially, O&P services and devices.

75% Rule Still on Hold, Congress Weighs In: The 75% Rule, which governs whether a hospital or unit is considered a rehabilitation hospital or unit, and, thus, paid in a different manner, is currently on hold pending CMS’s revision of the rule. Although CMS has stated that it will release the final rule shortly, Congress bolstered the arguments of NAAOP and other groups for a continued hold. “Report language” in the Medicare bill and the recently passed Omnibus Appropriations bill directs CMS to continue the delay in publication pending a study to examine the rule’s effectiveness. Although the report language is not law, it nevertheless sends a strong message to CMS that implementation of the 75% Rule as CMS has proposed would be highly restrictive to inpatient rehabilitation care, including inpatient rehabilitation received by amputees and others with orthopedic impairments.

Concern over LMRP Issue Continues: Amidst CMS’s drafting of new rules regarding the 75% Rule, some fiscal intermediaries (FIs) are drafting local medical review policies (LMRPs) intended to constrain and limit the coverage guidelines set by CMS for inpatient rehabilitation. These LMRPs significantly impact O&P patient care in this setting. Because LMRPs must be consistent with all statutes, rulings, and regulations, and may not conflict with CMS National Coverage Decisions or interpretive manuals, the fiscal intermediaries should await CMS guidance on the 75% Rule before implementing revisions to coverage policies for inpatient rehabilitation stays. NAAOP, along with other rehabilitation groups, continues to press CMS to direct FIs to withdraw the current LMRPs and discontinue further action until an independent panel of national clinical experts on inpatient rehabilitative care is convened and has fully examined the issues associated with medical necessity.

NAAOP will continue to monitor the implementation of specific provisions in the Medicare bill as they relate to O&P, particularly competitive bidding and the application of certification/accreditation standards to O&P providers. The 75% Rule and the LMRP issue will also be of continuing concern for O&P and NAAOP will be actively involved to prevent implementation of regulations unfavorable to O&P patients and providers. NAAOP will also continue to closely monitor Congress and the Bush Administration for any potentially deleterious policy initiatives in the future.

If you have questions regarding these issues, please contact Peter Thomas, NAAOP General Counsel, or Dustin May, Legislative Director, Powers, Pyles Sutter, and Verville, PC, at 1-800-622-6740.

  • Written by NAAOP

SADMERC to Rescind Policy on Prefabricated Orthoses Add On Code

NAAOP is pleased to report that its efforts, and the efforts of other O&P organizations, to challenge the SADMERCÂ’s recent coding decision regarding add on codes have been successful. NAAOP has verbally confirmed that the SADMERC will rescind its policy prohibiting the use of add on orthotic codes in conjunction with prefabricated orthotic base codes. This represents a clear victory for NAAOP and the O&P community in maintaining quality orthotic care.

Officials with the SADMERC stated during a recent conference call that “A formal article rescinding the advisory is forthcoming and a clarification letter will be issued in the next publication cycle.” Pursuant to this statement, the advisory was removed from the SADMERC website and the SADMERC will continue to work on this issue and make recommendations to add on codes where appropriate.

On December 23, 2003, NAAOP wrote to the SADMERC and DMERC Medical Directors, stating that the new “coding clarification” policy would adversely impact practitioners and the Medicare program, and would deprive patients of necessary options that enhance the comfort, stability, and, most-importantly, function of orthoses.

Not only does the action by the SADMERC to rescind the advisory elimination the immediate reimbursement impact of the decision, it also eliminates the need to challenge the process in which the coding advisory was issued. The SADMERC originally issues this advisory without following proper notice and comment procedures. Had the coding advisory been allowed to stand, additional policies may have been issued in the future using the same flawed procedure and averting proper notice and comment guidelines.

Please join NAAOP today to ensure that we are able to remain active and vigilant on behalf of the O&P community. Please contact NAAOP at (800) 622-6740 or on the web atwww.naaop.org.

  • Written by NAAOP

O&P Facilities’ Obligation to Provide Interpreters

“In a response to the message sent on the listserve regarding an O&P facility’s obligations to provide interpreters to deaf or hard of hearing patients, the following describes an O&P facility’s rights and responsibilities under the Americans with Disabilities Act of 1990 (“ADA”).

O&P facilities are considered “public accommodations” under Title III of the ADA, regardless of the size of the business or number of employees. As a public accommodation, an O&P facility has a responsibility to provide “effective communication” through its policies and procedures with the public, including patients. “Effective communication” does not require the provision of an interpreter for every patient who requests it or who is deaf or hard of hearing. In many instances, note taking and the use of other auxiliary aids and services to achieve effective communication are perfectly acceptable. However the complexity of the communication is largely what determines what form of communication would be considered “effective.” For a routine patient encounter, an interpreter is not required absent extenuating circumstances. However, if the patient encounter involves a more complex set of communications and consideration of more complicated issues, an interpreter may well be required by the ADA.

If the patient requests an interpreter, the practitioner should engage in a dialogue with the patient and/or his/her representative or family members to arrive at the method of communication that suits the particular needs of the patient and the circumstances of the patient visit.

If an interpreter is determined to be required, the O&P facility is obligated to pay for the interpreter entirely and may not impose a surcharge on the patient, even if the reimbursement for the patient service is less than the cost of the interpreter needed for that patient visit. The cost of interpreter services are measured against the revenues of the entire operation, not against the individual requiring the interpreter. In other words, the provision of interpreters or other auxiliary aids and services to deaf and hard of hearing patients is a cost of doing business with the public.

This response is provided to the O&P community as a service of the National Association for the Advancement of Orthotics and Prosthetics (NAAOP). Although drafted by NAAOP’s General Counsel, Peter W. Thomas, it does not constitute legal advice.”

  • Written by NAAOP

House passes a $45 billion legislative package impacting federal health care programs.

This afternoon, the House passed a $45 billion legislative package impacting taxes, trade and federal health care programs. The package now goes to the Senate for consideration.

The massive bills were quickly compiled over the last several days by Senate and House Republican leaders and, among other things, would prevent a scheduled 5% cut in Medicare physician payments in 2007, freezing payments at their current levels. Beginning in July 2007, physicians could receive 1.5% bonus payments in exchange for submission of data on quality measures.

Of importance to NAAOP, the legislation would not cut the O&P Medicare fee schedule and, therefore, O&P will maintain its 4.3% update in 2007. Also, in terms of disability-related policy, the legislation would extend the Medicare therapy cap exception process for an additional year, allowing beneficiaries requiring extensive therapy services to exceed the current Medicare therapy limit.

In order to pay for the physician payment freeze and other costly provisions, lawmakers are targeting the Medicare Modernization Act’s (MMA) “stabilization fund” – set up to entice insurance companies to participate in the Medicare prescription drug program. Other cost-saving provisions include a .5% reduction in Medicaid provider taxes (preempting expected CMS regulations that would have cut payments by 3%) and an “audit program to identify and collect on inaccurate Medicare overpayments and underpayments to specialized contractors.”

During House debate, many Democrats raised concern regarding the procedures and timeframe surrounding consideration of the bill. However, the legislative package is expected to face much greater opposition in the Senate from Members who oppose several of the trade provisions as well as some of the high cost items. Senate rules technically allow debate on the measure until Sunday, but leadership is hoping that they will be able to invoke cloture earlier than that.

We will keep you updated as developments occur.

For a copy of the summary of the healthcare provisions in the bill provided by the House Ways and Means Committee, please contact NAAOP at info@naaop.org.

  • Written by NAAOP