109th Congress Adjourns: Maintains 4.3% O&P Medicare Payment Update

Before adjourning, the 109th Congress cleared a surprising number of health-related bills including several which impact the Medicare and Medicaid programs.

Medicare/Medicaid

Most notable perhaps, was the massive tax and trade legislation which included in it a freeze in Medicare physician payments for 2007. Under the controversial SGR payment system, physicians were scheduled to receive a 5.0% payment cut in the coming year. The one-year fix also includes a 1.5% bonus payment beginning in July 2007 for those physicians who voluntarily submit data on quality measurements.

Of particular importance to NAAOP and the O&P profession, this legislation would not cut the O&P Medicare fee schedule and, therefore, O&P will maintain its 4.3% payment update in 2007.

The tax and trade legislation also included a one-year extension for the Deficient Reduction Act’s (DRA) therapy cap exception process. Under Medicare, therapy services are technically capped at a certain (and arbitrary) level; however the exception process allows beneficiaries requiring additional services to apply for exceptions to the cap. Additional provisions in the legislation include increases in Medicare dialysis payments, technical corrections to the 2005 DRA, and an extension of Transitional Medical Assistance (TMA) for low-income families transitioning off of Medicaid.

Some of the costs of these provisions are offset by using the 2003 Medicare Modernization Act’s (MMA) “stabilization fund,” originally set up to entice insurance companies to participate in the Medicare prescription drug program. Other cost-saving provisions include a recovery and audit program to identify and collect on inaccurate Medicare overpayments and a reduction in the Medicaid provider taxes ceiling from 6.0% to 5.5%. States often find some Medicaid revenues from taxing hospitals, nursing homes, managed care organizations, and other health care providers. This provider tax provision preempts the Administration’s expected regulations that would have reduced the provider tax limit to 3.0%, severely impacting states’ Medicaid budgets.

Appropriations:

Although the final hours of the 109th Congress were extremely busy, many pieces of legislation were left unfinished including the fiscal year (FY) 2007 Labor-HHS-Education appropriations bill. The 109th Congress postponed action on this, and eight other spending bills, by passing a continuing resolution (CR) into February, 2007. However, on Monday, December 11th, incoming House and Senate Appropriations Chairmen David Obey (D-WI) and Robert Byrd (D-WV) stated that they will attempt to pass a CR for the remainder of the FY 2007 appropriations cycle, which ends September 30, 2007. The year-long continuing resolution, if enacted, would essentially freeze program spending at FY 2006 levels until FY 2008.

NIH/SCHIP Legislation:

Another last-minute legislative package set to be enacted, would impact HIV/AID funding, the National Institutes of Health (NIH), and State Children’s Health Insurance Programs (SCHIP).
Among the top priorities of outgoing House Energy and Commerce Committee Chairman, Joe Barton (R-TX), was reauthorization legislation for the NIH. Chairman Barton’s NIH reauthorization bill will significantly restructure the agency and create a common fund to be used for cross-cutting research between centers.
Meanwhile, last week Senate HELP Committee Chairman Michael Enzi (R-WY) and Ranking Member Edward Kennedy (D-MA) were pushing the House to clear the Senate-passed Ryan White Care Act Reauthorization legislation which provides funding for low-income individuals with HIV/AIDS. And, HELP Bioterrorism and Public Health Preparedness Subcommittee Chairman, Richard Burr (R-NC), was also pushing the House to pass his Senate-approved reauthorization of the 2001 bioterrorism law.

The four lawmakers crafted a deal during the 109th Congress’ final hours that combined the three bills. However, as part of the deal in the Senate, lawmakers attached a provision which allowed for redistribution of surplus 2004 and some 2005 State Children’s Health Insurance Plans (SCHIP) funding (which were set to expire) to states with SCHIP shortfalls in 2007. The legislation was approved by both Chambers just prior to adjournment and now heads to the President for his signature.

Conclusion:

The Medicare physician payment freeze, included in the recent tax and trade legislation, proved extremely important to NAAOP members, as O&P will now receive a 4.3% update in calendar year 2007. However, Medicare provider payment rates, as well as many other important Medicare and Medicaid issues, are likely to be debated again in the 110th Congress, set to convene on January 4, 2007.

We will keep you updated as developments occur.

Compiled by Peter W. Thomas, NAAOP General Counsel
Emily A. Niederman, Legislative Director, Powers, Pyles, Sutter & Verville

  • Written by NAAOP

September 2006 Action Alert

National Regulation/Quality and Qualifications

NAAOP, both individually and in partnership with other O&P organizations, has consistently sought to separate legislative and regulatory treatment of professional O&P care from the provision of durable medical equipment. These efforts have been largely successful through the years, witnessed by more favorable treatment for O&P in the area of Medicare fee schedule freezes and competitive bidding. These victories have been accomplished through years of persistence. In fact, there are now laws on the books that were written to protect Medicare beneficiaries from receiving substandard care from individuals who are not qualified to provide professional O&P care to Medicare beneficiaries. This battle was won because NAAOP and its allies in the O&P field finally convinced legislators that the provision of O&P care is complex, clinical, and critical for Medicare patients with orthopedic conditions and disabilities.

CMS regulators are now interpreting these laws as they relate to the establishment of quality standards and accreditation requirements. This matter deserves your attention because you and your patients will suffer if non-qualified suppliers are permitted to provide care to patients, and bill the Medicare program for it. It is again necessary to use the arguments that convinced legislators to press the case with regulators interpreting the statutes. To do this, the O&P profession must put a human face on the issue of quality standards and the adverse consequences of O&P patients receiving care from individuals not qualified to provide professional care

You may have the evidence needed to advocate for your patients and your profession. You can help! Please provide NAAOP with specific examples of the effect of non-qualified individuals providing O&P care. When providing these examples, please provide as much evidence as possible, giving facts, including timeframes, disclosing only what you know, and do not include information that would identify a particular patient. If you have questions, please call NAAOP at 800-622-6740 or e-mail us at info@naaop.org. We want to hear from you.

O&P is a relatively small profession and in order to compete in the larger healthcare arena we must continue to present a factual and compelling account of the threats facing O&P patients and professional O&P care.

Please share this information with a colleague.

Coverage and Reimbursement

DRA 9-Day Payment Hold
This message is for all providers and physicians who bill Medicare contractors for their services.

A brief hold will be placed on Medicare payments for all claims during the last 9 days of the Federal fiscal year (Sept 22 through Sept 30, 2006). These payment delays are mandated by section 5203 of the Deficit Reduction Act of 2006. No interest will be accrued and no late penalties will be paid to an entity or individual by reason of this one-time hold on payments. All claims held during this time will be paid on October 2, 2006.

Please note, however, that contractors handling large volumes of paper checks may have some difficulty putting all checks in the mail in a single day. Consequently, delivery of checks to providers may take a few extra days.

This policy only applies to claims subject to payment. It does not apply to full denials, no-pay claims and other non-claim payments such as periodic interim payments, home heath request for anticipated payments and cost report settlements.

Please note that payments will not be staggered and no advance payments will be allowed during this 9-day hold.
Please refer to:
MLN Matters article #MM5047; Change Request #5047; Transmittal# R944CP
or refer your questions to your FI/RHHI or Carrier

Thank you for your support.

Respectfully,

Mark DeHarde
President
George W. Breece
Executive Director
Peter W. Thomas
General Counsel
  • Written by NAAOP

O&P Shared Vision Summit Yields Great Promise

NAAOP’s Executive Director and General Counsel, George Breece and Peter Thomas, participated recently in a two and a half day leadership conference in Chicago organized by the American Orthotic and Prosthetic Association and attended by many business, clinical, research and education leaders in the O&P field, nearly 75 people in all. The Summit was the first of its kind since 1987 when a similar strategic planning session was held.

While many important leaders in the field were not in the room, the participants consisted of a diverse cross-section of the field of orthotics and prosthetics, which lead to a rich dialogue on the pressing issues of the day. A main topic of discussion focused on the need of the O&P field to have a consistent, unified voice when representing the field to others. The O&P Alliance, which was formed earlier this year and functions as an informal government relations coalition between AAOP, ABC, AOPA and NAAOP, was seen as an effective force and a significant step forward.

With the help of a top-notch facilitator, the group discussed a variety of priority topics in both breakout sessions and as a full group, moving toward a consensus agenda for the future. Priority topics included the need to promote outcomes based research as well as technology R&D, ensure that Medicare regulations properly link payment to provider qualifications, and ensure that education requirements lead the field to new and higher levels of competence.

One of the many highlights of the conference was the closing speaker, Tammy Duckworth, former Democratic candidate for Congress in a suburban Chicago district. Tammy narrowly lost her House race in a Republican-leaning district on election day. Tammy spoke of her experience being shot down while piloting a Black Hawk helicopter in Iraq. After losing her legs (AK/BK) and the partial use of one arm, she received her rehabilitation and prosthetic care at Walter Reed Army Hospital. Tammy challenged the group to think in new ways about serving the needs of injured veterans and pledged to work hard in the future to secure additional funding for O&P research and services. She also suggested that the O&P field should actively recruit from the ranks of returning veterans.

A key challenge identified during the conference was the need to follow through on the groundwork laid during the two-day session. NAAOP intends to do its part to promote the consensus themes of the conference and actively work with other partners in the O&P field to make the “shared vision” a reality in the years to come.

  • Written by NAAOP

NAAOP November Government Relations Update

Mid-Term Election Impact and Brief Analysis

Democrats scored major victories in the election, becoming the majority party in the U.S. House of Representatives, achieving a majority of state governorships, and taking control of the U.S. Senate by a one vote margin. The results were largely consistent with most polling and political prognostications prior to the election, but the margins that Democrats achieved were generally larger than anticipated. Most analysts attributed the extensive Republican losses to the Iraq war, the unpopularity of President Bush, the economy, and a series of scandals that plagued the majority party. Following the election results, Defense Secretary Donald Rumsfeld resigned.

Impact on Policy: This sets that stage for a major shift in federal policy that could have a dramatic effect on health and human services, education, disability policy and policies that impact orthotics and prosthetics. Of particular interest to health care providers awaiting action on Medicare issues and funding levels for FY 2007, the change in leadership probably means that Congress’ lame duck session scheduled to begin November 13th will not be particularly fruitful. For the field of O&P, this means the likelihood of receiving a 4.3% Medicare fee schedule update on January 1st is very high.

House: In the House, at the time of this writing, the Democrats hold 230 seats and the Republicans hold 196, with 9 races throughout the country being too close to call. The margin to control the House is 218 seats. There is a real chance that Republicans may be shut out from taking any seats taken from Democrats, which would be the first time in history that this has occurred. But even if the Republican candidate in all 9 of these undecided races wins, the Democrats will still control the House. This means that a new Speaker of the House will be elected and all of the committees will change leadership. This also means that the agenda and the rules for debate in the House will no longer be run by Republicans, the party of President Bush.

Big winners in the House include Congresswoman Nancy Pelosi (D-CA), who is in line to become the first female Speaker of the House and highest elected female official in U.S. history. A long list of relatively unknown Democrats who toppled often well known Republicans follow, many of whom are either moderate or even conservative in their political outlook. Major figures who lost their reelection bids include Nancy Johnson (R-CN), Chairman of the House Ways and Means Health Subcommittee, Clay Shaw (R-FL), senior member of the Ways and Means full Committee and potentially the next chairman if House Republicans maintained their majority, and Speaker Hastert, who won reelection but announced that he will not seek the House Republican leadership post.

Senate: The Senate was less likely than the House to turn from Republican to Democratic control. In the Senate, Democrats have picked up six seats and now hold a 51 to 49 majority. The Democrats not only picked up six Republican seats but also held on to all of the Democratic seats including Maryland and New Jersey. With Democrats having taken the majority, they will be rewarded with controlling the agenda, chairing all committees and electing a new Majority Leader. Senator Harry Reid of Nevada, the present Senate Minority Leader, is expected to be elected Senate Majority Leader.

Political Analysis: In political terms, this election is a major shift in power in Washington and is being interpreted as a strong rebuke of President Bush and his leadership. Especially if the Democrats take the Senate, this election will have a major impact on the lame duck session of the 109th Congress, the last two years of the Bush Presidency, and perhaps the political dynamic in Washington.

Lame Duck Session: The lame duck session is likely to be shortened dramatically from what might have occurred if Republicans kept both Houses of Congress. If Republicans had won Congress, they would have returned on November 13th and continued to negotiate spending levels for fiscal year 2007, Medicare fixes such as physician payments and an extension of the therapy caps, and perhaps other legislation that is largely completed but has not received final approval before being sent to the President for signature. The likelihood now, in light of the Democratic gains, is a short lame duck session, pushing everything that can be postponed into next year for Democrats to address. Spending levels for federal programs will likely be addressed by passing a continuing resolution through some point next year (e.g., March 2007) at FY 2006 spending levels. This would be a major disappointment for anyone with provisions pending in this Congress as action on these provisions may not occur until well into next year. It is important to note, however, that this is informed speculation, and the incoming leadership may choose a different path in the coming days and weeks.

The 110th Congress: Because of the change in leadership, the 110th Congress will start with new leadership elections, selection of committee assignments and other organizing activities. The Democratic agenda is expected to focus on raising the minimum wage, increasing spending for homeland security and education, and promoting alternative fuels with less reliance on foreign oil. In addition, the House is widely expected to exercise greater oversight authority by probing Iraq reconstruction spending and other issues. Another key goal will be to authorize the federal government to negotiate pricing with prescription drug companies, thereby reducing the costs of the Medicare Part D program and perhaps allowing those savings to reduce the size of the gap in coverage under the existing program. A key challenge will be entitlement spending (i.e., Medicare, Medicaid and Social Security), as 2007 offers a window of opportunity in which to potentially accomplish an entitlement reform bill prior to the Presidential election year, when such a bill would be unlikely to pass.

Bipartisanship: Although too early to tell, the election results may trigger a new sense of bipartisanship in Washington, as the White House and the Democrats in Congress will have to work more cooperatively in order to accomplish any major legislation. Although Democrats have a fairly comfortable lead in the House and a razor thin margin in the Senate, they will need moderate Republican votes to move most legislation and President Bush still holds the veto pen, which will not be easily overridden in Congress as the House and Senate margins currently stand.

  • Written by NAAOP

Political Update

  • As expected, Congress was unable to wrap up its work on 10 out of 13 federal spending bills before recessing for the mid-term elections. Also expected to appear in a post-election “lame duck” session of Congress is a Medicare bill to spare physicians from a 5.1% cut in reimbursement scheduled to take place on January 1st if Congress does not intervene. It is this legislation that might include some changes that impact the expected 4.3% increase to the O&P fee schedule, also scheduled to take place on the first of the new year. NAAOP will be monitoring this situation closely and will intervene if necessary.
  • Several major pieces of legislation are still in play as a likely “lame duck” session is shaping up for late November, but this will be significantly impacted by the outcome of the elections.
  • The potential for a change in party leadership in the House and/or Senate complicate the outlook for a post-election legislative showdown over a Medicare bill.

Medicare Legislation Prospects and Impact on O&P

  • Great pressure is being exerted on the 109th Congress to craft a Medicare bill before the end of the year. The main political driver for this bill is the proposed elimination of a 5.1 percent decrease in physician payments for Calendar Year (CY) 2007. Other provisions are in the works as well that could impact the O&P field.
  • Three main strategic factors form the debate heading into the fall: what specific reform proposal to attempt, how much to spend and how to pay for it, and what political strategy would best be applied. If Republicans hold their leadership position in the House and Senate, expect a major bill this year. If Democrats take over either body, expect most of the work to be pushed off until next year.
  • Cost is a major concern for lawmakers as a one-year physician fix would cost $10+ billion.
  • In 2003, Congress froze the O&P fee schedule to offset the cost of other Medicare provisions in the Part D prescription drug law. The 3-year freeze expires at the end of this calendar year.
  • This creates the possibility that Congress will extend the O&P fee schedule freeze to help offset the cost of the physician fee schedule fix. However, NAAOP and other O&P Alliance members have been advocating to key members of Congress that this should not occur and have received indications that the O&P fee schedule is likely safe for calendar year 2007. If this holds, this would translate into an O&P fee schedule increase of 4.3%.

Appropriations Update

  • Over the summer, House and Senate appropriators completed work on their respective Labor, HHS, and Education Appropriations bills, but a conference committee set to work out a final bill will not likely complete work until after the elections. Most programs of interest to the O&P field were level funded from current spending levels.
  • After extensive advocacy from the O&P Alliance, of which NAAOP is a member, the Senate Labor, HHS, and Education Appropriations bill included language funding the fifth year of AAOP’s Project Quantum Leap, at a level of $500,000. Additional work will be required this fall to ensure that this funding is included in the final bill.

Association Health Plan Legislation Impacting O&P Benefit Mandates

  • Earlier this year, Senate Health, Education, Labor and Pensions Committee Chairman Michael Enzi proposed a bill relating to Association Health Plans that many Republicans have touted as a remedy for uninsured Americans to access affordable health insurance.
  • The bill would allow health plans to offer insurance across state lines, which would preempt state benefit mandates, including all state laws mandating basic coverage for O&P services.
  • NAAOP and its Alliance partners strongly advocated against this bill preempting these O&P mandated benefits laws. The legislation is not expected to move this year, but the tenuous political situation in Washington could spur movement on this legislation at any time.

CMS Issues Final Rule on Quality Standards and Accreditation of DMEPOS Suppliers

  • CMS recently issued a final rule on the quality/accreditation standards for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). The quality standards are much less stringent than proposed last Fall.
  • NAAOP and all Alliance organizations have been actively engaged in working with CMS during this debate. The fear is that the very basic Medicare quality standards may actually undermine the quality of care in a field like O&P, which is well accustomed to accreditation.
  • CMS anticipates using multiple accreditation organizations and a uniform set of quality standards, with a specific section for suppliers of O&P care. The accreditation requirements will be first implemented in cities where Medicare competitive bidding is implemented. Many questions remain and NAAOP will continue to closely work on this important issue.

Compiled by Peter W. Thomas, NAAOP General Counsel

Dustin W.C. May, Legislative Director, Powers, Pyles, Sutter & Verville, PC.

  • Written by NAAOP

NAAOP Action Alert

Dear O&P Professional:

The National Association for the Advancement of Orthotics and Prosthetics, both individually and in partnership with other O&P organizations, has consistently sought to separate legislative and regulatory treatment of professional O&P care from the provision of durable medical equipment. These efforts have been largely successful through the years, witnessed by more favorable treatment for O&P in the area of Medicare fee schedule freezes and competitive bidding. These victories have been accomplished through years of persistence. In fact, there are now laws on the books that were written to protect Medicare beneficiaries from receiving substandard care from individuals who are not qualified to provide professional O&P care to Medicare beneficiaries. This battle was won because NAAOP and its allies in the O&P field finally convinced legislators that the provision of O&P care is complex, clinical, and critical for Medicare patients with orthopedic conditions and disabilities.

CMS regulators are now interpreting these laws as they relate to the establishment of quality standards and accreditation requirements. This matter deserves your attention because you and your patients will suffer if non-qualified suppliers are permitted to provide care to patients, and bill the Medicare program for it. It is again necessary to use the arguments that convinced legislators to press the case with regulators interpreting the statutes. To do this, the O&P profession must put a human face on the issue of quality standards and the adverse consequences of O&P patients receiving care from individuals not qualified to provide professional care.

You may have the evidence needed to advocate for your patients and your profession. You can help! Please provide NAAOP with specific examples of the effect of non-qualified individuals providing O&P care. When providing these examples, please provide as much evidence as possible, giving facts, including timeframes, disclosing only what you know, and do not include information that would identify a particular patient. If you have questions, please call NAAOP at 800-622-6740 or e-mail us at info@naaop.org. We want to hear from you.

O&P is a relatively small profession and in order to compete in the larger healthcare arena we must continue to present a factual and compelling account of the threats facing O&P patients and professional O&P care.

Please share this information with a colleague.

Join your NAAOP colleagues in our efforts. Add your voice. Defend professional O&P patient care.

Respectfully,

Mark DeHarde
President
George W. Breece
Executive Director
Peter W. Thomas
General Counsel
  • Written by NAAOP

NAAOP September Government Relations Update

National Regulation/Quality and Qualifications

NAAOP, both individually and in partnership with other O&P organizations, has consistently sought to separate legislative and regulatory treatment of professional O&P care from the provision of durable medical equipment. These efforts have been largely successful through the years, witnessed by more favorable treatment for O&P in the area of Medicare fee schedule freezes and competitive bidding. These victories have been accomplished through years of persistence. In fact, there are now laws on the books that were written to protect Medicare beneficiaries from receiving substandard care from individuals who are not qualified to provide professional O&P care to Medicare beneficiaries. This battle was won because NAAOP and its allies in the O&P field finally convinced legislators that the provision of O&P care is complex, clinical, and critical for Medicare patients with orthopedic conditions and disabilities.

CMS regulators are now interpreting these laws as they relate to the establishment of quality standards and accreditation requirements. This matter deserves your attention because you and your patients will suffer if non-qualified suppliers are permitted to provide care to patients, and bill the Medicare program for it. It is again necessary to use the arguments that convinced legislators to press the case with regulators interpreting the statutes. To do this, the O&P profession must put a human face on the issue of quality standards and the adverse consequences of O&P patients receiving care from individuals not qualified to provide professional care.

You may have the evidence needed to advocate for your patients and your profession. You can help! Please provide NAAOP with specific examples of the effect of non-qualified individuals providing O&P care. When providing these examples, please provide as much evidence as possible, giving facts, including timeframes, disclosing only what you know, and do not include information that would identify a particular patient. If you have questions, please call NAAOP at 800-622-6740 or e-mail us at info@naaop.org. We want to hear from you.

O&P is a relatively small profession and in order to compete in the larger healthcare arena we must continue to present a factual and compelling account of the threats facing O&P patients and professional O&P care.

Please share this information with a colleague.

Coverage and Reimbursement

DRA 9-Day Payment Hold

This message is for all providers and physicians who bill Medicare contractors for their services.

A brief hold will be placed on Medicare payments for all claims during the last 9 days of the Federal fiscal year (Sept 22 through Sept 30, 2006). These payment delays are mandated by section 5203 of the Deficit Reduction Act of 2006. No interest will be accrued and no late penalties will be paid to an entity or individual by reason of this one-time hold on payments. All claims held during this time will be paid on October 2, 2006.

Please note, however, that contractors handling large volumes of paper checks may have some difficulty putting all checks in the mail in a single day. Consequently, delivery of checks to providers may take a few extra days.

This policy only applies to claims subject to payment. It does not apply to full denials, no-pay claims and other non-claim payments such as periodic interim payments, home heath request for anticipated payments and cost report settlements.

Please note that payments will not be staggered and no advance payments will be allowed during this 9-day hold.

Please refer to:

MLN Matters article #MM5047; Change Request #5047; Transmittal# R944CP

or refer your questions to your FI/RHHI or Carrier

Thank you for your support.

Respectfully,

Mark DeHarde
President
George W. Breece
Executive Director
Peter W. Thomas
General Counsel
  • Written by NAAOP

NAAOP August Government Relations Update

National Legislation and Regulation/Quality and Qualifications

CMS Issues Scaled Back Quality Standards: A Double-Edge Sword

The month of August finally brought the publication by CMS of the final quality standards and accreditation requirements on DMEPOS suppliers, enacted as part of the Medicare Modernization Act of 2003. All DMEPOS suppliers will eventually be required to become accredited and demonstrate compliance with the quality standards, but the first suppliers to be exposed to these requirements will be those suppliers who participate in competitive bidding in ten yet-to-be selected U.S. cities.

As detailed and lengthy as the proposed quality standards were (100 pages) when issued in the Fall of 2005, the final quality standards are general and far less onerous (14 pages). While this is good news for O&P providers in terms of not needing to demonstrate compliance with a raft of new Medicare requirements, it is clearly a double-edge sword. Because the O&P field long ago embraced accreditation of facilities and certification of practitioners while the DME field did not, the final quality standards may prove to actually “lower the bar” of quality O&P care over the long term.

In addition to the MMA requirements, the Beneficiary Improvement and Protection Act of 2001 (BIPA) established qualification standards for suppliers of certain orthotic and prosthetic services and devices. While the quality standards and accreditation requirements have been issued by CMS this month, the BIPA regulations have still not been released.

NAAOP strongly supports the imposition of strong accreditation requirements on DMEPOS suppliers, the establishment of effective quality standards to ensure that Medicare beneficiaries receive high quality orthotic and prosthetic care, and qualification standards on suppliers to ensure that Medicare only reimburses orthotic and prosthetic suppliers who possess the requisite education, training, and experience to provide high quality care.

NAAOP, along with the other organizations that comprise the Orthotic & Prosthetic Alliance, is concerned that if CMS only requires that an accrediting agency ensure that a DMEPOS supplier meets the very general and basic quality standards published by CMS, multiple agencies will design bare-bones accreditation programs for suppliers who wish to have access to the O&P billing codes (i.e., L-codes). This could have the effect of enabling a significant number of suppliers who have limited or no knowledge of comprehensive orthotic and prosthetic care to be able to bill Medicare for these services and devices. This, in turn, could lessen the quality of orthotic and prosthetic care and permit far greater numbers than currently exist to provide such services with only minimal education, training, and experience in the specialized field of orthotics and prosthetics.

This, of course, is exactly the opposite result of what was intended by Congress when it passed the MMA and BIPA laws. While it is too early to tell whether this will be the inevitable result, it is possible that the quality standards as written will actually increase utilization of the Medicare L-codes by suppliers who have little of no education and training in comprehensive O&P patient care.

It is for this reason that NAAOP is actively engaged on this issue, along with its O&P Alliance partners, to ensure that Congress’ intent in passing these two laws is implemented correctly by CMS.

NAAOP will continue to keep you informed of developments through our monthly updates and whenever developments dictate that we communicate with our members and the broader O&P field.

Thank you for your Support of our Mission

As a NAAOP member, you are working hard to improve the lives of patients who use orthotic and prosthetic services. In thanks, we would like to reaffirm our commitment to always putting the patient first. We are able to put the patient first only because you support this mission. NAAOP’s mission has always been member driven and people have always come before profits. NAAOP’s voice is respected, trusted, and effective because of this fact. As your leadership, it is an honor and privilege to represent O&P professionals who promote this position and we want to assure you that our commitment to the patient will not waiver.

NAAOP will be exhibiting at the 2006 AOPA National Assembly in Hollywood Florida, September 26 – September 30. We would like to take this opportunity to invite you and your colleagues to visit our booth # 011, which will be located outside the main exhibit hall with the non-profit organizations. It is very important that NAAOP continues to grow and we need your help to accomplish this. The power of your endorsement was demonstrated at the Academy show this past March.

As you know, almost 100% of your membership dollars go to a patient-focused education and advocacy agenda. This is unique in our profession. Our story on video illustrates NAAOP’s unique role and defines our purpose. Ours is a history of dedicated professionals banding together to ensure that individuals who use orthotic and prosthetic services receive the professional care they deserve.

It is important to NAAOP’s future that all those involved in O&P patient care are aware of the important role they can play in this mission. Please share this message and NAAOP’s video with a colleague. Also, please come by our booth and bring a colleague. Invite them to join usin advocating for better evidence, better education of practitioners, greater and better technology for the O&P consumer, and greater access to care.

Mark DeHarde
President
George W. Breece
Executive Director
Peter W. Thomas
General Counsel
  • Written by NAAOP

Comments on Proposed Rule CMS-1270-P; Competitive Acquisition of Certain DMEPOS Under the Medicare Program With Accompanying Addendum

To: Mark McClellan, M.D., Ph.D.
Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services

Attention: CMS-1270-P
Mail Stop C4-26-05
7500 Security Boulevard
Baltimore, Maryland 21244-1850

Re: Comments on Proposed Rule CMS-1270-P; Competitive Acquisition of Certain DMEPOS Under the Medicare Program

Dear Dr. McClellan:

Thank you for the opportunity to comment on the proposed regulations governing the competitive acquisition of certain durable medical equipment, prosthetics, orthotics and supplies (“DMEPOS”) as well as the implementation of quality standards in this important area. We are writing on behalf of the Orthotic and Prosthetic Alliance (“the O&P Alliance”), a recently formed coalition of the four primary organizations representing the field of orthotics and prosthetics (“O&P”). The four organizations include the American Academy of Orthotists and Prosthetists (AAOP), the American Board for Certification in Orthotics and Prosthetics (ABC), the American Orthotic & Prosthetic Association (AOPA), and the National Association for the Advancement of Orthotics and Prosthetics (NAAOP). Together, the O&P Alliance represents the scientific, research, professional, business, and quality improvement aspects of the orthotic and prosthetic field.

As discussed below, the O&P Alliance believes that off-the-shelf (“OTS”) orthoses should be exempt from the competitive bidding program since the minimal program savings to be gained by competitive bidding of such services will be offset by the significant administrative burden. However, the O&P Alliance supports the proposed use of quality standards and mandatory accreditation for the provision of all DMEPOS to ensure that Medicare beneficiaries receive the highest quality care possible from the most highly qualified suppliers. It is through this mechanism that we believe CMS will achieve both higher quality and lesser expenditures for OTS orthoses. Also attached is an addendum with additional comments related to competitive bidding that are not specific to orthotics and prosthetics.

I. Quality Standards

The O&P Alliance strongly supports the establishment of quality standards and mandatory accreditation for all suppliers of orthotic and prosthetic services and devices. Medicare beneficiaries are entitled to receive quality orthotic and prosthetic care from a supplier with the O&P qualifications to provide such care, regardless of the type of supplier that furnishes the services. For this reason, no supplier should be exempt from Medicare’s quality standards and accreditation requirements. To do so would contravene the statutory language of the Medicare Modernization Act, potentially put patients at risk of poor quality care, and subject the Medicare program to the threats (e.g., fraud and abuse, overutilization, poor patient care) that the quality standards requirement was intended to address.

The O&P Alliance believes strongly that the level of complexity and sophistication of the orthotic or prosthetic service being provided to the patient should directly correlate to the quality standards and accreditation requirements. For instance, a supplier that is qualified to provide off-the-shelf orthoses may be completely unqualified to provide the full range of comprehensive orthotic care. This is largely a result of significant changes in recent years in the provision of low-level orthotics, which are now routinely provided in non-traditional supplier settings (i.e., not in orthotic patient care clinics and facilities). The accreditation requirements and quality standards that are yet to be published by CMS must recognize this distinction if the intent of the statute is to be realized.

The O&P Alliance, therefore, requests CMS to require organizations that accredit orthotic and prosthetic suppliers to adopt varying levels of credentials that comport with the complexity and clinical expertise required to provide the wide scope of orthotic and prosthetic care. We have previously submitted to CMS documents stating our collective view that there are four basic levels of orthotic care and the qualifications of suppliers that provide these services and devices must comport with the varying levels. These levels are as follows:

  1. Off-the-Shelf Orthotics: A prefabricated device sized and/or modified for interim, evaluative or short term use by the patient in accordance with a prescription and which does not require clinical judgment and alteration for appropriate use.
  2. Custom Fitted Device (Low): A prefabricated device sized and/or modified for use by the patient in accordance with a prescription and which requires substantial clinical judgment (involving medium Patient Assessment and Formulation of the Treatment Plan and Follow Up Treatment Plan skills) and substantive alteration (involving low Technical Implementation skills) for appropriate use.
  3. Custom Fitted Device (High): A prefabricated device sized and/or modified for use by the patient in accordance with a prescription and which requires substantial clinical judgment (involving high Patient Assessment and Formulation of the Treatment Plan and Follow Up Treatment Plan skills) and substantive alteration (involving medium Technical Implementation skills) for appropriate use.
  4. Custom Fabricated Device: A device fabricated to comprehensive measurements and/or a mold or patient model for use by a patient in accordance with a prescription and which requires clinical and technical judgment in its design, fabrication and fitting.

It is important to note that the term “prefabricated” is not synonymous with the term “off-the-shelf.” There are many orthoses that begin as prefabricated devices or prefabricated portions of devices that require high levels of clinical judgment and technical skills to properly design and fit an appropriate permanent orthosis. The levels suggested above explicitly recognize this distinction.

In the proposed rule, CMS explicitly requests public comment on the issue of identifying which HCPCS L-Codes will be considered to represent “off-the-shelf” orthotics, thereby subjecting those orthoses to competitive bidding. With virtually hundreds of L-codes in the HCPCS system, this is a task that requires an intimate understanding of the L-Code system and the practice of orthotics. Led by AOPA’s Coding Committee, the O&P Alliance has already undertaken this formidable task and submitted to CMS on two previous occasions a comprehensive list of L-Codes that are divided into the four categories listed above. We request that CMS strongly consider these recommendations as they are the product of many hours of analysis and discussion by experts in the O&P field.

The fact that CMS has not yet published the final quality standards or the accreditation requirements for DMEPOS has made commenting further on this aspect of the proposed rule very difficult. There are significant unknown factors at this point that will be critical to an efficient system of quality standards and accreditation in the DMEPOS benefit. In our view, CMS’s main challenge with the O&P benefit is to strike the proper balance between setting the bar too low (and permitting unqualified suppliers to provide comprehensive O&P services to Medicare beneficiaries) and setting the bar too high (and compromising access to orthotic and prosthetic care, particularly in difficult-to-serve areas of the country).

Because of the importance of these issues, the O&P Alliance requests that CMS publish the accreditation requirements on DMEPOS suppliers as a proposed rule, thereby permitting the public to analyze and comment before final implementation. We believe that mandatory accreditation and quality standards, if properly designed and implemented, are the preferred method of achieving both program savings and higher quality in the Medicare OTS orthotic benefit, rather than a competitive bidding model.

II. Exempt Off-the-Shelf Orthotics from Competitive Bidding Based on Low Potential for Savings (Criteria for Item Selection)

When Congress enacted the Medicare Modernization Act of 2003 (MMA), Pub. Law 108-173, lawmakers granted CMS the authority to exempt certain items from a Medicare competitive bidding program that were not likely to result in significant savings. See Section 1847(a)(3)(B) of the Social Security Act. In CMS’ discussion of this issue in the Notice of Proposed Rulemaking (NPRM), the agency proposes to “exempt items outright or on an area by area basis using area-specific utilization data.” See 71 Fed. Reg. 25,670.

We urge CMS to exempt outright all OTS orthotics from the Medicare competitive bidding program on the basis that inclusion of OTS orthotics in a competitive bidding program will not produce significant savings to the Medicare program.

Medicare’s own data from the competitive bidding demonstration project in San Antonio, Texas strongly supports this conclusion. The Research Triangle Institute’s (RTI) Final Evaluation Report “Evaluation of Medicare’s Competitive Bidding Demonstration for DMEPOS” issued in November 2003 concluded,

“We believe that the product category of general orthotics is not as well-suited for competitive bidding as oxygen equipment and supplies, hospital beds and accessories, wheelchairs and accessories and nebulizer drugs. We reach this conclusion primarily on the basis of the relatively low potential for savings in the product category. We estimated that allowed charges on the demonstration items would have totaled only about $200,000 per year in San Antonio in the absence of the demonstration. At this level, even if competitive bidding reduced prices by 20 percent, the change in allowed charges would be relatively small. General orthotics had the fewest bidders of all the product categories included in the demonstration in San Antonio with only 14 suppliers submitting bids; 8 suppliers were selected as demonstration providers.” (page 253)

The actual data from the competitive bidding demonstration related to certain orthotics provides compelling support for our position. For the 23-month period (Feb. 1, 2001 – Dec. 31, 2002) during which competitive bidding for certain orthotics was tested in San Antonio, the Medicare program saved a total of $89,462, or less than $45,000 per year (page 92 of RTI’s Final Report). Moreover, since the conclusion of the San Antonio demonstration project in 2002, all orthotic and prosthetic services, including OTS orthotics, have been subject to a Medicare payment freeze as mandated by the MMA, effectively reducing reimbursement rates for Medicare OTS orthotics by 7.9 percent as compared to inflation.

In light of this data and because CMS determined through its proposed scoring methodology that San Antonio is one of the ten largest MSAs with the highest potential for DMEPOS savings (see 71 Fed. Reg. 25,666), we believe that other MSAs would likely yield even less savings than the original San Antonio demonstration.

Additionally, Section 1847(a)(1)(B)(ii) of the Social Security Act provides CMS the authority to phase-in competitive bidding “first among the highest cost and highest volume of items or those items that the Secretary determines have the largest savings potential.” Once again, OTS orthotics do not meet the underlying conditions of the statute. OTS orthotics are not high-cost or high-volume items nor do OTS orthotics have the largest potential for savings based on the San Antonio demonstration.

Rather, we believe that CMS’ focus on the OTS benefit should be aimed at designing, implementing and enforcing effective quality standards and mandatory accreditation requirements to help:

  1. improve the quality of orthotic and prosthetic services delivered to Medicare beneficiaries;
  2. ensure that orthotic and prosthetic suppliers are qualified to provide the level of orthotic and prosthetic care required by the individual patient;
  3. validate that services provided to beneficiaries are medically necessary;
  4. ensure that orthotic and prosthetic services are not miscoded;
  5. reduce unnecessary program expenditures for orthotics and prosthetics; and
  6. reduce opportunities for fraud and abuse in the program.

Again, we believe strongly that implementation and enforcement of effective quality standards and mandatory accreditation requirements is a far better course for CMS to take than competitive bidding of OTS orthotics. Whether or not CMS decides to ultimately include OTS orthotics in competitive bidding programs, we recommend a number of changes to the proposed competitive bidding regulations as detailed below and in the attached Addendum, which lists our more general concerns with the design of the competitive bidding program proposed by CMS.

III. Definition of Minimal Self-Adjustment (Criteria for Item Selection)

We recommend amending the proposed definition of “minimal self-adjustment” that is referenced in the preamble of the proposed rule. The Medicare Modernization Act defines OTS orthotics as:

“[o]rthotics described in section 1861(s)(9) for which payment would otherwise be made under section 1834(h) which require minimal self-adjustment for appropriate use and do not require expertise in trimming, bending, molding, assembling, or customizing to fit to the individual.” MMA, Pub. L. No. 108-173, § 302(b), codified at 42 U.S.C. § 1395w-3(a)(2)(C).

The statute does not define what is meant by “minimal self-adjustment” other than this statutory language. The definitions section of the proposed regulation (Section 414.402) is consistent with the statute with regard to the definition of “off-the-shelf orthotics.”

However, the preamble to the proposed regulation states that “[w]e are proposing that minimal self-adjustment would mean adjustments that the beneficiary, caretaker for the beneficiary, orsupplier of the device can perform without the assistance of a certified orthotist (that is, an individual certified by either the American Board for Certification in Orthotics and Prosthetics, Inc. or the Board for Orthotist/Prosthetist Certification).” [Emphasis added]. Accordingly, pursuant to this definition, OTS orthotics would include orthotics that require adjustments by a supplier (albeit not a certified orthotist).

We believe that the definition of OTS orthotics that appears in the definitions section of the proposed rule should not be modified by the preamble language. The definition of OTS orthotics should not include items that require the services of a supplier. CMS’s proposed definition of “minimal self-adjustment” conflicts with the plain-meaning of the statute. The term “self” in “self-adjustment” clearly indicates that the definition of “OTS orthotics” are intended to be orthotics which can be properly adjusted by the beneficiary, without assistance from a supplier. If an orthosis requires the assistance of a supplier, then it cannot be self-adjusted.

Accordingly, we request that CMS clarify that “minimal self-adjustment” means adjustments that the beneficiary or caretaker of the beneficiary can perform – it does not mean adjustments that require the involvement of a supplier. In addition, the definition of OTS orthotics must be established in the context of all levels of orthotic care, as described above.

On a related issue, we applaud CMS for recognizing in the preamble the ABC and BOC as the primary accrediting organizations in the field of orthotics and prosthetics. The field of orthotics and prosthetics is separate and distinct from durable medical equipment and supplies. The accrediting agencies that CMS determines are appropriate for suppliers of orthotics and prosthetics should reflect this distinction. Because of this distinction and the impact that the selected accrediting agencies will have on the quality of O&P care for Medicare beneficiaries, we recommend that CMS incorporate references to ABC and BOC in the regulations themselves, rather than relying on the preamble to establish this important distinction.

IV. New Gap-Filling Methodology

The preamble to the proposed rule discusses the use of three factors in its new method of determining fees for new items and services: (1) functional assessment; (2) price comparison analysis; and (3) medical benefit assessment. See 71 Fed. Reg. 25,687, to be codified at 42 C.F.R. § 414.210(g). Our comments and recommendations on these issues are as follows:

 

    • Functional assessment— This assessment should only be used to ensure that “like is being compared to like” in determining a fee schedule amount. Any other use of a functional assessment is not appropriate, since it would enter the realm of medical necessity judgments.

 

    • Price comparison analysis— This comparison is reasonable if an appropriate range of items are reviewed. However, in the past, we have found that CMS has used a very limited list of items, oftentimes comparing orthoses and prostheses to items and services that are not furnished by certified orthotists and prosthetists, to set HCPCS code fee schedule amounts. Most recently, this has occurred in setting fee schedule amounts for a number of orthoses.This is unreasonable and results in fee schedule amounts that may be accurate for devices often furnished by DME suppliers, but not for the services of certified orthotists and prosthetists. This type of fee setting tends to either force Medicare patients to use inexpensive, arguably inappropriate devices when a more appropriate device is both available and appropriate to treat the individual’s condition.

 

    • Medical Benefit Assessment— We strongly protest the use of medical benefit assessment in relation to fee determinations. Certainly, a determination of medical necessity is required before any device can be paid by the Medicare program, however, this decision must be made separately from the calculation of fee schedule amounts.The medical benefit of a device is a coverage decision, not a fee determination. It is inappropriate to use the setting of fee schedule amounts as a backdoor method of determining coverage, which has its own protocols, either through the National Coverage Determination process or through the determination of medical necessity by the PSC medical directors at the Local Coverage Determination level. Historically, coverage, coding and reimbursement have been separate and distinct activities and it must remain so for the system to make fair and equitable judgments regarding new technologies.

 

Finally, the O&P Alliance requests that CMS clarify in the final regulations the statement included in the gap-filling discussion that states, “We can use the technology assessment process at any time to adjust prices on or after January 1, 2007 that were previously established using the gap-filling methodology if it is determined that those pricing methods resulted in payments amounts that do not reflect the cost of furnishing the item.” 71 Fed. Reg. 25,688. We request clarification as to whether this statement is referring to the Medicare inherent reasonableness methodology of altering fee schedule amounts, or to some other process?

If you have any questions regarding the above comments or our more general comments on competitive bidding reflected in the attached Addendum, please feel free to contact our Washington counsel, Peter W. Thomas, at (202) 466-6550.

Sincerely,

Mark DeHarde
President
National Association for the Advancement of Orthotics and Prosthetics
Walter L. Racette, CPO
President
American Orthotic & Prosthetic Association
Paul E. Prusakowski, CPO, FAAOP
President
American Academy of Orthotists and Prosthetists
Jeffrey J. Yakovich, CO
President
American Board for Certification in Orthotics and Prosthetics

 


 

Addendum

Additional Comments of the O&P Alliance to the Proposed Rule Regarding Competitive Acquisition of DMEPOS; CMS-1270-P

The following comments are offered by the O&P Alliance on CMS’s Proposed Rule for Competitive Acquisition of Durable Medical Equipment, Orthotics, Prosthetics, and Supplies. These comments relate to the general concerns of the O&P community with respect to Medicare competitive bidding of DMEPOS and not with the more specific concerned of the orthotic and prosthetic field outlined in our primary comments.

I. Opportunity for Participation by Small Suppliers/Opportunity for Networks

Section 1847(b)(6)(D) of the Act states that “[i]n developing procedures relating to bids and the awarding of contracts under this section, the Secretary shall take appropriate steps to ensure that small suppliers of items and services have an opportunity to be considered for participation in the program under this section.” We believe that the proposed competitive bidding system strongly favors large providers with the ability to cover large service areas, provide all of the products in various categories, and use economies of scale to underbid smaller suppliers. The final regulations must include further measures to ensure that small suppliers have the opportunity to meaningfully participate in serving the needs of Medicare beneficiaries in competitive bidding areas.
The O&P Alliance recommends that CMS require a minimum percentage of small suppliers in each competitive bidding area (“CBA”). For example, CMS could establish a rule that required in each CBA at least fifty percent of the suppliers who receive a contract to be small suppliers (the definition of small supplier may be based on either FTEs or annual revenue). CMS may employ a number of means to ensure that CBAs include minimum percentages of small suppliers, such as: (1) creating CBAs that are reasonably sized in order to allow small suppliers to participate (since small suppliers often will be unable to furnish services to a large CBA); (2) allowing small suppliers to bid for “carve out” areas of CBAs; or (3) awarding contracts to the small suppliers with the lowest bids that exceed the pivotal bid (until the minimum percentage threshold is met). We believe that requiring CMS to contract with a minimum percentage of small suppliers is necessary to effectuate Congress’s unequivocal mandate that small suppliers are included within the competitive bidding program.
Furthermore, we do not believe that the proposal for suppliers to form supplier networks serves as a meaningful method to ensure participation by small suppliers. We question whether any such network is permissible under federal antitrust laws. While antitrust laws permit provider networks, such networks are based on the so-called “messenger model” and do not permit suppliers to reach a mutual consensus on pricing.
In contrast, CMS’s proposed model requires suppliers who are marketplace competitors to agree on proposed prices for all items within a competitive bidding product category. If CMS believes that its proposed network model is permissible under federal antitrust laws, we request that the agency publish any internal legal analyses supporting this position. Furthermore, if CMS believes that its supplier network option is permissible under the antitrust principle of “implied repeal” (in which there is an irreconcilable conflict between a federal regulatory scheme and antitrust laws), then we request that CMS clarify this in the final regulation. See, e.g., National Gerimedical Hospital and Gerontology Center v. Blue Cross of Kansas, 452 U.S. 278, 101 S. Ct. 2415 (1981). Otherwise, we believe that the proposed network model does not pose a viable solution for ensuring that small suppliers can participate in the competitive bidding program because of the risk that such a network violates federal antitrust law.

II. Beneficiary Access to Non-contract Suppliers

The proposed rule generally does not permit beneficiaries to access non-contract suppliers within a CBA (as grandfathering is not available to O&P). While we recognize that CMS has adopted this policy to ensure program cost savings, we believe it is imperative for CMS to permit beneficiaries to obtain services from a non-contract supplier. This is necessary for quality assurance purposes and to ensure that beneficiaries continue to have access to unique or particularly high-quality services from longstanding Medicare suppliers. As discussed below, this can be done in a fashion that ensures that Medicare receives its full program savings and which provides incentives for suppliers to seek contract-supplier status.

We recommend that CMS permit beneficiary’s to access non-contract suppliers if:

  1. the beneficiary pays 20% of the competitive bidding amount for the item;
  2. the beneficiary also pays the difference between the competitive bidding amount and the lesser of the Medicare fee schedule or the supplier’s usual charge;
  3. the supplier provides, and the beneficiary signs, a notice indicating the lower payment rate available at a contract supplier.

This methodology ensures that the Medicare program obtains its program savings (since the program would only pay 80% of the competitive bidding amount, as it would had the beneficiary received services from a contract supplier). It provides a strong incentive to the beneficiary to use contract suppliers (since the beneficiary will have clear notice that the coinsurance payment rate will be lower at such suppliers). It preserves beneficiary choice, without unduly penalizing beneficiaries for using non-contract suppliers. Finally, it provides an incentive to suppliers to submit bids (because, due to increased coinsurance amounts, it can be expected that beneficiaries would mostly utilize contract suppliers).
The following example illustrates how Medicare and the beneficiary would pay for non-contract services in a CBA. Supplier A is a non-contract supplier who charges $120 for an item. The Medicare fee schedule amount is $100, and the competitive bidding payment for the item is $80. If the beneficiary chooses to go to Supplier A, Medicare will pay the supplier 80% of the competitive bidding amount, or $64. The beneficiary will be responsible for 20% of the competitive bidding amount ($16), plus the difference between the competitive bidding payment amount and the lesser of the fee schedule payment or supplier charge ($20). Supplier A also must provide a notice to the beneficiary that the beneficiary’s coinsurance at a contract supplier would be $16 rather than $36.

Accordingly, in this example Medicare pays the same amount as if the beneficiary went to a contract supplier ($64), the noncontract supplier receives its usual payment amount ($64 from Medicare, and $36 from the beneficiary), and the beneficiary retains a choice of suppliers. There remains a strong incentive for the beneficiary to use a contract supplier (since the beneficiary would have paid $16 rather than $36). An added benefit of this methodology for Medicare is that it provides an additional incentive for suppliers to offer lower bids (since a contract supplier can only expect to gain significant additional market share if the difference between the competitive bidding amount and the fee schedule amount provides sufficient incentive to beneficiaries). The O&P Alliance views this as the ultimate quality assurance mechanism, as beneficiaries would be able to “vote with their feet” and access the provider of choice if the contract supplier or suppliers were not meeting their needs.

III. Geographic Access to Suppliers

The proposed rule does not include any provision to ensure adequate geographic distribution of suppliers within a CBA in order to maintain access for beneficiaries. For example, CBAs potentially may be as large as an entire MSA (possibly even including some adjacent counties), and under the proposed selection process, all contract suppliers may be located in one portion of the CBA. This will make it difficult for beneficiaries to obtain medically necessary services (especially in large urban areas where beneficiaries may have limited means of transportation).

The O&P Alliance recommends that CMS ensure adequate geographic access to contract suppliers by creating relatively small CBAs (with multiple CBAs in each chosen MSA). Doing so ensures that beneficiaries will not be forced to travel across large cities in order to obtain Medicare services.

IV. Use of Median Bid

CMS has proposed to pay contract suppliers the median of the winning bids. This means that, for any given HCPCS code subject to competitive bidding, half of the contract suppliers in a CBA will be paid less than their bid amount. We believe that this policy significantly discourages suppliers from participating in the competitive bidding program. It is our view that quality suppliers may be unlikely to become contract suppliers if they will be reimbursed at less than their proposed bid amount. Furthermore, this system may lead to a high level of supplier attrition in the competitive bidding program. Suppliers who drop out of the program will not be easily replaced since the potential replacements are suppliers who will be paid the same amount but who submitted even higher bids.
We recognize that CMS believes that the median bid methodology is necessary to ensure program savings. However, we believe that this methodology is a fundamental flaw in the competitive bidding program. We believe that the program will be placed in jeopardy due to lack of supplier participation under this model, or will lead to a substantial deterioration in quality due to this attempt to maximize program savings.
We recommend that CMS use the highest selected bid. While CMS states in the preamble to the proposed rule that it disfavors this approach, we request that the agency reconsider. The use of the highest bid provides an equitable result (because it ensures that no supplier is required to accept less than the supplier’s bid amount). It will ensure sufficient supplier participation in the program (because suppliers are more likely to bid and remain in the program if they are paid at least their bid amount). Finally, it is a valid representation of the market payment rate (the process will still weed out disproportionately high prices because composite bids above the pivotal bid will not be selected).

V. Use of Rebates

The O&P Alliance opposes CMS’s proposal to allow contract suppliers to offer rebates to Medicare beneficiaries. First, we believe that such rebates constitute illegal “kickbacks” under federal fraud and abuse laws. While the proposed rule states that the collection of coinsurance and the provision of rebates must be separate transactions, in practice we expect that collection of coinsurance and the use of rebates will be reduced to a single transaction. Furthermore, while the proposed rule prohibits advertising of rebates, word-of-mouth advertising is inevitable.

Accordingly, the rebate system will become nothing more than the routine waiver or reduction of coinsurance. The Office of Inspector General has made clear on numerous occasions that such a practice represents an impermissible kickback, potentially interfering with clinical judgment and leading to overutilization. See, e.g., 59 Fed. Reg. 31,157 (Dec. 19, 1994). The routine waiver or reduction of coinsurance is illegal in traditional fee-for-service Medicare, and we believe the same should be true for Part B competitive bidding.
Second, the proposed rebate system will lead to a decrease in professionalism and quality of care. Suppliers of DMEPOS should be expected to provide high quality professional care. Patients should choose suppliers (and physicians should refer to suppliers) based on a supplier’s record of providing quality medical services. Medicare certainly would not expect a beneficiary to choose a physician based on whether a coinsurance rebate is available. The use of rebates leads to patients instead choosing suppliers based solely on the availability of discounts, rather than quality of care. This could lead to decreased patient outcomes.
We do not see any merit to the proposed use of rebates. Accordingly, we request that CMS withdraw this proposal.

VI. Miscellaneous Provisions

In addition to the above mentioned provisions, the O&P Alliance makes the following recommendations:

  • Authority to Adjust Payments in Other Areas (414.408) — CMS should not use the competitive bidding program to adjust payment rates outside of competitive bidding areas — such a payment adjustment does not take into account a variety of factors (e.g., differences in wage indexes, differences among suppliers, the inability of small suppliers to provide services based on bids of large, more streamlined suppliers).
  • Furnishing Items to Beneficiaries Whose Permanent Residence is Outside a CBA (§ 414.408) — A beneficiary from outside of the CBA should not be required to use a contract supplier. This requirement will lead to beneficiary confusion when traveling. This provision should be eliminated or should only apply to beneficiaries who have resided in the CBA for three or more months.
  • Requirement to Obtain Competitively Bid Items from a Contract Supplier (§ 414.408) — We do not believe it is appropriate to set the payment for suppliers outside of a beneficiary’s CBA at the competitive bidding amount for that CBA. The suppliers outside of the CBA will not have agreed to participate in the competitive bidding program, and may be unable to offer services at the competitive bidding amount (due to differences in wage indexes or an inability to match the price of a potentially much larger supplier). We recommend that Medicare pay the supplier its normal Medicare payment amount (e.g., lesser of fee schedule or charge). The beneficiary will have an incentive to obtain DMEPOS from the competitive bidding area because of lower coinsurance amounts.
  • Conditions for Awarding Contracts (§ 414.414) — We recommend a grace period of at least six months for suppliers to obtain accreditation.
  • Composite Bids (§ 414.414) — We recommend that the composite bid should be weighted by utilization rather than payment amount, since this will result in a more accurate composite bid (otherwise “big ticket” items that are rarely purchased can be underbid to artificially deflate the overall composite bid).
  • Terms of Contracts (§ 414.422) — A contract supplier should not be required to furnish services to a Medicare beneficiary. The supplier may be operating beyond capacity and unable to reasonably service the beneficiary. The supplier may not believe that the requested orthosis is appropriate for the patient, despite the physician order. In fact, the regulation does not even require a physician order; it simply states that the supplier must respond to beneficiary “requests.” Since there will be more than one supplier per CBA, there is no need to prohibit suppliers from turning away beneficiaries.
  • Information Collection from the Supplier (Misc.) — The O&P Alliance requests that CMS clarify what is meant by “information on product integrity,” “information on business integrity,” and “customer service protocol.” Orthotic clinics are more like physicians offices than retail environments and, therefore, “customer service” is not accurate terminology.
  • Beneficiary Education (Misc.) — The proposed rule’s preamble states that “[w]e believe that it is important for beneficiaries to learn about the benefits of the Medicare DMEPOS Competitive Bidding Program, such as lower out-of-pocket expenses and increased quality of products ….” 71 Fed. Reg. 25,684. We disagree with this statement. It is unproven that competitive bidding will increase the quality of products. In fact, the O&P Alliance believes that a system based on the lowest bidder has the potential to impact quality in a very detrimental way. CMS should be vigilant in monitoring quality as the competitive bidding system is implemented and not assume before this system is underway that quality will be improved.
  • Written by NAAOP

NAAOP July Government Relations Update

National Legislation/Regulation

Recent weeks have witnessed significant legislative and regulatory activity at the federal level that impacts orthotics and prosthetics. First and foremost, NAAOP, along with our O&P Alliance partners, AAOP, AOPA and ABC, submitted extensive comments to CMS on the proposed competitive bidding regulations for DMEPOS. Although the competitive bidding program only applies to “off-the-shelf” orthotics (not to custom orthoses or prostheses), CMS has not yet defined this term.

The regulations have serious implications for the entire O&P field. The main reason for this is the interplay between competitive bidding and a separate requirement that all DMEPOS suppliers must meet quality standards in the future in order to bill Medicare Part B for O&P services. CMS has stated that it intends to require accreditation of all DMEPOS suppliers as a quality indicator. But the details of those requirements have not yet been released. NAAOP is working in concert with the O&P Alliance to ensure that CMS preserves access to quality orthotic and prosthetic care as it regulates this important area.

On legislative developments, the House Appropriations Committee passed its Labor-Health and Human Services (HHS)-Education spending bill in early June, but a controversial amendment on raising the federal minimum wage has prevented the leadership from bringing the bill to the House floor. The Senate Appropriation Labor-HHS-Education Subcommittee is expected to mark-up its spending bill July 19th, and the entire Appropriations Committee is expected to take up the bill on July 20th. Because of the pressure on the budget this year, it is unclear at this time whether funding for orthotic and prosthetic awareness, education and research will be negatively impacted.

Both the House and Senate are working under an overall $873 billion discretionary spending cap. After shifting funding from other programs, the House’s Labor-HHS-Education spending bill would allocate slightly less than $142 billion to discretionary programs under these departments. This represents only a 0.6% increase over FY 2006 and $4.1 billion more than President Bush requested. Last month, the Senate Appropriations Committee announced its FY 2007 outline and determined that they would shift approximately $11.4 billion in defense and foreign aid spending to other programs, including an additional $5 billion more than President Bush’s request to Labor, HHS, and Education programs. (Labor-HHS-Education would receive approximately $142.8 billion in FY 2007.) While this is an important increase over the Administration recommendations, the funding level would still only represent a 1.1 percent increase from FY 2006 and $2 billion less than FY 2005 levels after adjusting for inflation.

In Medicare developments, there has been speculation that a major Medicare and Medicaid bill will likely move forward next year. Congress feels it must address several issues including physician payments, pay-for-performance, Medicare Part D drug coverage, outpatient rehabilitation therapy caps, and technical corrections to the Medicare/Medicaid bill that was signed into law this past February.

But there is also significant pressure on Congress to fix the scheduled cut to the Medicare physician fee schedule by the first of the new year. Unless Congress acts this year, physicians’ fees will be cut by approximately 4.5 percent on January 1, 2007. This means that if Congress is going to accommodate the physicians, they will need to find “offsets” to pay for this legislative fix. The O&P fee schedule, which has been frozen for three years and is expected to receive a CPI increase at the beginning of next year, may be at risk under this scenario, as would the Medicare fees that all providers are paid under both Medicare Part A and B, including hospital fees, skilled nursing facility fees, home health, DME and others.

The November elections could have an important impact on Medicare and Medicaid legislation, both in December of this year and next year as well. However, either way, such legislation could be viewed as both a threat and an opportunity to accomplish goals related to quality standards, competitive bidding, and other O&P priorities.

Quality and Qualifications/Partnerships and Coalitions

The American Board for Certification in Orthotics and Prosthetics, Inc., (ABC) recently announced the proposed integration of the Board for Certification in Pedorthics, Inc., (BCP) into ABC. Accredited pedorthic facilities will join ABC’s comprehensive O&P and mastectomy accredited facilities.

NAAOP and ABC have a strong history of partnering to ensure high quality patient standards. This proposed integration of BCP into ABC furthers this common goal. From a government relations advocacy perspective, it broadens the professional O&P patient care community to include pedorthic professionals in one unified credentialing body further ensuring that pedorthic patients are protected by the highest quality standards and qualifications as are currently being defined by federal regulators. CMS is in the process of implementing §302(a)(1) of the Medicare Modernization Act of 2003, which requires the Secretary to establish “quality standards” for orthotic providers, prosthetic providers, and pedorthic footwear providers. CMS is currently inclined to rely on independent accreditation of providers to satisfy this legislative mandate.

NAAOP’s advocacy efforts are dedicated to all those in our profession who provide complex O&P care with sufficient education and experience as well as appropriate care facilities to ensure that patients’ needs are met. NAAOP membership has always been open to all ABC credentialed individuals, and if the proposed integration goes through, NAAOP would welcome and invite all ABC certified pedorthists to consider joining NAAOP.

Coverage and Reimbursement/Quality and Qualifications

The Centers for Medicare & Medicaid Services, (CMS) is in the process of converting from Legacy Identifiers to National Provider Identifiers, (NPI) for use in standard health care transactions. This change specified by the Health Insurance Portablity and Accountability Act of 1996 (HIPAA) should improve accuracy and processing time of medical claims. Additionally, the NPI requirement is consistent with efforts to ensure that payments only be made to those providers and suppliers who meet quality standards. Health care providers have until May 2007 to obtain their NPI, however, Medicare fee-for-service has been accepting the NPI since January 2006. For more information visit National Provider Identifier Standard at the CMS website.

Thank you for your support.

Mark DeHarde
President
George W. Breece
Executive Director
Peter W. Thomas
General Counsel
  • Written by NAAOP