Medicare Contracting Reforms

Dear NAAOP Member:

The National Association for the Advancement of Orthotics and Prosthetics has recently published a government relations update entitled, “Major Changes at DMERCs Coming.” This update concerns Medicare contracting reforms. This is an important opportunity for O&P providers to not only be informed about the upcoming changes, but to participate in the process by providing NAAOP with your feedback prior to and during the implementation process. Below is a brief summary of the information included in NAAOP’s update, “Major Changes at DMERC Coming.”

Summary of Medicare Contract Reforms

Proposed effective date: 7-1-06

  • DMERCs or Durable Medical Equipment Regional Carriers will be replaced with DME MACs, Durable Medical Equipment Medicare Administrative Contractors.
  • The new DME MACs will have performance incentives built into their contracts. The performance measures to be used have not yet been determined.
  • CMS intends to hold monthly meetings to solicit the feedback of the O&P provider community through provider organizations such as NAAOP.

Contractors by region as of 7-1-06:

  • Region A National Heritage Insurance Company (replacing HealthNow)
  • Region B AdminaStar Federal
  • Region C Palmetto GBA
  • Region D Noridian, (replacing CIGNA)

Changes in contactor jurisdictions as of 7-1-06:

Claims for residents of four states and the District of Columbia will change

  • Maryland Region A (rather than Region B)
  • District of Columbia Region A (rather than Region B)
  • Virginia Region C (rather than Region B)
  • West Virginia Region C (rather than Region B)
  • Kentucky Region B (rather than Region C)

Changes for the handling of electronic claims:

  • If you are an O&P provider who conducts electronic transactions as of
    7-1-06 all electronic transactions for DMEPOS services will go through
    MEDIS, Medicare Electronic Data Interchange System (both submission of
    claims and receipt of electronic remittances).

Name change:

  • The SADMERC, statistical analysis durable medical equipment regional
    carrier will be replaced by Data Analysis Coding contractor, DAC. This is a
    change in name only. The contract has been awarded to Palmetto GBA.

Changes for program integrity safeguard contractors (PSCs) as of 3-1-06:

As of 3-1-06, fraud and abuse functions (all pre- and post- payment reviews)
will be performed solely by PSCs.

  • Region A TriCenturion
  • Region B TriCenturion
  • Region C TrustSolutions
  • Region D Electronic Data Systems through its subcontractor IntegriGuard

Please consider providing NAAOP with your input on these proposed changes
and also your thoughts on what performance incentives would have the most
valuable impact on your O&P practice. Also, please forward this message to
other O&P professionals who may not be NAAOP members.

Thank you,
George W. Breece
Executive Director – NAAOP

1875 Eye Street, NW
Twelfth Floor
Washington, DC 20006-5409
Phone: 910-583-2162
E-mail: or

  • Written by NAAOP

CMS Holds Meeting on Replacement of DMERCs

On July 1, 2006, CMS plans to replace the current Durable Medical Equipment Regional Carriers (“DMERCs”) with new Durable Medical Equipment Medicare Administrative Contractors (“DME MACs”). For some O&P practices, this change may hardly be noticeable. For other O&P practices, the change will represent a significant adjustment to the provider’s Medicare practice. CMS invited a small number of provider organizations, including the National Association for the Advancement of Orthotics and Prosthetics (“NAAOP”), the American Orthotic and Prosthetic Association (“AOPA”), and the American Board of Certification in Orthotics and Prosthetics (“ABC”), to participate in a meeting to discuss the implementation of the DME MAC system and to address the concerns of the O&P provider community.


Currently, the Medicare durable medical equipment, prosthetics, orthotics, and supplies (“DMEPOS”) benefit is administered by four DMERCS: HealthNow; AdminaStar Federal; Palmetto GBA; and CIGNA. CMS awarded these DMERC contracts back in 1992 and the DMERCs and their respective jurisdictions have remained unchanged since then. These DMERCs are reimbursed a fixed amount based on the estimated cost of their services.

Section 911 of the Medicare Modernization Act of 2003 instructs CMS to replace the current system of fiscal intermediaries (for Medicare Part A), carriers, and DMERCs (for Part B) with “Medicare Administrative Contractors” (“MACs”). The most significant change accompanying the creation of the MACs is the awarding of MAC contracts through competitive bidding at least every five years, based on performance, quality, and price. The hope is that such a competitive bidding process will lead to lower costs for CMS and improved performance among contractors due to decreased complacency.

Changes in Contractor Jurisdiction

CMS has awarded DME MAC contracts to National Heritage Insurance Company (replacing HealthNow for Region A), AdminaStar Federal (Region B), Palmetto GBA (Region C), and Noridian (replacing CIGNA for Region D). CIGNA has formally protested the award of the Region D contract to Noridian – the matter is currently being reviewed by the U.S. Government Accountability Office (“GAO”), which is expected to render a recommendation to CMS (such as whether the contracts should be rebid or remain unchanged) in the beginning of May. Until that time, CMS has indicated that it will proceed forward with the expectation that Noridian will be the DME MAC for Region D.

Accordingly, the most noticeable difference will be to O&P providers in Regions A and D since, notwithstanding the CIGNA protest, these providers will work with new Medicare contractors. Additionally, because of changes in contractor jurisdictions, providers in or near four states (plus the District of Columbia) will notice significant changes. Specifically, claims for residents of Maryland and the District of Columbia will now be under the jurisdiction of Region A, rather than Region B. Claims for residents of Virginia and West Virginia will now be under Region C rather than Region B, and claims for residents of Kentucky will now be under Region B rather than Region C. These changes in jurisdiction will occur on July 1, 2006, unless the CIGNA protest delays the process.

Submission of Electronic Claims

Another significant change scheduled for July 1, 2006 is the handling of electronic claims. Currently, O&P providers who conduct electronic transactions (such as submission of electronic claims and receipt of electronic remittances) must be connected to the DMERC that has jurisdiction for the claim. For example, if the beneficiary resides in Region B, then the provider submits the electronic claim to AdminaStar Federal. If the resident resides in Region C, then the provider submits the electronic claim to Palmetto GBA.

Under the new system, all electronic transactions pertaining to DMEPOS services will go through the Medicare Electronic Data Interchange System (“MEDIS”), which will be maintained by Palmetto GBA. Accordingly, O&P providers will no longer have electronic connections to each of the DMERCs to which they submit claims. Rather, as of July 1st (assuming CMS meets its implementation deadlines), all O&P providers that conduct electronic transactions will each have only one connection – to the MEDIS. The MEDIS will then route claims to the appropriate DME MACs for payment. Likewise, O&P providers will receive their electronic remittances from all DME MACs through a single connection to the MEDIS.


In addition to the changes to the DMERCs, CMS also will be implementing changes for the statistical analysis durable medical equipment regional carrier (“SADMERC”) and program integrity safeguard contractors (“PSCs”). The SADMERC will be replaced by the Data Analysis and Coding contractor (“DAC”), although this contract has been awarded to Palmetto GBA, so this change should mostly be in name only.

CMS also stated that, beginning March 1, 2006, all of the DMERCs’ fraud and abuse functions, including all pre- and post-payment reviews, will be performed solely by program safeguard contractors (“PSCs”). Already, these duties are performed by a PSC in Region A (TriCenturion).

The PSCs for the different regions will be TriCenturion for Regions A and B, TrustSolutions for Region C, and Electronic Data Systems (“EDS”), through its subcontractor IntegriGuard, for Region D.

The transition to PSCs may prove to be a welcome relief to Region C, which has experienced significant payment delays due to frequent and onerous audits. According to CMS, Palmetto GBA, as a DME MAC, will no longer have the responsibility for such audits. This is confirmed on Palmetto GBA’s website, which states that “the DME MACs will not take over any pre-pay or post-pay medical review function or benefit integrity function performed by a DMERC. CMS awarded separate payment safeguard contracts for these functions in early December.” While Palmetto GBA will no longer be conducting pre- or post-pay reviews, there is the possibility that one or more of the PSCs will prove equally problematic (although TriCenturion has been operating as the PSC for Region A since 2001, and we are not aware of its audits being as problematic as those that have been occurring in Region C).

Performance Incentives

One of the contracting reforms with the most potential is that the new DME MACs will have performance incentives built into their contract. While CMS will compensate the DME MACs based upon the amounts specified in their bids, CMS will also offer performance incentives of between 4% and 5%. The DME MACs will be eligible for these payments if they meet certain performance measures.

CMS has not yet determined what performance measures will be used. Performance measures could potentially include prompt payment goals and incentives for meeting time deadlines on claim redeterminations. In light of the transition of pre-payment review responsibilities to the PSCs, these DME MAC performance measures may be especially helpful to providers. For example, in Region C, not only will Palmetto GBA no longer retain responsibility for pre-payment reviews, but, in fact, performance incentives may effectively penalize the contractor for pending any claims.

At the meeting, CMS solicited comments regarding what measures should be used for the performance incentives. NAAOP recommended that CMS establish and widely publicize a provider hotline where providers can report problems with the performance of particular DME MACs, and that the results of this complaint hotline should impact the contractors’ incentive payments.


The DME contract reform that will be occurring on July 1st should prove to be a positive development for the O&P community. It may alleviate the audit problems that are currently plaguing Region C. It may significantly improve contractor performance through the use of performance incentives and increased accountability (since poor performance will adversely impact a DME MACs potential for obtaining subsequent contract awards).

The changes will not come, however, without some burdens on O&P providers. All O&P providers that conduct electronic transactions will have to transition their systems to work with the MEDIS. Some O&P providers will change regions or deal with new contractors, which may entail new rules and new local coverage determinations. Additionally, the July 1st implementation may involve confusion surrounding certain claims, such as redetermination requests submitted prior to the change (CMS admitted that it has not yet worked out the details regarding whether appeals will be transferred). Finally, the rebidding of awards in five years means that providers should expect additional changes in the foreseeable future.

CMS intends to hold additional monthly meetings with provider organizations to inform the provider community of the progress of the implementation process and to solicit feedback. NAAOP, AOPA, and ABC are all participating in these meetings. It is imperative for members of these organizations to express their concerns and suggestions regarding the implementation process, so that these organizations can forward the information to CMS. For example, what performance measures would the O&P community like to see as the basis for CMS performance incentives to the new DME MACs (e.g., prompt payment measures, redetermination deadlines, rate of appeal reversals, etc.)? CMS has expressed its sincere desire to obtain the feedback of the provider community, so O&P practices should not pass up this important opportunity to impact their future Medicare experience.

For more information contact

  • Written by NAAOP

Support for a Strong Orthotic and Prosthetic Licensure Bill in Rhode Island


Ms. Helen Drew
RI Department of Health – Legislative Liaison
3 Capitol Hill
Providence, RI 02908

Dear Ms. Drew:

On behalf of the National Association for the Advancement of Orthotics and Prosthetics (“NAAOP”), I am writing to support the efforts of the Rhode Island legislature to enact a strong state licensure bill to help ensure the quality of orthotic and prosthetic services provided to Rhode Island residents.

The National Association for the Advancement of Orthotics and Prosthetics (“NAAOP”) is a national non-profit association representing the collective interests of certain specialized clinicians, as well as the rehabilitation and disability communities they serve, who are concerned with the quality of orthotic and prosthetic (“O&P”) healthcare. Specifically, these highly trained and educated clinicians carefully evaluate both limb loss and limb or trunk dysfunction for the purpose of providing appropriate, custom designed and custom fit orthoses (orthopedic braces) and prostheses (artificial limbs).

NAAOP supports state licensure efforts for the provision of professional orthotic and prosthetic care. As such, we generally support H. 7103, introduced in the Rhode Island General Assembly on February 7, 2006. However, we would offer a small number of important amendments to make the licensure law as effective as possible in safeguarding the public health and ensuring the quality of orthotic and prosthetic services.

First, the bill should reflect a distinction between “off the shelf” and “pre-fabricated” orthoses. These are not synonymous terms as the bill clearly indicates in Section 5-59.1-3(14). Most pre-fabricated orthoses require varying degrees of clinical expertise and custom fitting to be safe, effective, and functional for the patient. Exemptions from orthotic licensure should apply to “off the shelf” orthoses only, which are generally regarded as being minimally complex and widely commercially available, and should not apply to pre-fabricated orthoses. This is particularly true when additional exemptions are explicitly recognized in the state licensure law that provide wide latitude to therapists and others to treat patients with devices such as “commercially available knee orthoses used following injury or surgery, spastic muscle-tone inhibiting orthoses….finger splints, hand splints, wrist gauntlets….fabric or elastic supports, corsets, low-temperature formed plastic splints, trusses, etc.” See, Section 5-59.1-3(11).

Most importantly, limiting exemptions of providers from orthotic licensure to off-the-shelf orthoses would be consistent with federal Medicare law. See, Section 427 of the Benefits Improvement and Protection Act of 2000 (“BIPA”). The distinction between off the shelf and prefabricated orthoses should be replicated consistently throughout Rhode Island’s orthotic and prosthetic licensure law.

Second, Section 5-59.1.3(3) of the bill should be amended to include “custom fit” orthoses, all of which require varying levels of clinical expertise to properly fit to the patient. This would be consistent with the previous points regarding prefabricated orthoses.

Finally, we understand that the physical therapists and occupational therapists are seeking at least two amendments to the “Exceptions” section of the bill, Section 5-59.1.8. The first amendment would apparently insert the words “or podiatrist” in the provision exempting physicians generally from the licensure statute. Section 5-59.1.8(a). We oppose this amendment because we view it as superfluous and might suggest that other physician specialties would not hold the same level of exemption from the licensure scheme as podiatrists.

The second amendment is far more problematic. We understand that the physical and occupational therapists are seeking to expand their exemption from this law from “providing patients with prefabricated or direct-form orthoses” (as the bill now reads) to all orthotic services and devices. This would be a substantial expansion of the types of orthotic care that PTs and OTs would be able to provide under this bill without obtaining the additional education and training necessary to provide quality orthotic care. In fact, this amendment, if adopted, would significantly expand the range of orthotic and prosthetic services currently permitted under the state’s PT and OT licensure laws. The provision of orthotics and prosthetics is not even addressed by the PT licensure law in Rhode Island (see, [PDF]) and the OT licensure law only mentions “selected orthotic devices” and “training” for use of orthoses and prostheses (see, [PDF]. We believe the current bill, as amended by the recommendations herein, would properly exempt “selected orthotic devices.”

The arguments being made by the physical and occupational arguments on this issue are not new. For many years, therapy organizations have attempted to expand their scope of practice through legislation rather than through additional clinical training in professional O&P care. To this day, no document exists that demonstrates that physical or occupational therapists are educated and trained, as a profession, to provide the degree of professional orthotic and prosthetic care that they apparently seek in this bill.

We firmly maintain that physical and occupational therapists do not possess the formal education, unique training, experience, broad knowledge base, ability and expertise necessary to prescribe, fabricate and provide to patients the full range of professional orthotic and prosthetic services. And we oppose any legislative effort that circumvents proper education and training requirements.

Thank you for your careful consideration of this matter. If you would like to discuss this issue directly, please call me at (800)220-6670.

Mark DeHarde
President, NAAOP

  • Written by NAAOP

Four Organizations Representing the Field of Orthotics and Prosthetics Announce Formation of Government Relations Alliance


Contact: Peter W. Thomas, Esq.

Powers, Pyles, Sutter & Verville, P.C.

Phone: 202-872-6730
Fax: 202-785-1756

WASHINGTON, D.C., February 9, 2006–The American Board for Certification in Orthotics and Prosthetics (ABC), the American Academy of Orthotists & Prosthetists (AAOP), the American Orthotic & Prosthetic Association (AOPA) and the National Association for the Advancement of Orthotics and Prosthetics (NAAOP) today announce the formation of a new alliance which will bring the four organizations together for the purpose of working on federal and state government affairs.

The Orthotic & Prosthetic Alliance, as the new coalition will be known, marks a new era in both cooperation and coordination among ABC, the Academy, AOPA and NAAOP. Together the four organizations represent a large segment of the orthotics and prosthetics profession. The unified effort on legislative and regulatory issues will lead to less duplication in activity among the four groups. All have an interest in programs, policies, rules and regulations coming from Congress, the Centers for Medicare & Medicaid Services (CMS) and state legislatures.

Working with one Washington, D.C., law firm and relying on the combined staff and volunteer leadership of the entire coalition, the Orthotic & Prosthetic Alliance brings a more focused approach to tackling the governmental issues that pose a concern both for professionals and businesses throughout the orthotic and prosthetic (O&P) community as well as for O&P patients. The four partners in the Alliance expect to achieve better results in getting the O&P message heard by federal and state lawmakers and in educating CMS officials about the needs and unique qualifications of O&P professionals.

While coming together for the purposes of the Orthotic & Prosthetic Alliance, ABC, the Academy, AOPA and NAAOP have all agreed to stay true to their respective missions and advance their own agendas in areas not related to the consensus goals of the larger group.

NAAOP President Mark DeHarde states, “I am very pleased about the breakthrough commitment to unity by the Academy, ABC, AOPA and NAAOP. The new Orthotic & Prosthetic Alliance will bring all professional stakeholders to the table to work in the best interests of our patients who rely on comprehensive O&P care to realize their fullest potential. We must learn to speak with one voice to assure their future.”

Academy President Paul Prusakowski, CPO, FAAOP, says his organization is “very excited about joining with our sister organizations in the O&P field in this new government relations venture. The Academy believes that by working together we can do more for the field than by working on our own.
Though our organizations have a number of different missions, the one we have in common is making sure that the O&P field and the professionals that work in it are respected and appreciated for their unique ability to serve the public and make people’s lives better.”

The Orthotic & Prosthetic Alliance’s lobbyist is long-time Washington attorney and O&P advocate Peter W. Thomas in the firm of Powers Pyles Sutter & Verville, P.C. Thomas has been the general counsel for NAAOP and will continue in that capacity in addition to the work he will do on behalf of the Alliance. Thomas’ firm is also the administrator for the Alliance.

Thomas says, “Powers Pyles Sutter & Verville and I are honored to serve as lead counsel for the new Orthotic & Prosthetic Alliance. With serious policy threats looming, it is more important than ever to work collaboratively on a consensus agenda in Washington, D.C. This Alliance is long overdue and creates an historic opportunity to meet the needs of O&P patients and the providers who serve them.”

The Orthotic & Prosthetic Alliance is the result of several months of discussion by the leadership of the respective organizations. Its genesis occurred as all four organizations came to realize that there would be better progress on government affairs if the various groups put aside historical differences and worked together toward common goals.

AOPA President Walter Racette, CPO, comments “Although some might have thought the idea of a coalition improbable, once in a room together, everyone realized that what could be done for the good of the profession far surpassed any individual organization’s effort. I believe the formation of the Orthotic & Prosthetic Alliance is the beginning of a new era of cooperation that will help focus the resources, vision and effort needed in the coming years to improve patient care, encourage development of new technology and advance our profession.”

ABC President Jeff Yakovich, CO, is similarly upbeat in his assessment:
“Formally bringing O&P’s four leading groups together for the purpose of cooperation in government relations efforts is in the best interests of the profession and our patients. With facility accreditation being the central requirement for Medicare’s new qualified supplier guidelines, ABC is pleased to actively participate with our sister organizations in crafting a unified message to our lawmakers and Medicare decision makers. We are proud of the unity being shown in our profession today.”

The first formal meeting of the Orthotic & Prosthetic Alliance steering committee will take place at the Academy’s Annual Meeting in Chicago on March 3; however, a strategic planning process for developing the Alliance’s legislative and regulatory objectives is already underway.

* * * * *

The American Board for Certification in Orthotics and Prosthetics (ABC) is the nation’s leading orthotic and prosthetic certification and accreditation organization. Established in 1948, ABC sets objective standards for over 11,000 individuals and organizations providing orthotic and prosthetic patient care.

The American Academy of Orthotists & Prosthetists (AAOP) is the organization representing the professionals in O&P. Its mission is to ensure that practitioners’ concerns are represented within the field and to the public, and to provide the continuing education that they need to serve their patients at the highest level. The Academy works to enhance the visibility of the entire field and to ensure that all publics understand the unique role that this allied health profession plays in serving its patients..

The American Orthotic & Prosthetic Association (AOPA) is a national trade association representing patient care facilities, distributors and manufacturers in the O&P industry. With over 1,950 members, AOPA is an advocate at all levels of government on behalf of the O&P field. The organization serves as the leading provider of business management information and guidance on coding and reimbursement issues.

The National Association for the Advancement of Orthotics and Prosthetics
(NAAOP) is a strong government relations advocate for all those participating in comprehensive O&P patient care. NAAOP champions causes concerning patient access, funding, advanced technology and outcomes through leadership in national and state policy formation. NAAOP was established in
1987 to help create a federal research and development program in orthotics and prosthetics and since then NAAOP has expanded its government relations agenda to address national health care reform, Medicare and Medicaid reform, managed care standards and Veterans Administration issues.

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  • Written by NAAOP

O&P Field Dodges a Budget Bullet; For Now

On Monday, February 6, 2006, President Bush released his fiscal year (FY) 2007 Budget Proposal. The Administration.s $2.77 trillion budget includes $870.7 billion for annually appropriated discretionary programs and the remainder in entitlement spending including Social Security, Medicare and Medicaid.

The Budget Proposal recommends large cuts to or the elimination of 141 programs, a savings of almost $15 billion. Under the plan, the federal budget deficit would decrease in FY 2007 to $257 billion, down from $367 billion in FY 2006. This year.s budget proposals, which apply to fiscal year 2007 beginning on October 1, 2006, represent another very austere year for the federal budget. For instance, labor, health and human services, and education programs would be cut by a combined $4 billion from FY 2006 levels.

Medicare Part A: The Medicare proposals would save $2.5 billion in FY 2007 and $35.9 billion over five years. The Bush Administration proposes to achieve $2.1 billion in savings in FY 2007 and $22.2 billion over the next five years by reducing Part A Medicare payments, primarily by freezing or decreasing annual updates for hospitals, inpatient rehabilitation facilities, skilled nursing facilities and home health agencies. The Administration would reduce the payment for hip and knee replacements in posts acute care settings, saving $2.4 billion over five years.

Medicare Part B: The President.s Part B budget proposals would save $460 million in 2007 and $15.6 billion over five years. The President.s budget would extend competitive bidding to clinical laboratory services and estimates this initiative would save $1.4 billion over five years. The budget cites competitive bidding programs being developed for durable medical equipment (DME) and outpatient drugs as successful templates. However, in all of the budget documents that are publicly available to date, there is no mention of expanding to additional orthotics or prosthetics.

The budget proposes to issue Medicare payments for short-term power wheelchairs based on duration of usage, rather than the current payment system, saving an estimated $50 million in FY 2007 and $460 million over five years. Under the Medicare Modernization Act of 2003 (.MMA.), the DME fee schedule was frozen through 2008.

But the MMA froze the O&P fee schedule through calendar year 2006, not 2008. After extensive review of the budget documents and after speaking with agency officials, there is no provision to once again freeze the O&P fee schedule in 2007 and beyond. This means that the Administration proposes to allow the CPI-U annual update to apply at least for the 2007. Considering the austere budget climate, this is clearly a temporary victory. But remember, if Congress proceeds with a Medicare bill this year, all options for savings will again be on the table, potentially including orthotics and prosthetics.

  • Written by NAAOP

In Defense of Patients: Preserving Access to Professional O&P Care in the 109th Congress

By Peter W. Thomas, Esq.

NAAOP General Counsel

Congress just finished a major health care bill without significant direct impact to O&P. But what’s in store for 2006? Are O&P professionals safe from another 3-year fee schedule freeze similar to the one scheduled to end next year? Will access to medical rehabilitation or the new Medicare competitive bidding program seriously disadvantage patients? While 2006 promises to be a year of action and uncertainty for the O&P field, NAAOP is prepared to take a strong message to Congress and the federal government: preserve access to professional O&P care and ensure that these services are being provided by qualified providers.

2005 Retrospective—O&P Spared Major Impact from Deficit Reduction Bill

Late in December 2005, Congress passed an historic budget reconciliation bill (the “Deficit Reduction Act”) that is slated to cut Medicare and Medicaid as well as make important changes to both entitlement programs. The O&P field was spared direct impact from the more than $17 billion in entitlement cuts from Medicare and $10 billion from Medicaid. But many provisions will have significant short and long-term impacts on people with disabilities, particularly with respect to access to rehabilitation services and state Medicaid funding.

NAAOP has prepared the following summary of the major provisions that could impact people with disabilities in the Deficit Reduction Act and may have an indirect impact on O&P patient care. It should be noted, however, that at the time of this writing, the bill is not yet final law. Though the bill has essentially cleared both houses of Congress on its way to the President for his signature, a procedural issue has stalled enactment of the legislation until late January or early February when Congress reconvenes for the annual State of the Union speech. It is not anticipated that, prior to enactment, any changes will be made to the contents of the bill impacting the following provisions.

Medicare 75% Rule—The final bill, known as a “conference report,” includes a provision that addresses Medicare’s “75% Rule” on inpatient rehabilitation hospitals. While not directly related to O&P care, this provision was on the top of the disability and rehabilitation provider communities’ agenda. Just in the past year, over 40,000 patients have been denied access to inpatient medical rehabilitation. Presumably these patients will go to SNFs or other less-intensive health care settings.

The legislation passed in the bill will freeze the required percentage of admission with one of thirteen diagnoses at the 60% level for an additional year, ending June 30, 2007. The extension pushes the implementation dates for the 65% to July 1, 2007, and the 75% would take effect July 1, 2008.
The Senate reconciliation bill included a provision that would have stopped implementation of the rule at the 50% level for two years-a proposal widely supported by disability organizations and provider groups. Clearly the Senate provision would have been more favorable than the final bill, but a delay of one year will certainly be helpful in terms of preserving appropriate access to inpatient hospital rehabilitation-a key step in the road to restoration of patients’ function.

Medicare Therapy Caps—As many O&P professionals are aware, the Balanced Budget Act of 1997 imposed $1,500 per patient caps on occupational and physical/speech therapy. These caps, however, have never fully gone into effect-until this year. The reconciliation conference report allows implementation of the Medicare caps on therapy services (now adjusted for inflation at $1,740 per patient on occupational therapy and $1,740 on speech and physical therapy). The current moratorium expired on January 1, 2006. However, the bill does permit, for 2006 only, an exceptions process whereby individual patients may apply for additional therapy services if their need for treatment exceeds the cap. In addition, the report instructed HHS to improve coding to reduce erroneous payments for therapy services. If Congress does not act by January 1, 2007, the full weight of the therapy caps will be enforced.

Medicaid—Perhaps the most significant impact of the conference report on consumers and people with disabilities is in the Medicaid section. Over $10 billion in gross cuts were passed that stand to push additional health care costs and reduced benefits onto the lowest-income and most vulnerable people and their states. The conference report included increases in patient co-payments and premiums that produce cuts of $1.9 billion over five years and $10.1 billion over ten years. States would be allowed to increase the co-payments that many Medicaid beneficiaries are required to pay to access items or services, as well as the premiums that can be charged. Additionally, the conference report changes the definition of “nominal” with regard to cost-sharing from the current $2, to an amount that increases yearly with the medical care consumer price index.

States will have the option of liberally applying and increasing cost sharing and premiums on Medicaid recipients with certain limits for very low-income families. Generally, premiums and cost-sharing may not apply to individuals under 18 years of age in foster care; pregnant women; terminally ill individuals in hospice care; and individuals who must “spend-down” to receive inpatient care in a hospital, nursing facility or ICF/MR.

There are several provisions in the conference report that allow greater state autonomy in determining the benefit package covered under state Medicaid programs. With the current state fiscal situation, state flexibility allowed under this legislation will have the effect of further shrinking coverage of services for recipients. This presents a real threat to O&P coverage in state Medicaid programs. Although many of the financing proposals included in the bill attempt to focus on reducing waste, fraud and abuse in the Medicaid system, the proposed policies will likely have a negative impact on many individuals with disabilities or long-term needs.

In addition to the Medicaid cuts in the bill, several new spending initiatives were included that total approximately $5 billion over 5 years.
Of top priority to many disability organizations was the Family Opportunity Act, which will provide states the option of allowing families with children (up to age 19) with disabilities to buy into the Medicaid program for that child. The states would set the income limitations for eligibility with some federal limitations. Also included in the final conference report were the following provisions of interest to consumer and disability groups:
demonstration projects regarding home and community-based alternatives to psychiatric residential treatment facilities for children; a “Money Follows the Person” rebalancing demonstration project; a state option to establish non-emergency medical transportation programs; expansion of access to home and community-based services for the elderly and people with disabilities; and, the optional choice of self-directed personal assistance services, otherwise known as “Cash and Counseling.” On the whole, these new programs are a bright spot on a bill that ultimately seeks to reduce spending on entitlement programs.

Ultimately, state budgets will be further tightened as these provisions take effect. O&P benefits in Medicaid, which are already stretched to the limit if they exist at all, will undoubtedly be under further assault as states seek to cut benefits and reimbursement.

2006 O&P Preview

2006 is likely to be a major year for consideration of health care issues in Congress and federal agencies. O&P is not specifically targeted on a legislative front, but that could quickly change as major proposals are likely to be debated. But what is the likelihood of any substantial legislative action in an election year?

If history is any indicator, major bills impacting health care often occur in odd-numbered, non-election years. Medicare and Medicaid were enacted in 1965. The Social Security Amendments of 1983 significantly changed Medicare. 1987 witnessed the creation of the “Six Point Plan,” which defined the current O&P benefit under Medicare. 1993 was President Clinton’s “Health Security Act,” which, as soon as it spilled into the electioneering of 1994, backfired and led to a Republican overthrow in Congress. The Balanced Budget Act of 1997, which cut hundreds of billions from Medicare, and the Balanced Budget Refinement Act of 1999 are more recent examples. In 2003, the Medicare Prescription Drug Improvement and Modernization Act was enacted and 2005 saw the budget reconciliation bill that just passed in December and is slated for enactment in early 2006. The only election year bill, BIPA, the Benefits Improvement and Protection Act of 2000, was actually finalized in a “lame duck” session after the election.

Despite this historical perspective, 2006 is a likely candidate for another Medicare bill. President Bush will make health care a top priority in his State of the Union speech. There is also increasing talk on Capitol Hill about making changes to the Medicare prescription drug benefit, which appears to be having serious trouble enrolling patients and providing access to needed medications, especially among beneficiaries who are covered by both Medicare and Medicaid. Physicians, who were spared a payment cut of 4.4% in the budget reconciliation bill, will likely be facing an even deeper cut in 2007 if Congress does not act. Thus, it is possible that Congress could break the historical trend and move a bill this year.

As such, the O&P field needs to be vigilant. NAAOP will be closely monitoring Congress as it looks to “offset” any new Medicare spending with cuts in other areas, such as a potential extension of the O&P fee schedule freeze that was originally enacted in late 2003 in the Medicare Prescription Drug law. Additionally, the O&P field will be supporting the disability community on longer term solutions to the 75% Rule and therapy caps.

The crux of major reform from Congress on O&P issues took place in the 2003 Medicare Prescription Drug law as new statutory frameworks were erected on Medicare competitive bidding, quality standards, and accreditation of DMEPOS suppliers. NAAOP does not anticipate any new programs similar to these to be enacted this year in Congress. Rather, the focus on these major initiatives has moved to regulatory monitoring and advocacy. In 2006, there will be an increased effort to work directly with policymakers in the agencies, particularly CMS, to ensure that the concerns of the O&P community are heard. NAAOP is poised, together with other O&P organizations, to mount an aggressive strategy that focuses on the direct impact federal policy can have on patient access to professional O&P care.


2006 will undoubtedly be a challenging year. However, NAAOP will continue its ambitious agenda to defend professional O&P care in a tough fiscal and regulatory environment. With the President’s FY 2007 budget due out in early February and new health care initiatives on tap for debate in Congress this session, there may be an opportunity for a national platform to discuss O&P issues. We will keep you updated throughout the year as developments occur.

  • Written by NAAOP

NAAOP Letter to O&P Professionals

Dear O & P Professional:

NAAOP is beginning 2006 with a new look and a renewed emphasis on communicating our commitment to advocating for the millions of people with amputations, limb differences and orthopedic impairments. At the same time, NAAOP will continue to monitor the activity in Washington and maintain a strong presence in O&P legislation and regulation.

Congress reconvenes in a few weeks amid a major lobbying scandal that will decrease the influence of large political contributions and increase the importance of having a compelling, unified message delivered primarily by constituents.

That is why NAAOP is well positioned to represent the O&P field in 2006. NAAOP is a strong voice that represents all constituents in the comprehensive O&P patient process. As always, our highest priorities are patient outcomes and quality. Member involvement in NAAOP’s government relations activities, both financial and in-kind, has never been more important. Our strength is in our collective voice.

With Congress again poised to consider comprehensive Medicare changes this year in a very difficult fiscal climate, there will be tremendous pressure to further freeze or cut provider fees, expand and accelerate competitive bidding, and create quality standards that accommodate a wide range of providers and suppliers.

The threats and opportunities are great. NAAOP has been a catalyst for leadership in O&P healthcare legislation and we owe this success to our members. Of course, it is critical that we have a continued strong Washington presence during the 2nd session of the 109th Congress. If you are already a NAAOP member, thank you for your support. If you are not a member, please join us and make a difference. Join here on our website or please call 1-800-622-6740 and ask to speak with George Breece.

Thank you for your professional commitment to the advancement of O&P patient care and to the preservation of your profession.


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

Congress To Work Through Fall on Health Care Bills

Congress is expected to work into the holiday season as House and Senate committees consider major legislation that could, in the end, impact orthotics and prosthetics. The main political driving force behind legislation is looming cuts in the Medicaid program, the federal/state program that provides health care to low income Americans. However, also driving the process is a scheduled cut in physician payments under Medicare that, if not rectified by the end of the year, would reduce payments to physicians by 4.5% in calendar year 2006. Though this cut does not impact orthotists and prosthetists, any Medicare bill that emerges from Congress is going to have to pay for itself, implicating a whole host of potential cuts to other Medicare providers. Despite this, the controversial new Medicare drug benefit has been declared “off-limits” by President Bush. To what extent O&P practitioners are impacted by changes to Medicare this fall is unclear at this point, but a host of changes are in the offing.

Any Medicare bill will most likely be attached to the anticipated end-of-year Omnibus Appropriations spending bill that will wrap up the first session of the 109th Congress in November or December. This is because members with be hard pressed to vote for cuts in Medicaid unless that are coupled with the end-of-the-year spending package.

O&P practitioners are still smarting from a three-year fee freeze enacted in the Medicare Modernization Act of 2003. The cut, which is scheduled to run through 2006, is not likely to be extended. The Chairman of the influential Senate Finance Committee, Charles Grassley (R-IA), has stated that a Medicare package will likely not contain fee schedule freezes for O&P providers. But that assessment may be muted by the need for Congress to fund ways to pay for other priorities, specifically to offset an increase to physician payments. With the fiscal climate very unfavorable to any new Medicare spending, Congressional leaders will be looking at all provider payments and this includes O&P practitioners.

Another potential issue impacting the Medicare population is the $1,500 per patient, per year caps on physical/speech therapy and occupational therapy that are scheduled to be implemented in 2006 if Congress does not act. The caps, which were initially enacted in the Balanced Budget Act of 1997, have been subject to a moratorium for much of the time since enactment with the exception of a brief period in 2002. If implemented, the caps have the potential to seriously impact people with disabilities who need routine physical therapy or an intensive course of therapy to rehabilitate an acute injury. But a long term fix to this problem is very expensive, potentially implicating additional cuts to other Medicare providers.

Another potential provision under consideration is Medicare beneficiaries’ “direct access” to physical therapists without physician referral. The latest draft of this proposal also has the potential to directly impact O&P practitioners by potentially allowing physical therapists to provide O&P services directly to Medicare beneficiaries-without a physician’s referral. Though advocates for direct access have been unsuccessful in enacting full direct access at the federal level, the Medicare Payment Advisory Commission (MedPAC) studied the issue and issued a report in December 2004. The recommendations did not endorse direct access; in fact, the Commission stated that direct access could be detrimental. But despite MedPAC’s less than enthusiastic assessment of direct access, influential leaders in Congress have pledged to work toward including a direct access provision in the next Medicare bill.

Although O&P providers may not be directly targeted this fall in the Medicare debate (at least at the time of this writing), they must remain vigilant to ensure that no “surprises” occur in November or December if a Medicare bill is enacted. NAAOP will be monitoring developments closely and plans on actively engaging Congress throughout this important time.

  • Written by NAAOP

Why Oppose PT “Direct Access”?

To: NAAOP Members

From: Mark DeHarde – NAAOP President

Why has NAAOP opposed the proposal by the physical therapy trade association to remove from Medicare the requirement to obtain a physician’s referral before physical therapy services can be provided to a patient? Why should the wider O&P community continue to vigorously oppose direct access?

In 2003, NAAOP joined a coalition of organizations including the ACA, AAOP, AOPA and various physician and rehabilitation groups, in opposing Medicare Direct Access. The legislation authorizing this change to Medicare law presented serious concerns for our patients, our profession and the fiscal health of the Medicare system. NAAOP believes physical therapy—and all Medicare-covered services—should be provided under the supervision of a physician to ensure that all underlying medical conditions of the patient have been properly diagnosed to clear them for physical therapy treatment or other services. Moreover, since a growing number of states now include orthotics and prosthetics (or some portion of O&P) in their PT state practice acts (and in many states where our profession does not have O&P licensure), NAAOP is very concerned about the possibility of patients receiving comprehensive O&P services from physical therapists who simply do not have adequate education, training and experience to provide professional O&P services and related O&P technology. If Medicare were to eliminate the requirement for a physician referral, the provision of O&P services by PTs in the coming years may accelerate dramatically, as would traditional physical therapy services.

Physical therapists are our primary colleagues in the care of our patients. Each O&P practitioner enjoys relationships with PTs that are crucial to patient care, and the PT’s role in the rehabilitation process is fundamental to good outcomes. We wholeheartedly support the ability of physical therapists to directly provide temporary splints to patients and therapy training in using definitive O&P technology that O&P practitioners provide. But this does not justify support for PT Direct Access.

Rank and file physical therapists have no interest in providing comprehensive O&P services, and generally do not consider themselves qualified to provide them. But their leadership in Washington and the state capitals have ambitious plans for amending all 50 state practice acts to include comprehensive O&P care within the PT’s scope of practice. This goal, coupled with PT Direct Access at the federal level, is the “one-two punch” aimed at our profession and our patients. North Dakota is the PT’s most recent “victory” in this area, where the state law was just rewritten to explicitly include orthotics and prosthetics in the PT scope of practice. One must ask the question; is this really a victory for patients?

The O&P community must unify now and draw a line in the sand to assert that patient outcomes and safety are the highest priority and that provision of comprehensive O&P services requires the necessary education, training and experience that only members of the O&P profession possess. Ultimately, this set of issues must be dealt with at the federal level with a proper definition of “qualified practitioner” and facility accreditation, as well as through state-based O&P licensure. All of these efforts must flow from a proper definition of the clinical scope of practice for comprehensive O&P services and the demonstrated core competencies that O&P clinicians are uniquely qualified to provide in order to safely deliver the intended clinical and functional outcomes.

PT Direct Access is NOT in the best interests of O&P patients or, for that matter, all rehabilitation patients. Please communicate this message to your congressional representatives and state legislators and be vigilant in reiterating the message. The PTs outnumber us, will outspend us, and are more organized at the state level. Our patient-centered message and our passion for providing our patients with the highest quality care are out strongest assets. Join with me and NAAOP in advancing this cause.

  • Written by NAAOP

Medicare “Direct Access” – A Trojan Horse for Physical Therapy’s Expanding Scope of Practice

Legislation has been reintroduced in the U.S. House and Senate that has the potential to allow physical therapists to prescribe and provide orthotic and prosthetic services directly to Medicare beneficiaries, assuming O&P services are included in a particular state’s physical therapy practice act. This bill could lead to the ability of PTs to prescribe and provide O&P care in such a state without any involvement, supervision, or coordination by a physician. But in order for this to occur, Congress must first decide whether Medicare should eliminate the current requirement to obtain a physician’s referral before physical therapists can provide physical therapy services to patients.

This proposal has been skillfully named “PT Direct Access” by physical therapy proponents, but it could just as accurately be described as “PT self-referral.” If a “direct access” bill does, in fact, make it through Congress and into a possible Medicare bill this fall, the implications to professional O&P care in some states, and eventually nationally, could be far reaching for many years to come.

What is Direct Access?

The Medicare direct access legislation discussed in this article would remove the current Medicare requirement for a physician’s prescription to provide a course of physical therapy. Direct access, as a concept, has been in existence in various forms for many years. Direct access proponents claim that thirty-nine states currently allow some form of direct access to physical therapy services without a physician’s prescription. However, according to the American Academy of Orthopedic Surgeons, only two states have unrestricted direct access laws that truly permit physical therapists to provide PT services without a physician’s involvement or prescription.

Under many of the state direct access laws, physicians prescribe a course of physical therapy before patients see the therapist. And, of course, direct access does not guarantee payment. In addition to Medicare, many private health insurance companies require that patients obtain a physician’s prescription for physical therapy in order to receive payment.

The effort to permit physical therapists to have direct access to patients has been in play since the early 1990’s. A 1994 study by Jean Mitchell, Ph.D., of Georgetown University, and Gregory de Lissovoy, Ph.D., MPH, of Johns Hopkins University used data from Blue Cross and Blue Shield of Maryland to study the cost-effectiveness of direct access. They found that the costs incurred for physical therapy visits were 123% higher when patients were first seen by a physician than when they went to a physical therapist directly. The study also showed that physician referral episodes generated 67% more physical therapy claims and 60% more office visits than did episodes when the patient went directly to the physical therapist without a physician referral. Opponents of direct access point to this one study, which is over ten years old and focused on only one state, as weak evidence that direct access is cost-effective. The study itself was retrospective and did not account for the medical complexity of patients in the two settings, and may explain the difference in overall cost between patients who chose direct access over physician referrals.

MedPAC Examines Direct Access

Legislative efforts by proponents of PT Direct Access culminated in December 2003 when the Medicare Modernization Act of 2003 required that the Medicare Payment Advisory Commission, or MedPAC, conduct a study within one year of enactment on the feasibility and advisability of Medicare allowing direct access to outpatient physical therapy. The MedPAC report was issued in early 2005 and cast doubt on the viability of the direct access concept. The report clearly concluded that “physician requirements help ensure beneficiaries receive medically appropriate care.”

The full report is available at: (PDF).

MedPAC serves as a quasi-governmental entity that studies Medicare payment issues and publishes reports to Congress that recommend payment policy changes. MedPAC’s recommendations are non-binding, but are routinely used as a basis for Congress to consider changes to the Medicare program.

MedPAC considered the direct access issue publicly at its December 2004 meeting. It previewed its conclusions during Commission discussion, indicating that elimination of the physician referral and review requirements would set a bad precedent for other Medicare services that have similar coverage requirements for physician referrals or orders. Such referrals are required for home health care, skilled nursing facility stays, durable medical equipment, orthotics and prosthetics, medical supplies, outpatient drugs, oxygen, and occupational therapy.

Supporters of direct access often assert that beneficiaries do not have adequate access to physical therapy services, particularly in rural areas, but the data cited by MedPAC appears to quell that argument. MedPAC found no evidence of limited access to physical therapy services throughout the country. MedPAC also considered the complex medical conditions underlying many patients in need of physical therapy, stating that “[b]eneficiaries often have multiple medical conditions and physicians can consider their broad medical care needs.” Using this rationale, MedPAC contended that the physician as “gatekeeper” also prevented unnecessary care or therapy services that were marginally beneficial, thus saving Medicare money and improving patient care.

Rather than MedPAC’s endorsing physical therapy direct access, it actually questioned the efficacy of physical therapy services in the elder population altogether. It recommended that evidence-based practice guidelines would help establish when and for how long beneficiaries would typically benefit from physical therapy services, thereby reducing the amount of inappropriate or medically unnecessary care. The Commission encouraged the physical therapy profession to help research and develop this body of evidence and “use it to establish credible guidelines for outpatient physical therapy services furnished to older patients.”

MedPAC reports are usually given significant weight by Congress, but since the report is not binding, the door is still open for legislation on direct access.

New Direct Access Legislation Gains Support in Congress

Legislation introduced in March 2005 promises to amplify the charge for direct access in Congress despite the MedPAC report’s blows to the prospects for direct access. The “Medicare Patient Access to Physical Therapy Act of 2005” is very similar to the bill introduced in the previous Congress and would allow physical therapists to prescribe and bill Medicare for their services within their state-defined scope of practice without a physician’s referral.

In the Senate, the Medicare Patient Access to Physical Therapy Act is sponsored by Senator Blanche Lincoln (D-AR), a member of the Senate Finance Committee, which has jurisdiction over the Medicare program. The House bill is sponsored by Congresswoman Melissa Hart (R-PA), who is a member of the House Ways and Means Committee, which also oversees Medicare. At the time of this writing, the Senate bill had eight cosponsors and the House bill had 78 cosponsors, indicating that the physical therapy trade association is lobbying hard on this legislation.

This new bill takes on greater significance this year with the prospect of a Medicare bill looming in the fall of 2005. The recently-passed budget agreement contained “reconciliation instructions” that mandate legislative changes to entitlement programs such as Medicare and Medicaid. This development, coupled with heavy pressure from therapy groups to extend the moratorium on the annual $1500 per patient caps on outpatient physical and speech therapy and occupational therapy has the potential to result in passage of a compromise Medicare package that may include some version of the direct access legislation. With both sponsors of the bill on the committees with jurisdiction over Medicare, they will be in a position to exert significant influence over the contents of the final Medicare bill, assuming such legislation is enacted.

Effect of the Direct Access Legislation on O&P Care

How PT Direct Access legislation impacts the future of O&P care is the subject of significant disagreement. The legislation, if passed, would define physical therapy services according to state scope of practice laws and, therefore, if state law includes O&P care in its PT scope of practice, a PT would be able to provide O&P care without a physician’s order. The counter-argument, which the PT trade association currently asserts, is that O&P care is an entirely separate Medicare benefit and that, even if the legislation passes, O&P care will continue to require a physician order.

In terms of the bill’s potential impact on the O&P field specifically, the direct access legislation amends the Medicare definition of “outpatient physical therapy services” to permit a “qualified physical therapist” to furnish physical therapy services without the involvement of a physician. The legislation also amends the definition of “outpatient physical therapy services” to exclude any services that fall outside of a state’s scope of practice law.

Although stated in the negative (i.e., excluding services that are outside state scope of practice laws), the legislation’s incorporation of state scope of practice laws arguably establishes that the definition of “outpatient physical therapy services” for Medicare purposes includes any service authorized by a state’s PT practice act. Under this interpretation, if orthotics and prosthetics are included in a given state’s practice act, then they will be considered “outpatient physical therapy services” under Medicare law and a PT may provide and be paid for O&P care without physician involvement.

In contrast, the PT trade association currently asserts that physical therapy and O&P care are statutorily separate Medicare benefits and, because Medicare program instructions require that a physician “order” (or prescription) be on file in order for the DMERCs to issue payment on O&P claims, the direct access legislation is a non-issue for the O&P community. Under this interpretation, the legislation permits physical therapists to self-prescribe physical therapy, but such therapists would need a physician’s written order (or, in certain circumstances, the order of a nurse practitioner, clinical nurse specialist, or physician assistant) to furnish O&P care. SeeProgram Integrity Manual § 5.1. As a result of this argument, some O&P organizations that previously opposed direct access legislation have recently taken more neutral positions on the newly-introduced bill. Other organizations, such as NAAOP, continue to oppose direct access, not only for the potential negative impact it could have on the future of O&P, but also because of the belief that it is not in the interests of Medicare beneficiaries generally and could balloon Medicare spending for physical therapy services.

If the direct access legislation is enacted, then the future of O&P care will be substantially impacted by which one of the above arguments carries the day. Again, Medicare program guidance currently states that O&P care is only covered if furnished pursuant to the order of a physician or, in certain circumstances, the order of a nurse practitioner, clinical nurse specialist, or physician assistant. See Program Integrity Manual § 5.1. If the bill passes and is interpreted to include O&P care when such care is authorized by a given state’s scope of practice law, then this will trump any manual provisions requiring that PTs obtain a written order for O&P care (statutory language takes precedence over program instructions when a conflict arises).

However, even if the legislation is enacted but is not interpreted to include O&P care, it nevertheless lays the foundation for physical therapists to self-prescribe O&P care. Because the requirement of a physician’s order is found in program instructions rather than statute or regulation, it likely can be amended without Congressional action or notice and comment rulemaking. We believe it likely that, if PTs are granted the autonomy to self-prescribe physical therapy services, they will soon argue that Medicare program instructions should be amended to exempt physical therapists from the requirement that O&P care requires a written order from a physician. Once Congress has legislated that PTs do not require a physician order to furnish physical therapy services, it will be difficult to convince CMS that a physician order is necessary for a physical therapist to provide O&P care.

Direct Access Legislation Could Circumvent the Negotiated Rulemaking Process

The government has long recognized that there is an increased likelihood of abuse in the O&P field when such services are provided by unqualified practitioners. See Medicare Orthotics, OIG Report No. OEI-02-95-00380 (Oct. 1997). But the impact of the Medicare Patient Access to Physical Therapy Act could have the consequence of doing an “end-run” around the very issue that stalemated the O&P Negotiated Rulemaking Committee in 2003.

Section 427 of the Benefits Improvement and Protection Act of 2000, or BIPA, addressed the issue of which providers were considered “qualified” to provide the full range of O&P care by providing that Medicare would only pay for prosthetics and custom-fabricated orthotics if furnished by a “qualified practitioner.” BIPA limited the definition of “qualified practitioner” to physicians, certified orthotists and prosthetists, and “qualified” physical and occupational therapists.

BIPA also created a negotiated rulemaking process to assist the Centers for Medicare and Medicaid Services (CMS) with drafting the regulations interpreting Section 427. Between October 2002 and July 2003, CMS convened approximately eight two-day meetings where representatives of over 20 O&P-related organizations met and discussed, among other things, who should be considered “qualified” to provide professional O&P care (as opposed to “off-the-shelf” orthotics which are routinely provided by therapists and others with minimal training). In the end, the Negotiated Rulemaking Committee deadlocked without consensus on the matter of whether physical and occupational therapists should be permitted to provide O&P care solely based on state scope of practice law. CMS is currently developing a regulation that will interpret Section 427 of BIPA but little is known about the path that CMS will propose in terms of whom is considered “qualified” to provide comprehensive O&P care. However, the PT Direct Access legislation renders this point moot, since it arguably takes the further step of providing that, not only can PTs provide O&P care when permitted under state scope of practice laws, but they can do so without a physician prescription.

Furthermore, the PT Direct Access bill contains an explicit definition of the term “qualified physical therapist” and commits this definition to statutory language. The definition is extremely expansive, essentially grandfathering-in the vast majority of PTs. If this bill were to be enacted as is, or if this particular provision were to be stripped out of the direct access bill and included in a broader Medicare package, it would potentially establish in the Medicare statute that virtually all PTs are “qualified” for purposes of BIPA Section 427. This would explicitly authorize virtually all PTs to be paid by Medicare for the provision of comprehensive O&P care, and would completely circumvent the Section 427 regulation scheduled to be released later this year.

Political Future of Direct Access Legislation is Uncertain

The battle over direct access in Congress will likely center on the asserted efficacy, cost-effectiveness, and rationale for allowing enhanced access to traditional and physical therapy services, not on the impact that this bill will have on O&P. Under a strict interpretation of the legislation, the bill does not specifically or explicitly authorize physical therapists to self-prescribe O&P care. As a result, the bill’s potential impact on O&P will not likely be a major issue debated on the House or Senate floor. Thus, many in the O&P field will likely be unaware of the potential impact that physical therapy direct access may have on O&P practitioners and patients.

The advocates in favor of direct access are many. They are well-funded and organized at both the state and federal levels. They are in the process of gearing up for a massive push this summer and fall to include direct access provisions such as the Medicare Patient Access to Physical Therapy Act included in a final Medicare bill. Compounding these efforts is the real prospect of state legislatures actively supporting an expanded PT scope of practice to include O&P care.

Though not through the “castle walls” of Congress yet, the Medicare direct access bill could potentially be a Trojan horse for physical therapists to self-prescribe and self-provide O&P care for Medicare patients.

This article was prepared by Peter W. Thomas, JD, General Counsel to the National Association for the Advancement of Orthotics and Prosthetics, Adam H. Greene, JD, MPH, Associate, Powers, Pyles, Sutter and Verville, PC, and Dustin W.C. May, Legislative Director, Powers, Pyles, Sutter and Verville, PC

  • Written by NAAOP