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Political Update

1. 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.

2. 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.

3. 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

1. 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.

2. 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.

3. Cost is a major concern for lawmakers as a one-year physician fix would cost $10+ billion.

4. 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.

5. 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

1. 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.

2. 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

1. 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.

2. 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.

3. 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

1. 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.

2. 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.

3. 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.