A Forward

A Forward

8/4/1997

M E M O R A N D U M


TO: NAAOP Membership and Friends

FROM: Peter W. Thomas

DATE: July 31, 1997

RE: Governmental Relations Update Meeting Announcement

        After years-long, unsuccessful negotiating and politicking,
congressional negotiators and the White House reached a final budget
agreement July 28 which includes significant Medicare and tax reforms.
The separate spending and tax bills were scheduled to pass both
chambers of Congress before the month-long August recess, and all
indications from the White House were that President Clinton would sign
both bills.

        While negotiators agreed to eliminate three major reforms from the
Medicare portion of the bill -- means-testing, raising the eligibility age
from
65 to 67 and requiring a copayment for home health care -- changes
relevant to O&P made their way into the final deal.

        Competitive Bidding

        There is very encouraging news on Medicare competitive bidding
of Part B services. The conference committee members agreed to a
three-site, five-project competitive bidding demonstration program for
DME and some Part B services, rather than an unlimited program for all
Part B services, except physician services (as proposed by the Senate).
 At least one of the five projects would be specifically earmarked for
oxygen and oxygen equipment. The agreement contains a much less
expansive authority for HCFA and the HHS Secretary to conduct
competitive bidding of Part B services than was being considered.

        Under the compromise, HCFA would be allowed to implement a
broader competitive bidding program only if the demonstration projects
are successful. NAAOP attempted to secure an explicit exemption for
O&P in this language but met with significant opposition to that proposal
due to the fact that the current language only allowed for demonstration
projects, not outright authority for HCFA to conduct competitive bidding.

        Despite no specific exemption for O&P, the advocacy of NAAOP
and other O&P organizations that custom devices and clinical services
should be exempt from competitive bidding seems to have paid off. In
advocating for full scale competitive bidding, Senator Graham (D-FL) sent
a letter to Rep. Bill Thomas, Chairman of the House Ways and Means
Health Subcommittee, stating that the General Accounting Office and the
HHS Inspector General's office have issued reports that demonstrate
that private payers using competitive bidding paid significantly less than
Medicare for surgical dressings, laboratory tests, and nutritional
therapy. These services are obviously a far cry from orthotics and
prosthetics.

        I have discussed NAAOP's competitive bidding position with key
staff members at the Department of Health and Human Services and the
White House and have forwarded correspondence to them supporting
our position. I will continue to keep you informed as these issues unfold
during the regulatory rulemaking processes that will follow enactment of
this bill.

        Inherent Reasonableness

        Budget negotiators also agreed to include the Senate's position on
Inherent Reasonableness with an amendment in the final bill. As it
stands, the HHS Secretary will be required to describe, by regulation, the
factors which will be used to determine if a payment system (except for
physician services) does not result in inherently reasonable payment
amounts. The factors provided by the Secretary, however, could not
increase or decrease payment amounts by more than 15% from the
preceding year for a specific item or service.

        While we are opposed to changes in the Inherent
Reasonableness standard, the specific limits on the Secretary's authority
and the requirement that the Secretary submit to the public rulemaking
process are positive amendments -- supported by NAAOP -- to the new
rules.

        Health Care Quality Commission

        This past July 21 and July 22, I chaired the second meeting of the
Subcommittee on Consumer Rights, Protections, and Responsibilities of
the President's Advisory Commission on Consumer Protection and Quality
in the Health Care Industry held in Burlington, Vermont. The
Subcommittee's next meeting is on August 13 in Washington, DC. As
chair of this subcommittee, I am working to gather consensus around a
consumer bill of rights in the area of health care and will continue to keep
you informed as this process continues.

        NAAOP General Membership Meeting and Board Meeting

        For your information, NAAOP will hold its semi-annual General
Membership Meeting on Friday, September 12, from 5:15 p.m. to 6:30 p.m.
at the Charlotte Convention Center, to coincide with the AOPA National
Assembly. NAAOP will also hold a Board of Directors' meeting either on
that day or on Thursday, September 11, 1997. I will inform you as soon
as possible as to the final date, time, and location of the Board meeting.
Please make every effort to attend these meetings as we will be
discussing in depth a number of issues important to the future of O&P.