US Politics: Passage of House and Senate Medicare Bills Yields Mixed Bag

US Politics: Passage of House and Senate Medicare Bills Yields Mixed Bag

NAAOP

6/30/2003

Passage of House and Senate Medicare Bills Yields Mixed Bag

NAAOP Reports to the O&P Field About Medicare Reform

Early in the morning on June 27, 2003, the U.S. Senate and House of
Representatives each passed Medicare reform and prescription drug bills.
This sets the stage for what is anticipated to be a contentious conference
committee that will attempt to reconcile two complex and significantly
different pieces of legislation. The Senate bill, which was the product of
an historic bipartisan agreement, passed by a vote of 76-21. In the House,
however, last-second lobbying by Republican leaders of their own members was
required to secure a slim one-vote victory, 216-215.

A conference committee, which is expected to be appointed shortly, will
attempt to reconcile the two bills before the August Congressional recess
due to immense political pressure being exerted by the Bush Administration
and interest groups. Despite the momentum of passage, a conference
committee and Congressional leaders have a great deal of work ahead. The
House bill contrasts significantly with the Senate bill in how it would
restructure the Medicare program in the long-term. In addition, both bills
offer conflicting approaches to a prescription drug benefit structure,
changes in how Medicare reimburses providers, and reform of how the federal
government assists states with the costs of dually eligible Medicare and
Medicaid beneficiaries.

The most controversial issues will likely center around the restructuring of
the Medicare program itself. The Senate bill, while relying upon private,
managed care entities to provide new Medicare benefit plans (including
prescription drug coverage), contrasts greatly with the House's plan to
begin implementing a competitive bidding plan for health plans to provide
Medicare benefits similar to the Federal Employees Health Benefits Plan.
Furthermore, the House bill creates other new, privately administered
benefit options for Medicare beneficiaries, including the use of Medical
Savings Accounts (MSAs).

In the House, Republican leaders could not prevent 19 of their members from
voting against the bill. Some viewed the bill as not having enough private
market reforms, some viewed the Medicare drug benefit as an open-ended
entitlement, and still others criticized the bill for not containing
adequate prescription drug price reform. These same members, as well as
others who voted for the bill under heavy pressure from the White House and
Republican leaders, will prove pivotal in achieving final passage in the
House following a conference agreement. It should be noted, however, that
nine Democrats voted for the bill. This number was less than expected and
consisted of generally fiscally conservative Southern Democrats.

Provisions Affecting O&P

Competitive Bidding: The House bill contains a provision in the Medicare
bill that would require the Secretary of HHS to establish and implement
nationwide competitive bidding programs for durable medical equipment,
off-the-shelf orthotics, and medical supplies. Off-the-shelf orthotics
are defined as covered orthotics which require minimal self-adjustment for
appropriate use and do not require expertise in trimming, bending, molding,
assembling, or customizing to fit the patient. A contract for items and
services could only be granted if the provider meets quality and financial
standards, the amounts paid for the items and services are less than the fee
schedule amounts, and the beneficiary has a choice of multiple providers.

The Secretary would be permitted to exempt areas that were not competitive
due to low population density (i.e., rural and non-competitive urban areas).
In a major addition to this year's competitive bidding proposal, the
Secretary would be permitted to use so-called inherent reasonableness
authority to impose fee schedule reimbursement reductions (similar to those
achieved through competitive bidding) on non-competitive areas. This
provision is troublesome because competitive bidding prices could be
extended nationwide in non-competitive areas, even through lower
reimbursement levels in these areas may cause access problems.

Fee Schedule Freeze: A much simpler, but equally troubling provision
appears to be included in the Senate bill, although clarity as to what is
actually included in the Senate bill will not occur until the week of June
30. The Senate bill most likely includes a seven-year fee schedule freeze
for DME, supplies, and some orthotics. The provision specifically applies
to orthotic devices that are non-custom fabricated. It is not known at
this point how broad this term applies on a L-code by L-code basis.

Prosthetics, prosthetic devices, and custom-fabricated orthotics would be
updated for each of the next ten years under the current fee schedule
according to the consumer price index. Considering the fact that just four
weeks ago during the tax bill debate, the full Senate voted 86 to 13 to
freeze the entire O&P fee schedule for a ten-year period, the result in the
Senate Medicare bill should be considered a tremendous victory. In the
Senate bill and even in the House bill, the O&P field has clearly been
successful in convincing policymakers that prosthetics and a large portion
of orthotics are decidedly NOT like DME and indeed, should be treated
separately.

PT Direct Access Amendment Passes in Package of Amendments: Shortly before
the final Medicare vote, Senator Lincoln's (D-AR) amendment on Physical
Therapy Direct Access was combined with several other amendments and passed
the Senate by voice vote. Taken on the last day of the two-week Senate
Medicare debate, and without a recorded vote, there is no way to tell how
many Senators voted for or against this amendment or whom voted for or
against the amendment. This provision will now be the subject of intense
lobbying during a conference committee to be held during the month of July.

The PT Direct Access Amendment would create a 3-year, 5-state demonstration
project where physical therapists would be able to see Medicare patients
without a physician prescription. The Amendment as introduced would also
define qualified physical therapist in a way that would likely impact the
ability of state licensed PTs to provide O&P services, potentially
superceding the Negotiated Rulemaking Committee which is in the final stages
of its work. The language of the final amendment, however, is not yet
known. The O&P organizations will likely work together on this issue to
appeal to the grassroots O&P field to communicate strong opposition to the
Amendment to Congress during the month of July.

Conclusion: Despite passage in both houses, the Senate's strong, bipartisan
vote will likely give them the upper hand on particularly controversial
issues in conference committee negotiations. If Senate conferees are
successful in protecting the major elements of their plan, it is likely that
House leaders and the President will have a difficult time passing a
compromise bill in the House. Despite many political problems expected to
appear as the conference committee moves forward, the chances of enactment
of a major Medicare bill this summer remain quite high.


Prepared by Peter W. Thomas, NAAOP General Counsel, and Dustin May,
Legislative Director, Powers, Pyles, Sutter & Verville, PC.

June 27, 2003

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