NAAOP Medicare Reform Alert

NAAOP Medicare Reform Alert

NAAOP

11/25/2003

NAAOP Helps Lead Lobbying Effort to Protect Professional O&P in Medicare
Reform Agreement-End Result a Mixed Bag

Today, November 25, the Senate passed a landmark Medicare reform and
prescription drug bill by a vote of 54-44. The House of Representatives
passed the bill by a vote of 220-215 at 6:30 a.m. on Saturday, November 22,
in an historic three-hour roll call vote. President Bush is expected to
sign the bill into law.

Treatment of professional orthotic and prosthetic care in the Medicare bill
can generally be considered a mixed bag, but there are clearly some
important victories in the bill.

Under the Medicare bill, the entire O&P fee schedule, along with all DME and
supplies, will be frozen at 2003 rates for three years (2004-2006). The
original House and Senate bills only applied a fee freeze (or competitive
bidding) to a small portion of orthotics and no prosthetics. Despite
protests by NAAOP and other interest groups, the provision freezing all O&P
was included in the final bill. Upon learning of the full O&P freeze
provision during the days leading up to the conference agreement, NAAOP
engaged in a last-ditch lobbying effort to exempt O&P from the freeze.
NAAOP met directly with Senator Charles Grassley (R-IA), who is Chairman of
the Senate Finance Committee and Vice Chairman of the Medicare Conference
Committee, on Thursday, November 20, just hours before the final conference
report was agreed upon by conferees, to discuss the O&P fee freeze. Despite
assurances from Congressional staff close to the negotiations that the
majority of O&P should be exempted from the freeze, the final legislative
language revealed that, in fact, the freeze would apply to all O&P.

It is important to note that a Senate-passed tax bill in late May would have
frozen the entire O&P fee schedule for 10 years. Thanks in part to the
efforts of NAAOP, this provision was removed from the final tax bill. In
addition, the fee freeze under the Medicare bill continues through 2008 for
certain items of DME, clearly indicating a separation between treatment of
DME and professional O&P care.

The bill enacts nationwide competitive bidding starting in 2007 for all
DME, supplies, and off-the-shelf orthotics. NAAOP was successful in
persuading negotiators to confine the scope of competitive bidding to only
off-the-shelf orthotics, which is a much narrower definition than what was
proposed by the original Senate-passed bill in June. The inclusion of this
definition should be considered a major victory for NAAOP and the O&P
profession since most orthotics and all prosthetics will not be subject to a
nationwide system of Medicare competitive bidding at anytime in the near
future.

Within the competitive bidding framework established under the original
House and Senate bills, standards for quality and accreditation of providers
would apply to all DME. However, the final bill extended this provision to
all O&P as well. This provision appears to trump the protracted
Negotiated Rulemaking dispute in favor of the position that all O&P care
must be provided by health care professionals certified/accredited in the
practice of orthotics and prosthetics. The provision will need to be
analyzed further to understand its full implications, i.e. its impact on the
failed Negotiated Rulemaking process, but it appears to be very favorable to
NAAOP's position on the issue of the definition of a qualified provider.

Under the bill, O&P was spared application of a provision mandating a cut in
reimbursement for the top five utilized DME items in 2005. The cut will be
implemented by reducing fees for these items to the median price reimbursed
by the Federal Employees Health Benefits Plan, which would represent a cut
in fees of approximately 20% under current levels. This also represents an
extremely positive outcome for O&P.

NAAOP will continue to review the final bill language and assess the full
impact of the Medicare reform and prescription drug bill. Overall, the bill
marks a fundamental shift toward private insurance as a model for the
provision of Medicare benefits and prescription drugs. It also enacts
myriad reforms to other provider payment systems as well as the CMS
regulatory system.

While the three-year payment freeze for O&P is certainly a negative,
unexpected development in the final Medicare bill, NAAOP was successful in
many other areas by protecting O&P from the overhaul of DME reimbursement
and payment cuts and in what appears to be a very positive resolution of the
Negotiated Rulemaking process.

If you have questions regarding these provisions, please contact Peter
Thomas, NAAOP General Counsel, or Dustin May, Legislative Director, Powers,
Pyles Sutter, and Verville, PC, at 1-800-622-6740.

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