3/7/2007

NAAOP Government Relations Update: March 2007

Political Update

• The new 110th Congress is being run by Democrats after 13 years of Republican leadership. The House began aggressively, passing a flurry of bills within the first 100 hours of convening. The Senate has been more deliberate, although things are heating up as the annual budget and appropriations process gets underway.



• Before the new Congress could begin work on the FY 2008 federal budget, it had to pass a continuing resolution to fund 10 out of the 13 annual spending bills that were left unresolved by the prior Congress. These bills were passed and signed into law by the deadline, February 15th. The spending levels for FY 2006 were simply extended through FY 2007, representing flat funding for most programs except some that Democrats considered priorities such as NIH (increase of $615 million over FY 2006 levels). These selected increases were funded through the elimination of all spending “earmarks” that were dropped from the bill.



• The President’s new budget for FY 2008 was released on February 5, 2007. It is one of the most austere federal budgets in recent memory, with over $100 billion in cuts to Medicare and Medicaid, as well as flat funding for all domestic spending except the Defense Department and the Department of Homeland Security. The Democratic Congress declared the budget “Dead on Arrival,” but Democratic leaders are now in the midst of trying to keep a lid on federal spending while trying to improve priority programs, and that usually costs money.

Medicare Legislation Has Little Impact on O&P

• Huge pressure from physician groups finally wore down Congress to act in the closing days of the 109th Congress and eliminate a cut of 5% off the Medicare physician fee schedule, set to take effect on January 1st. Congress’ intervention provided a zero update for the doctors as well as a 1.5% increase in fees for any doctor who reports quality data starting July 1st.



• This stands in stark contrast to the Medicare O&P fee schedule which, after three years of freezes in fees, finally received a full CPI-U update worth over 4% over CY 2006 fees. In addition, there were no expansions of competitive bidding or changes in the accreditation requirements for DMEPOS suppliers in the bill.



• If Congress proceeds with a Medicare bill in 2007, it is likely that all provider fees, not just O&P suppliers’, will be in the crosshairs as Congress and the President tries to reign-in federal spending, especially on entitlement programs such as Medicare. NAAOP, as well as the other national O&P organizations, will be working hard this year to preserve reasonable O&P fee increases.

Appropriations Update

• After extensive advocacy on the FY 2007 spending bill 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. However, all earmarks (of which this spending item was one) were stripped from the bill in the wake of unresolved spending bills and a year-long continuing resolution through FY 2007.



• NAAOP, and the O&P Alliance, will be working hard on the FY 2008 spending bill to restore this funding as well as other appropriations for O&P research.

National Health Insurance Proposals Make Waves

• Last year’s Congressional attempts to pass legislation that would have preempted state insurance laws (including state O&P benefit mandates and parity laws) for small groups and individuals who wanted to band together to purchase insurance is turning into a much more ambitious effort to cover a large portion of the 50 million Americans without health insurance.



• Most of these proposals include a dramatic expansion of the State Children’s health insurance program as well as an expansion of Medicaid. In addition, these proposals, at both the state and federal levels, rely to a large extent on increased federal spending for health insurance. Because of this, the prospects for passage of a significant expansion of health care are very unclear that this point, considering the fiscal situation caused by the war spending.

CMS Issues Final Rule on Quality Standards and Accreditation of DMEPOS Suppliers

• CMS continues to try to implement the competitive bidding program for DMEPOS but is well behind schedule. The final regulation for competitive bidding has not yet been released, even as CMS is beginning to impose requirements for accreditation of DMEPOS suppliers who participate in competitive bidding.



• Out of 11 accrediting organizations chosen by CMS to accredit DMEPOS suppliers, nine of them were granted authority to accredit O&P practitioners who provide the full compliment of professional O&P care.



• NAAOP and all O&P Alliance organizations have been actively engaged in working with CMS during this debate. Many questions remain and NAAOP will continue to closely work on this important issue.

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