6/4/2007
Summer Heats Up for O&P Congressional Action
As Congress returns from its annual Memorial Day Recess, Capitol Hill prepares for a busy legislative schedule. With the appropriations process now underway, a continued legislative focus on Veteran's healthcare, and a potential Medicare bill in the works, there promises to be no shortage of Congressional activity on O&P-related issues in the coming months.
Supplemental Spending Bill:
Last week, the President signed a supplemental spending bill that authorizes additional FY 2007 funding for the wars in Iraq and Afghanistan. Congress and the Administration have primarily used supplemental spending bills to fund these wars, allowing them to keep this spending out of the annual budget and appropriations process.
The first version of the supplemental was sent to the President weeks ago and was vetoed due to war timeline provisions. During negotiations on the second supplemental bill, Democrats removed the timeline provisions clearing the way for the President's signature. Largely as a result of rising concerns regarding access to and quality of military and VA healthcare services, the bill directs much of the $1.8 billion in additional fiscal year (FY) 2007 funding for the Department of Veterans Affairs toward the health-related needs of veterans.
Of particular importance to the O&P field, under the Veterans Health Administration, the supplemental provides $32.5 million for "Medical and Prosthetic Research" to be used for "research related to the unique medical needs of returning Operation Enduring Freedom and Operation Iraqi Freedom veterans." These funds are in addition to the $411 million already allotted for the account in FY 2007. Additionally, under funding for "Medical Services," the bill adds $466.8 million, of which $25 million "shall be for prosthetics."
FY 2008 Budget Resolution and Appropriations
Congress approved its $2.9 billion FY 2008 Budget Resolution in mid-May, kicking off the annual appropriations process for the coming fiscal year which begins on October 1, 2007. The budget sets FY 2008 discretionary spending at $954.1 billion, $21 billion more than requested in the President's FY 2008 budget. The Budget Committee will soon announce the "302(b)" allocations which set the specific spending caps for each appropriations bill (e.g. Defense, Labor-HHS-Education, Agriculture).
Although funding will be relatively tight, we do not expect to see the level funding or cuts to many of the disability-related programs that we have seen in recent years. President Bush proposed about $140.9 billion in discretionary spending for fiscal 2008, or 2.5 percent less than Congress provided in FY 2007. However, the Chairman of the Senate Labor-HHS-Education Appropriations Subcommittee, Tom Harkin (D-IA), is a long-time disability and healthcare champion and has vowed include greater funding into these and related domestic programs.
VA Appropriations
In late May, the House Military Construction and Veterans Affairs Appropriations Subcommittee marked-up is FY 2008 spending bill. The spending bill would provide FY 2008 appropriations for military construction and the Department of Veterans Affairs totaling $109.2 billion, including $64.7 billion in discretionary spending.
The bill would provide $87.7 billion in FY 2008 for the VA – $9.9 billion more than in FY 2007 and $3.8 billion more than requested by President Bush. This would represent the largest single increase in the 77 year history of the Veterans Administration.
The bill would also fully fund the "Medical and prosthetic research" account at approximately $480 million. This account provides funds for medical, rehabilitative, and health services research. Medical research supports basic and clinical studies that advance knowledge leading to improvements in the prevention, diagnosis, and treatment of diseases and disabilities. Rehabilitation research focuses on rehabilitation engineering problems in the fields of prosthetics, orthotics, adaptive equipment for vehicles, sensory aids and related areas. This total amount may change as the bill moves through the legislative process. The $480 million is consistent with the recommendation of the "Friends of the VA" or "FOVA," a coalition to which NAAOP belongs and advocates on VA issues.
Medicare/SCHIP Legislation:
A primary focus of Congressional health committees right now is reauthorization of the State Children's Health Insurance Program (SCHIP). SCHIP is a state-federal program that provides healthcare coverage for children whose family's income makes them ineligible for Medicaid.
Congressional Democrats and advocates would like to see $50 billion or more over five years invested in the program and enrollment expanded to higher income families with children and potentially adults. In fact, the FY 2008 budget resolution included an unfunded $50 billion reserve fund for SCHIP reauthorization.
Not only will Congress be looking for ways offset the costs of SCHIP reauthorization this year, but Congress will also have to come up with $20 - $40 billion to fund a physician payment fix by the end of the year. Currently, under the Sustainable Growth Rate (SGR) formula, the Medicare fee schedule for physicians and other providers is scheduled to receive a 10 percent cut on January 1, 2008. Not surprisingly, Congressional leaders are eyeing Medicare cuts to other providers as the primary source of funding for these two legislative priorities.
House Ways and Means Health Subcommittee Chairman, Pete Stark (D-CA), has made it clear that "everything" is on the table including Medicare managed care plans, durable medical equipment (DME) payments, home health, hospice, skilled nursing facilities, and imaging services. While O&P has not been specifically identified as a possible target, it is by no means out of the woods. In fact, having received a 4.3% increase in the fee schedule this year, O&P providers will be looked at closely by policymakers regardless of how little Congress can expect to save by limiting annual updates to such a relatively small provider group. However, NAAOP will continue working with its O&P Alliance partners to preserve the scheduled update.
While a Medicare bill poses a possible threat to O&P providers, it is important to recognize that it could also serve as an opportunity to accomplish some of NAAOP's Medicare-related priorities.
The Senate Finance Committee is expected to mark-up its version of SCHIP reauthorization as early as June 7th and the House will likely soon follow. Finance Chairman Max Baucus (D-MT) has stated he will have "payfors" by then, and if such savings come from the Medicare program, it is likely that the Committee’s SCHIP legislation could serve as the Medicare vehicle this year.
In short, the O&P profession can expect a long and active year in Washington D.C.
Compiled by Peter W. Thomas, NAAOP General Counsel, and
Emily Niederman, Legislative Director, Powers, Pyles, Sutter and Verville, P.C.
