8/1/2007
NAAOP Government Relations Update
Legislative Update:
Last week, Democrats on the House Ways and Means and Energy and Commerce Committees introduced their much-anticipated legislation to reauthorize the State Children's Health Insurance Program (CHIP) and make significant changes to the Medicare and Medicaid programs. Of particular importance to NAAOP, the legislation did not target the Medicare orthotic and prosthetic fee schedule in order to pay for major "cost-ers" in the bill.
The Children's Health and Medicare Protection ("CHAMP") Act of 2007 would reauthorize CHIP and invest an additional $50 billion dollars over five years in the program. The bill would also eliminate a scheduled 10 percent Medicare physician payment cut in fiscal year (FY) 2008, providing doctors with a 0.5 percent payment bump each year for the next two years.
But the 465-page bill goes well beyond these two primary provisions to address several additional Medicare and Medicaid priorities. For example, the bill would freeze further implementation of Medicare's so-called "75% Rule" on inpatient rehabilitation facilities, which requires that a certain percentage of patients have one of thirteen specified diagnoses in order to maintain its status as an inpatients hospital or unit. The legislation would also place a moratorium on promulgation of Medicaid regulations that would restrict allowable rehabilitation and school-based services.
Although a $0.45 tobacco-tax increase and a nearly $47 billion cut to the Medicare Advantage program pay for much of the cost of the bill, the CHAMP Act would also find savings through cuts to many Medicare provider groups. For example, $2.7 billion would be saved under Medicare by zeroing-out the FY 2008 payment update to Skilled Nursing Facilities (SNFs) and $2.4 billion would saved from cuts to inpatient rehabilitation facilities next year.
Having received a significant 4.3% increase to the Medicare orthotic and prosthetic fee schedule on January 1, 2007, the O&P field was bracing for cuts to next year’s CPI update. However, the House legislation, as of now, does not include such cuts and it appears the O&P field may be spared in the final bill. However, with likely floor amendments and conference negotiations, the O&P fee schedule could still be susceptible to cuts as other costly provisions make their way into the legislation.
Late Thursday night, the House Ways and Means Committee approved the massive legislation along party lines. However, following an 18-hour markup session, the House Energy and Commerce Committee adjourned late Friday afternoon without passing the bill. House leadership now plans to bring the bill to the floor, bypassing Energy and Commerce Committee approval. House leaders hope to pass the bill prior to the August Congressional recess.
The Senate's $35 billion CHIP reauthorization bill, approved by the Finance Committee earlier in July, is funded entirely by an increase in tobacco taxes and includes no Medicare-related provisions. The full Senate is expected to begin debate on the measure the week of July 30th.
The Bush Administration issued a formal veto threat on the Senate and House legislation last week, using a philosophical argument that expansion of CHIP represents a step toward government-run healthcare. It remains very unlikely that Democratic leaders will have the votes to override a veto.
NAAOP will continue to work in alliance with other orthotic and prosthetic organizations to ensure that cuts to the O&P fee schedule are not targeted in the CHAMP Act as a means to pay for other legislative priorities. We will keep you updated as developments occur.Regulatory Update:
In regulatory news, last week the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would require suppliers of Durable Medical Equipment, (e.g. wheelchairs, scooters, canes) and Prosthetic, Orthotics and other Supplies (DMEPOS) to post a $65,000 "surety" bond in order to participate in the Medicare program.
CMS states that the requirement for the surety bond would ensure that Medicare can recover erroneous payments up to $65,000 that result from fraudulent or abusive supplier billing practices and it is clear that these proposed changes are a direct result of recent fraud and abuse discovered in Florida and other parts of the country. However, the impact of this surety bond could be very detrimental to small O&P providers and is just another example of CMS unfortunately grouping O&P with DME in the Medicare program. NAAOP will be submitting comments to the agency opposing these changes.
Prepared by Peter W. Thomas, NAAOP General Counsel
