Medicare Reform Bill Passes: A 'Mixed Bag' for O&P

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," according to the National Association for the Advancement of Orthotics & Prosthetics (NAAOP).

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), 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 ten years," NAAOP pointed out, adding, "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 organization stated. "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," NAAOP continued.

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 healthcare professionals certified/accredited in the practice of orthotics and prosthetics," said NAAOP. "The provision will need to be analyzed further to understand its full implications, i.e. its impact on the failed Negotiated Rulemaking [NegReg] 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 percent under current levels. "This also represents an extremely positive outcome for O&P," NAAOP pointed out.

"NAAOP will continue to review the final bill language and assess the full impact of the Medicare reform and prescription drug bill," the organization stated. "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 [Centers for Medicare & Medicaid Services]regulatory system."

Although the three-year payment freeze for O&P was an unexpected negative development in the final Medicare bill, efforts were successful in protecting O&P from the overhaul of DME reimbursement and payment cuts and, as NAOP noted, "what appears to be a very positive resolution of the Negotiated Rulemaking process."

For additional information, contact Peter Thomas, NAAOP general counsel, or Dustin May, legislative director, Powers, Pyles Sutter, and Verville, PC, 800.622.6740, or visit www.oandp.com/naaop .

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