The National Association for the Advancement of Orthotics and Prosthetics (NAAOP) issued the following update on the Medicare physician fee schedule and its potential impact on the O&P profession:
President Obama released his fiscal year (FY) 2013 federal budget this week as Congress is poised to pass a major bill that would extend through the remainder of this year a 0 percent update to the Medicare physician fee schedule and an extension of the current treatment of the outpatient therapy caps.
Federal Budget: The budget calls for total spending of $3.8 trillion and would increase funding for education, research, infrastructure, and technology while proposing significant cuts in entitlement programs such as Medicare and Medicaid. Of the $360 billion proposed to be cut from Medicare providers over a ten-year period, none of these cuts would impact O&P practitioners directly. Despite these proposed cuts, the budget would still produce a deficit in 2013 of over $1 trillion. For this reason, the budget is seen as a largely political document in an election year and has been widely criticized, especially by the House leadership.
The House is expected to produce a budget that will likely resemble the budget passed by the House in the spring of 2011. This was commonly known as the “Ryan Budget” and it proposed significant structural reforms to both Medicare and Medicaid. The Senate, on the other hand, has already announced that it will not produce a budget this year, for the third year in a row. Senate Majority Leader Harry Reid has stated that last summer’s debt discussions already set the parameters for the budget for the coming year and, therefore, a separate budget is not necessary (even though it is required by law). A budget summary can be found on the NAAOP website.
Medicare Reimbursement: A House-Senate Conference Committee also announced this week that agreement has been reached to extend the physician fee schedule “fix” through the end of 2012. This means that on March 1, 2012, physicians, physical therapists, occupational therapists, and other providers paid under the Medicare physician fee schedule will NOT have their fees cut by 27.4 percent, as would have occurred under current law. Instead, the physician fee schedule will be held in place, producing no annual inflation update (but no cut in reimbursement either). In addition, the Medicare outpatient therapy caps will not go into effect on March 1, as scheduled under existing law.
The threat in this agreement had been the potential for Medicare payment changes to other providers to help pay for the changes to physician and therapy reimbursement. Although many types of providers’ fees were cut in a variety of ways, this legislation includes no cuts to the Medicare O&P fee schedule for the remainder of this calendar year.
However, under the budget agreement reached last summer, “sequestration” is expected to go into effect on January 1, 2013, unless Congress acts between now and then to pass an alternative to across-the-board cuts included in that agreement. All Medicare providers are slated for a 2 percent cut in 2013 off of what the fee schedules would have otherwise paid, and this across-the-board cut will impact O&P providers, again, unless Congress acts to avert that cut and replace it with something else.