O&P Threats and Opportunities as 114th Congress Gets Under Way

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By Peter W. Thomas, JD; Christina Hughes, JD, MPH; and Sara Rosta, MA

Healthcare issues are expected to take center stage in the new Congress while the Obama administration continues to pursue its healthcare agenda by issuing Medicare regulations and continuing the implementation of the Affordable Care Act (ACA). This presents a mixture of threats and opportunities for the O&P profession during the coming year. This article surveys several important issues to the profession, including ACA repeal, Medicare reform, the legislative outlook for O&P, a Recovery Audit Contractor (RAC) update, and ACA implementation in 2015.

The 114th Congress convened in January as new leadership took the helm in the U.S. Senate. This change in leadership from Democratic to Republican control has major implications for the policy agenda for the last two years of President Obama's tenure. There will be fissures within both political parties, but the likelihood that Congress will more routinely send bills to the president on which he must either compromise or veto is far greater than in years past. There are strong political incentives for Republicans to demonstrate that they can govern in order to position themselves for the 2016 presidential election. With this in mind, it is likely that the 114th Congress will be more active than the 113th Congress, whether or not this activity translates into the enactment of new laws.

ACA REPEAL

The Republican-led Congress will most certainly make repealing the ACA, in whole or in part, a major goal over the next two years. But without a 60-vote Republican margin in the Senate, and with the president's warning to Congress not to attempt to repeal the ACA, it is unlikely that this policy will make it to the finish line in the next two years. The Supreme Court's review of the ACA is another matter. The high court is scheduled to hear King v. Burwell in its spring term. The case challenges whether the ACA authorizes the federal exchange to distribute federal subsidies to help people pay for health insurance; the federal exchange is being used in 36 states. If the court strikes down this aspect of the ACA, more than 5 million people are expected to lose their health insurance subsidies, striking a major blow to the ACA and causing massive disruption of the law.

PIECEMEAL ACA REPEAL

A more likely strategy that congressional Republicans may pursue is selective repeal of certain parts of the ACA. A primary target for early action is the repeal of the medical device tax. While this tax does not significantly affect O&P, repeal is strongly supported by medical device manufacturers, suppliers, importers, and their trade associations. It also has bipartisan support for repeal. The problem is that when passed, it saved the federal government more than $20 billion over ten years. So Congress would have to either pass the bill without offsetting the cost of repeal, or pass a series of provisions to pay for the cost of the repeal in order to attract enough votes to do so, and this will undoubtedly raise objections from other factions. Recently, Senator Orrin Hatch (R-UT), the new chairman of the U.S. Senate Committee on Finance, stated that he did not believe a repeal of the medical device tax would have to be offset with other savings from the Medicare program.

MEDICARE AND MEDICAID REFORM

The ascension of Congressman Paul Ryan (R-WI) to chairman of the U.S. House of Representatives Committee on Ways and Means, coupled with the annual budgeting process that was scheduled to begin February 2, is expected to generate debate about the future of Medicare and Medicaid. There will be serious proposals to significantly reform these programs, which will undoubtedly have the effect of reducing the long-term federal investment in these programs at current levels.

In addition, the current "fix" to the Medicare physician fee schedule expires at the end of March, which means that Congress will have to pass an extension, whether short term or long term, to eliminate an over 25 percent cut in reimbursement to physicians on April 1. This effort creates a must-pass Medicare bill that will bring both threats and opportunities to O&P. Threats will come in the form of reimbursement cuts to offset the cost of other changes, while opportunities will present themselves to add favorable legislative provisions to the bill.

O&P LEGISLATION

Legislative provisions that impact the O&P profession in a positive way include explicit recognition that the practitioner's notes will be included in the patient's medical record for purposes of determining medical necessity. Other provisions include the separate accounting of denials and appeals impacting O&P-separate and distinct from durable medical equipment (DME) denials and appeals-as well as the linking of Medicare payment with provider qualifications, a long-standing goal of the O&P profession. These and other O&P legislative goals impacting the Medicare program will be in play as Congress debates the Medicare program, especially in the first quarter of 2015.

RAC DEVELOPMENTS

On December 23, 2014, the Centers for Medicare & Medicaid Services (CMS) again extended its current contracts with the RACs, including authority to continue auditing claims for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). Under the extension, the four RACs already in place will continue with at least limited auditing of Medicare providers and suppliers through the end of 2015.

The current RAC contracts were originally signed for four years, and set to expire in February 2014, with a four-month extension until June 1, 2014. CMS attempted to implement a new set of RAC contracts for the next four-year period but bid protests were lodged in three of the four RAC jurisdictions, delaying the award of the new contracts. As noted in its posted extension, CMS does not anticipate a ruling from the court that will allow it to proceed with procurement until summer.

On December 30, 2014, CMS announced that it awarded the Region 5 RAC contract to Connolly to focus on Medicare auditing claims for DMEPOS. Connolly will also audit home health and hospice claims. The award of this new contract had been pending throughout 2014. Connelly is expected to begin auditing relatively soon and will work with CMS and the DMEPOS and other Medicare Administrative Contractors (MACs) to adjust claims to recoup overpayments and pay underpayments. It is not clear at this time whether the extended RACs will be required to transition their DMEPOS auditing authority to this new RAC. This award marks the beginning of this new RAC contract and is the start of certain reforms to the RAC program, some of which had been announced previously.

The new RAC reforms include provisions to address the need for greater transparency and accountability by RACs. For instance, RACs will now be required to maintain an overturn rate of less than 10 percent at the first level of appeal, excluding claims that were denied due to no or insufficient documentation, or claims that were corrected during the appeal process. Failure to do so will result in CMS placing the RAC on a corrective action plan that could include decreasing the limits on additional documentation requests (ADRs), or ceasing certain reviews until the problem is corrected. RACs will also be required to maintain an accuracy rate of at least 95 percent. Failure to do so will result in a progressive reduction in ADR limits.

ACA IMPLEMENTATION IN 2015

Open enrollment in the health insurance exchanges continues until February 15. From November 15 to December 26, 2014, nearly 6.5 million consumers selected 2015 health insurance coverage from the marketplace or were automatically reenrolled in a healthcare insurance plan, according to CMS.

CMS also states on its website that more affordable options are now available during the 2015 open enrollment period due to increased competition in the health insurance marketplaces. About 90 percent of consumers will have the option of three or more issuers, an increase from 74 percent in 2014. Consumers will also have an average of 40 health plans to choose from, up from 31 in 2014.

More than 7 million people purchased health insurance through the exchanges for 2014 coverage; this number was lower than original projections. Between 9 and 9.9 million people are estimated to be insured through the federal health insurance marketplace for 2015 coverage. This figure includes those reenrolling in health insurance plans for coverage in 2015, as well as individuals new to the health insurance marketplace. This estimate is lower than the 13 million people the Congressional Budget Office predicted would sign up; a decrease blamed on a slower than predicted shift from employer-sponsored insurance and individual coverage.

The 6.5 million consumers who signed up for 2015 health insurance coverage under the ACA is nearly double the number of plans selected as of December 15, 2014. Only 3.4 million consumers had purchased insurance through the exchanges as of mid-December, the total reflecting a surge in the last two weeks of the year. Of these figures, roughly 1 million consumers purchased health insurance through the marketplace in the three days leading up to the December 15, 2014, deadline for coverage effective January 1, 2015.

The language of the ACA requires exchanges to be self-sustaining by the start of 2015, and while federal grant funding can be used to sustain certain components of a state's exchange, it cannot be used for operations. The majority of state-based exchanges are funded by user fees from insurers that offer plans, while five states have fees that apply to insurers operating both in and outside of the exchange. Three state-based exchanges have not finalized how they will sustain their insurance marketplaces in the future. Because funding mechanisms for the majority of states are tied to member enrollment fees, a key component of success will be enrollment levels. If enrollment is lower than expected, a resulting loss in revenue could create problems in funding exchanges.

MEDICAID AND THE CHILDREN'S HEALTH INSURANCE PROGRAM

Enrollment for Medicaid and the Children's Health Insurance Program (CHIP) is not limited to a certain enrollment period, unlike private health insurance. Those with low income may enroll in these publicly funded health insurance programs at any time throughout the calendar year.

Due to the dynamic application used on Health-Care.gov, an individual or family that meets the qualifications for Medicaid or CHIP can be enrolled without filling out a separate application for enrollment in the exchanges. This is the outgrowth of a U.S. Department of Health and Human Services (HHS) strategy to make the exchanges, or marketplaces, one-stop shops for obtaining health insurance coverage, whether it is through the ACA or a public program like Medicaid or CHIP. About 8.7 million people enrolled in Medicaid or CHIP for the first time in 2014; this was a large increase in enrollment predominantly due to the expansion of Medicaid in certain states and the ability to access the dynamic application online. Many of these individuals were eligible to receive Medicaid coverage in the past but had not enrolled in the program.

IMPLICATIONS FOR THE REPUBLICAN-LED CONGRESS

Many incoming senators and representatives campaigned on a pledge to repeal the ACA. But with millions of Americans now insured under the law, outright repeal of the ACA, even if Congress were to override a certain presidential veto, is unlikely. The King v. Burwell case could dramatically change this dynamic if the high court invalidates the distribution of federal subsidies through the federal exchange. But the unanswered question for Republicans has been, and will continue to be, their alternative to the ACA. Simply repealing or striking down the ACA without an alternative approach to healthcare reform will throw millions of newly insured Americans back onto the rolls of the uninsured. This may create a powerful backlash, much like the firestorm that occurred in 2013 when it became clear that some individuals could not keep their health plans under the ACA even if they liked what they had. And with the 2016 presidential contest already beginning to heat up, neither party wants to be on the negative end of the healthcare debate.

Peter W. Thomas, JD, is general counsel for the National Association for the Advancement of Orthotics and Prosthetics (NAAOP). Christina A. Hughes, JD, MPH, is an associate at Powers Pyles Sutter & Verville, Washington. Sara Rosta, MA, is a legislative assistant at Powers Pyles Sutter & Verville.