New President and Congress Move Quickly on Health Care

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While the economy continues to grind through a recession, President Barack Obama and the 111th Congress have produced more legislation in the short time since the year began than any administration and new Congress in recent memory. Much of this legislation either directly or indirectly impacts health care and some of it offers opportunities and threats for the field of orthotics and prosthetics. With this legislation comes a breathtaking amount of federal spending. Depending on where one sits politically and fiscally, this could either be viewed as the necessary ingredient for prompting the country to reemerge from recession, or a recipe for a huge and unnecessary shift of debt to the next generation.

Thus far this year, Congress and Obama have enacted a reauthorization and expansion of the State Children’s Health Insurance Program (SCHIP) and a massive $787 billion stimulus package designed to increase the number of jobs by 3.5 million, including almost $200 billion on health care spending. The remaining spending bills that fund the federal government for the remainder of fiscal year 2009 are poised to be debated by the Senate now that the House has passed the bill and the federal budget blueprint calls for the creation of a $634 billion reserve fund to support the cost of national health care and entitlement reform.

Health care and entitlement reform

During the last week in February, Obama announced a blueprint of his federal budget for fiscal year (FY) 2010 and beyond — a bold document that takes on health care reform through the creation of a massive reserve fund funded through tax increases primarily on Americans with high incomes and reforms to entitlement programs such as Medicare. The budget also assumes $330 billion to fix the Medicare physician fee schedule for a 10-year period so that physicians serving Medicare patients do not see their fees decrease approximately 40% during that same period of time. Assuming that Congress adopts the concept of a health care reform reserve fund and presses forward with fixing the fee schedule for doctors, there will be tremendous reimbursement pressure on all other providers, including O&P professionals, as Congress will be looking for ways to save federal dollars for years to come in the Medicare program.

With Medicaid largely being held harmless, the cuts will fall hardest on institution-based providers such as hospitals and skilled nursing facilities. A variety of very significant and controversial reforms were listed in the budget documents. One of these proposals would “bundle” payments for hospitals with post-acute care services, saving a total of $17.8 billion over 10 years. Although the details of how this proposal would work have not yet been released, it is expected that O&P patients would fair poorly under such a bundling system. Acute care hospitals would be responsible for managing the care of each patient for 30 days after leaving the hospital and would receive an enhanced diagnosis-related group payment per case to accommodate the addition of post-acute services.

For longer term amputees and others requiring orthotic care, this provision may not be major problem. But for those with new amputations and functional deficits who enter a hospital, this proposal would most certainly impact O&P patient care. It is likely that, under such a system, hospitals would seek to provide only temporary O&P patient care until such time as the 30-day period lapses and the O&P provider can bill Medicare Part B on an outpatient basis. During the 30-day time period, the incentive for the hospital will be to send the patient to the least intensive rehabilitation setting and deny them access to a definitive orthosis or prosthesis. This and other proposals will have to be watched very carefully to ensure that the quest for health care reform funding does not cause more harm than good.

It is clear that policymakers are serious about enacting health care and entitlement reform this year. Following the January withdrawal of Health and Human Services (HHS) secretary designate Tom Daschle due to tax problems, the momentum on health care reform slowed considerably, but the Obama’s Joint Address to Congress in late February made it clear that he views health care and entitlement reform as a necessary component of furthering economic security. The momentum created as a result of his speech was sustained on March 5th when Obama hosted the White House Summit on Health Care Reform.

White House Summit

Barack Obama
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On Thursday, March 5th, I had the honor of representing the disability community at the White House Summit on Health Care Reform. The 4-hour event was an experience, considering the fact that Obama spent nearly all afternoon engaged on this issue, and over 50 members of Congress participated in the event. The Summit was intended to build momentum for tackling health care reform this year. In fact, many of the same people and organizations that were responsible for mounting campaigns that led to the demise of health care reform under President Bill Clinton were in the room offering their support to achieve reform this time around.

Obama began the Summit in the East Room of the White House. Approximately 150 guests were in attendance along with numerous White House and HHS staff, and a large number of news media. Obama took the stage and delivered 20 minutes of remarks designed to frame the purpose of the Summit. At that point, the 150 invitees divided into five separate break-out sessions, with some people being panelists and others being participants with no speaking role. I attended the break-out session held in the State Dining Room in the White House. The other four sessions were held in the Old Executive Office Building. This break-out session was televised on C-SPAN while the others were available for viewing on the White House website.

The break-out session in which I participated included four U.S. Senators including Orin Hatch, Sheldon Whitehouse, Mike Enzi and Byron Dorgan, and seven House Members. A wide spectrum of interest groups were represented including Planned Parenthood, the Business Roundtable, Blue Cross/Blue Shield Association, the American Cancer Society and the American Hospital Association. Every one of the panelists spoke and everyone expressed support for reform this year. A key element of the discussion centered on how to reduce costs while expanding coverage and improving quality. Several panelists stressed the importance of prevention, several raised the importance of malpractice reform to decrease the unnecessary costs of defensive medicine, the preservation of the employer-based health care system, and how successful reform would be a “uniquely American solution,” not a single payer system.

Other than my remarks, there was little discussion of chronic illness and disability, and no discussion about an area of health care as specific as orthotics and prosthetics. However, it is clear that if the system is overhauled, there would be major implications on access to O&P care, particularly for the sector of the population that is currently uninsured – approximately 48 million people.

I focused my comments around a “unifying statement of purpose of the health care system” that appears in the final report of the Clinton Commission on health care reform in 1998, on which I served. This statement reads:

“The purpose of the health care system must be to continuously reduce the impact and burden of illness, injury, and disability, and to improve the health and functioning of the people of the United States.”

I then cited examples of how health care includes the concept of improving and maintaining the ability to function in order to return home from a hospital stay, live independently and even return to work. I cited the need for artificial limbs and orthopedic braces and the rehabilitation services needed by many people with disabilities to remain functional. I then stressed that while Medicare and Medicaid are critical programs that must be strengthened, the private insurance system must work for everyone, not just those without disabilities and chronic conditions. No one on the panel cast a negative tone or signaled that they would not be constructive as this process moves forward. To the contrary, many who I expected to offer muted tones of support were actually quite proactive in their endorsement of reform this year.

This positive spirit carried into the closing session where Obama reviewed a number of statements made by key stakeholders during the breakout sessions and called on key leaders to make statements. Notably, Karen Ignani of America’s Health Insurance Plans, representing the insurance industry, stated that they are ready to support an individual mandate that everyone have health insurance, coupled with rules against pre-existing conditions and excessively high rates based on health status. Both big business and small business stated they are ready to move forward with health care reform this year. Hospital groups, doctors’ organizations, nurses, labor, and key Congressional leaders from all sides of the political spectrum rallied around the case for reform now.

The financial markets reacted with a 280 point loss on the day and health care stocks have plummeted since Obama laid out his plans for reform in his budget. Ironically, this may suggest that Wall Street believes the chances of reform in the near term are better than they have been in years. Whether the failing economy will provide the necessary widespread insecurity to enact significant health care reforms or will lead to further delays until signs of recovery begin to emerge is an unresolved question at this point.

If this reform were to pass, there would certainly be a large number of individuals who currently have no insurance coverage who would be able to access O&P patient care, assuming that O&P care is considered a covered benefit under private plans operating in a reformed system. One way to ensure that O&P care is a covered benefit is to pass a federal O&P parity law, which impacts private insurance and employer provided coverage of O&P care. There is also specific legislation that addresses the quality of O&P care delivered to Medicare beneficiaries and links the complexity of this care to the qualifications of the practitioner providing the care. Both of these bills are soon to be introduced in the 111th Congress.

SCHIP reauthorization and expansion

The SCHIP reauthorization and expansion was the first health bill signed into law by Obama. The bill expanded the children’s health insurance program by over $32 billion over 5 years and is expected to cover millions of currently uninsured children. To the extent that these children require orthotic and prosthetic care, this is welcome relief for providers faced with the difficult situation where a pediatric patient needs O&P services and is without insurance of any kind. SCHIP is designed to cover children whose parents do not qualify for Medicaid but whose income levels do not allow them to purchase private insurance coverage. Reauthorization and expansion of this program is being viewed as a “down payment” on national health care reform. Approximately 4 million additional children will receive health care coverage under the expanded SCHIP law, bringing the total number of children covered under this program to more than 10 million.

Economic stimulus package

In addition to enactment of SCHIP legislation, Congress passed and Obama signed a $787 billion economic stimulus package designed to bring the economy out of the current recession. That package, known as the American Recovery and Reinvestment Act (ARRA), includes significant spending on health care programs, some of which will have an impact on the field of O&P.

The stimulus bill includes nearly $90 billion in federal matching funds to the states to help them sustain Medicaid services during the recession. The bill increases FMAP funding for a 27-month period beginning October 1, 2008 with an across-the-board increase to all states of 6.2, with greater funding going to states with high rates of unemployment. The bill also prohibits states that accept the funding from restricting Medicaid eligibility beyond the Medicaid beneficiaries they covered as of July 1, 2008. As a result, some states will re-enroll beneficiaries that had been removed from the Medicaid program since July 1. However, states are allowed to restrict Medicaid services and cut Medicaid provider payments if necessary. Despite the increased FMAP funding, some states will likely choose to divert some of these new funds to their overall state budgets and continue to implement cuts in services and payments.

ARRA provides approximately $19 billion over 5 years for health information technology (HIT) and requires HHS to develop an initial set of HIT standards by 2010. The Congressional Budget Office estimates that the bill will assist about 90% of doctors and 70% of hospitals in adopting certified electronic health records (EHR) within the next decade. In addition, federal privacy and security laws were expanded to protect patient health information. O&P businesses, along with a long list of other providers, are not eligible for grants under this program. But they are also not subject to the penalties in Medicare and Medicaid payments that could result for noncompliance with HIT standards.

The ARRA also provides $1.1 billion for comparative effectiveness research (CER), of which $300 million will be administered by the Agency for Healthcare Research and Quality, $400 million by the National Institutes of Health (NIH) and $400 million by the secretary of HHS. The outcomes of this research will be used in the future to assess whether health care payors continue to cover various treatments and medical devices. There is significant concern that the focus of this initiative will devolve to a cost comparison between treatments, rather than a comparison based on clinical effectiveness. O&P care may be particularly vulnerable to this initiative if not implemented with clinical effectiveness as the ultimate priority.

The ARRA provides $10 billion for the NIH. This is a huge influx of funds for NIH at a time when the percentage of grant applications to funded grants is historically low. The entire FY 2008 budget for NIH was approximately $29.5 billion. Orthotic and prosthetic research funded by the National Center for Medical Rehabilitation Research (NCMRR) is expected to see a proportional increase in funding, assuming the pending grant applications for this area receive high scores based on scientific merit.

In a significant victory for disability advocates, the ARRA provides $540 million for Vocational Rehabilitation (VR) State Grants, which is an increase from the $500 million proposed by both the House and the Senate. In this manner, the billions of dollars being spent by this bill on employment and training services for the general population will be equitable with the amount spent on employment and training assistance for people with disabilities. VR agencies occasionally fund orthotic and prosthetic services if they are required to assist a person in returning to work and no other avenues for coverage are available to the person with a disability.

Wrap-up of FY 2009 spending bills

On February 25th, the House passed, by a vote of 245 to 178, a $410 billion FY 2009 omnibus spending bill, finishing up the work left over from the past Congress. The agencies covered by the bill, including the HHS, the Department of Labor and the Department of Education, are currently being funded at 2008 levels under a continuing resolution. The Senate is expected to take up the bill soon.

The belated FY 2009 spending plan provides about $152 billion to labor, health and human services and education programs, nearly a $6 billion increase over 2008. When entitlement spending such as Medicare and Medicaid is included, the total reaches $625 billion for the entire fiscal year, which is approximately $25 billion more than last year. The omnibus package provides HHS with a 4% overall increase. It is difficult to identify specific aspects of this budget that directly impact the O&P profession but many programs that the O&P community values, such as research programs at NIH and the National Institute on Disability and Rehabilitation Research will benefit from a settled budget for the remainder of the fiscal year.

Outlook for 2009

Normally, the president would release his budget in early February but with the administration having just started and with the transition of new agency leaders still on-going in many cabinet departments and many related offices, a final comprehensive budget is not expected until late March. However, the Obama Administration just released a bare-bones budget including many key priorities and changes it will push for this year. This should allow the House and Senate Budget Committees to proceed in the development and passage of their budgets for the coming fiscal year, thereby keeping the FY 2010 appropriations process more or less on schedule for the year.

Since Democrats now hold a significant majority in both chambers of Congress, as well as the presidency, it is expected that the appropriations bills that follow Obama’s budget will be ambitious and will stand a significantly better chance of timely passage.

Peter Thomas

Peter W. Thomas, JD, is general counsel for the National
Association for the Advancement of Orthotics and Prosthetics.

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