Now that the dust has settled on the healthcare reform law officially known
as the Patient Protection Affordable Care Act (PPACA), it’s time to review
the law in detail and determine what it means for providers. The legislation
presents challenges for the industry, but it’s important to remember that
this is an election year, and that makes legislators much more attentive to
constituents’ needs when we make our case and ask them for help.
Five issues of focus for complex rehab and mobility providers have been identified
in the PPACA, so let’s discuss strategies discussed to advance positive
outcomes in these areas.
Competitive Bidding Update
Section 6410 of the PPACA expands Round 2 of competitive bidding from 79 to
100 of the largest areas where bidding is set to begin in the summer of 2011.
It also requires the Secretary to either expand the competitive bidding program,
or apply competitively bid rates nationally by 2016. This includes Group 2 single
and multiple power-option wheelchairs and related accessories.
In the House, Representative Kendrick Meek’s (D-Fla.) legislation (H.R.
3790) that would repeal the DME competitive bidding program in a budget-neutral
manner has more than 240 co-sponsors, well surpassing the industry goal of 218.
That provides enough support to pass the bill in the House once the congressional
budget office (CBO) score is released and the “pay-for” is agreed
to by the industry. The “pay-for” specifically exempts complex
rehab from any future payment reductions in order to repeal the competitive
bidding program. The industry goal is now to secure introduction of a Senate
In addition, efforts will continue on the regulatory front to address the
most fundamental errors of the CB program as the Round 1 rebid moves toward
implementation in January of 2011. The industry is planning to closely monitor
the steps CMS takes over the next couple of months as the single-payment amounts
and contract winners are announced.
Elimination of the First-Month Purchase Option
Section 3136 eliminates the first-month purchase option for standard power
wheelchairs (K0813-K0829) effective January 1, 2011. Complex rehab bases (K0835-K0864)
are exempt from this change.
The one benefit is that it front-loads the rental payments so providers will
receive 15 percent each month for months 1-3 and 6 percent for the remaining
months 4-13. The current rental methodology is 10 percent for months 1-3 and
7.5 percent for months 4-13. For a K0823 this provides an additional $546.21
within the first 90 days when compared to the current formula for such rentals.
In addition, the first nine competitive bidding areas are exempt as long as
contracts are signed prior to January 1, 2011.
The industry has met with senior staff in the Senate and House to discuss
industry options prior to implementation. Key Democrat committee staff made
it clear that a repeal of this provision is not possible this year. They did,
however, indicate that they would support a budget-neutral delay in implementation
in order to provide the industry and CMS an opportunity to plan for this significant
change. At press time, the CBO was scoring both a short-term and a long-term
delay. Once the CBO scores are available, the industry will have an opportunity
to determine what level of reduction, if any, it supports in order to secure
a delay in implementation.
Productivity Adjustment Applied to Medicare Payment Rates
Section 3401 requires that beginning in 2011 and for each year thereafter,
a productivity adjustment be applied to Medicare payments, which may result
in no CPI-U update or payment rates that are lower than the rates for the preceding
The average productivity adjustment over the last 10 years has been 1.3 percent
for the other sectors where the adjustment has been applied. Assuming a 2-percent
CPI-U update, once the productivity adjustment is applied (assuming 1.3 percent),
the increase would be reduced to 0.7 percent. It is important to note that this
provision applies to all DME, including complex rehab, and other healthcare-related
Medical Device Excise Tax
The Health Care and Education Reconciliation package, which provided for some
modifications to PPACA, included a provision (section 1405).