The Patient Protection and Affordable Care Act is officially the law of
the land, according to the recent Supreme Court decision upholding most of the
provisions of the legislation. However, depending on the outcome of the
November presidential election, the Affordable Care Act could also be
dismantled, so it is important for O&P providers and patients to prepare
for two very different scenarios come Nov. 7.
The Supreme Court’s decision to uphold the constitutionality of the
Patient Protection and Affordable Care Act (ACA) has significant ramifications
on the health care field generally, including on the O&P profession. The
Court’s holding means that the administration will move forward with a
number of ACA provisions that will directly impact access to and coverage of
orthotic and prosthetic care. For example, the law establishes a minimum health
benefits package that all individual and small group plans must cover starting
in 2014 — and that package must include “rehabilitative and
habilitative devices.” Whether this term specifically includes orthotics
and prosthetics will be decided, at least initially, at the state level.
The law also prohibits insurance companies from denying insurance
coverage because of a pre-existing condition and from discriminating against
plan participants based on health status or disability. This means that
premiums for insurance coverage will be moderated and not dependent on whether
one has limb loss or an orthopedic condition. Although the constitutional
questions have been decided, it is now as important as ever for O&P
clinicians and their patients to engage in the health care reform
implementation process at the state level since the application and scope of
these new protections will determine their effect on access to orthotic and
prosthetic care.
Overview of Supreme Court decision
On June 28, the Supreme Court issued its highly anticipated decisions
regarding a number of constitutional issues brought forth in legal challenges
to the ACA. Those decisions involved four main issues:
Anti-Injunction Act: In its only display of consensus about the ACA, the
Court ruled unanimously (9-0) that the Anti-Injunction Act (“AIA”)
did not foreclose review at this point of the ACA’s individual mandate,
the provision requiring, effective Jan. 1, 2014, that individuals either obtain
health insurance coverage or pay a penalty for failing to do so. The AIA
generally prohibits courts from considering lawsuits challenging federal taxes
and penalties until the tax or penalty has been paid and administrative
remedies have been exhausted.
© iStockphoto.com
Individual Mandate: The Court held 5-4 that the individual mandate is
not a constitutional exercise of congressional power under the Commerce and
Necessary and Proper Clauses. But, the Court also held 5-4 that the individual
mandate and its penalty provisions are constitutional exercises of
Congress’ power to tax. So, in sum, the individual mandate was upheld as
constitutional.
Severability: Because the Court did not overturn the individual mandate,
there was no need to decide whether it could be severed from some or all of the
remainder of the ACA.
Medicaid Expansion: In a 7-2 split, the Court ruled that the ACA’s
expansion of the Medicaid program, effective Jan. 1, 2014, was unconstitutional
insofar as it would permit the federal government to withdraw all federal
funding to any state that did not expand its Medicaid program in accordance
with the ACA. Under that expansion, individuals who are not currently Medicaid
eligible but who have incomes up to 133% of the federal poverty level
(“FPL”) would become Medicaid eligible. This provision is expected to
cover approximately 16 million Americans beginning in 2014. Significantly,
however, a 5-4 majority held that the expansion would be permissible as long as
the state had a voluntary choice to expand coverage, without fear of losing all
existing federal funding for their Medicaid program.
The Supreme Court’s decision means that, with the exception of the
Medicaid expansion, all of the provisions of the ACA that are already effective
and all of the requirements that will be effective in the future will be
implemented. This includes important provisions such as: the individual
mandate, health insurance reforms (guaranteed issue, community rating, ban on
denials due to pre-existing medical condition, and anti-discrimination based on
health status), health insurance exchanges run by the states or the federal
government, accountable care organizations, health insurance subsidies for
employers and individuals, Medicare and Medicaid provisions in areas such as
reimbursement and program integrity, and a wide array of demonstrations,
experiments and innovations.
Medical device tax
This also means the reimbursement provisions of the ACA will continue to
go into effect, including the annual productivity adjustment, which ultimately
decreases the annual inflationary CPI-U update to the Medicare O&P fee
schedule. In addition, the medical device tax that was included in the ACA,
which applies a 2.3% tax on manufacturers and importers of medical devices
beginning on Jan. 1, 2013, will go into effect unless it is repealed by
Congress. Fortunately, the proposed regulation that interprets the application
of this tax to the O&P field appears to be less of a threat than was once
thought.
Ryan Ball
“AOPA and the O&P Alliance have sat down with the IRS and tried
to get us included under the retail exemption,” Ryan Ball, director
of government relations, Orthotic and Prosthetic Group of America, told
O&P Business News. ““They think that we would be eligible
for the exemption; manufacturers could potentially be hit with it one way or
another. In terms of repeal…the House will pass it, but the Senate
won’t touch it, even though the House identified how they were going to
pay for the revenue change. I think it raises something like $20 billion over
10 years. In order to repeal the House and Senate would need to agree on a cost
offset, and I’m not sure anyone would be able to agree on that.”
Medicaid expansion
The Congressional Budget Office (CBO) has scored the Supreme
Court’s ruling, and estimates the 11-year net cost of the federal health
care overhaul will be about $1.168 billion, an $84 billion decrease from its
March estimate of $1.252 billion. This reduction is primarily due to the
court’s decision to remove financial penalties on states that opt out of
the Medicaid expansion.
The estimated net savings to the federal government result from spending
reductions from lower Medicaid enrollment, which is expected to offset the
increase in costs from greater participation in the new exchanges.
The CBO estimated the federal government will pay 93% of additional
Medicaid costs as a result of the health care reform law. Although Medicaid
spending patterns vary from state to state, on average, additional state
spending may total less than $600 per year for every additional insured
beneficiary. That number may be offset somewhat by reductions in other costs.
Also, the CBO predicted that the court’s decision will result in
about 6 million fewer enrollees in Medicaid and the Children’s Health
Insurance Program, and about 3 million more enrollees in the state insurance
exchanges that will be in place in 2014.
The repercussions of the Supreme Court’s decision regarding the
Medicaid expansion remain to be seen. Although no state will be forced to
expand eligibility for individuals up to 133% of the federal poverty level,
several different scenarios are possible:
- Some states will find the allure of federal financing (100% funding
initially, phasing down to 90% in 2020 and thereafter) irresistible and will
engage in the expansion. - Some states may conclude for political or financial reasons that
they will engage in no expansion whatsoever. Currently, Republican governors of
four states — Florida, Iowa, Louisiana and South Carolina — have said
they want to opt out of the expansion. Leaders in several more states,
including Texas, are considering doing the same. - Other states may desire to engage in a partial expansion (eg, up to
120% or 125% of the federal poverty level). It is expected that the federal
government will provide guidance on this before too long to resolve questions
as to whether this will be permitted and, if so, under what conditions.
As a result, there may be a relatively sizeable group of individuals who
will remain uninsured, who will not be eligible for Medicaid due to the
states’ decisions not to expand fully, and who will not be able to obtain
federal subsidies to help purchase private coverage under the state exchanges.
“If the president loses reelection and there is a Republican House
and Senate, a lot of this stuff will go away, or at least be significantly
delayed, especially the Medicaid expansion, medical device excise tax and
creation of state exchanges,” Ball said. “State-based exchanges
initially were a pretty conservative idea, so there’s some support for
those and accountable care organizations have largely been embraced by private
payers, so they are likely to remain no matter the outcome of the
election.”
“If the president wins, a lot of the states will fall in line.
Historically you don’t see states opt out of programs that they’re
going to get such a large federal match on. But there are a lot of states where
it’s going to cost them a large chunk of money.”
Dan Ignaszewski
“There seems to be an understanding with a number of states …
they’re now being given a choice they weren’t previously given,”
said Dan Ignaszewski, government relations manager, Amputee Coalition.
“Some are holding off on making the decision until they can get a handle
on what the expansion would mean, the costs, and how it would affect their
state’s population.”
Ignaszewski cited studies that suggest that only 25% of individuals with
an ambulatory disability between the ages of 18 and 64 years have jobs,
compared with up to 77% of the general population.
“That percentage is problematic for people who don’t currently
qualify for Medicaid standards, so the expansion would be able to cover more
individuals who may not currently qualify,” he told O&P Business
News.
Coverage equality
Ball said the best chance for parity, or insurance fairness, is on the
state level. The Department of Health and Human Services (HHS) decided states
could choose from currently offered health policies in their state and decide
what the minimum health policy is that will be sold on the state-based
exchanges as part of the Essential Health Benefits package (EHB), Ball
explained.
Currently, 20 states have some form of insurance fairness benefit, while
eight states introduced insurance fairness legislation this year. Other states
are working on legislation, or trying to introduce legislation. Work continues
on a federal bill.
“Insurance fairness remains an active campaign on the state and
federal level,” Ignaszewski said.
“O&P is included in pretty much all state and federal health
insurance plans — the three largest HMOs and the three largest small group
insurance policies. The more states we have that pass parity the better, so you
know O&P is included in all those no matter what. Depending on how the
politics play out, if we can get [parity] included in all 50 states’ EHB
packages, we can get to parity without having to pass parity [at the federal
level],” Ball said.
Lifetime caps and pre-existing conditions
For now, insurance fairness laws continue to differ from state to state,
but good progress is being made within the ACA reforms in other areas of
concern to O&P patients, including coverage for pre-existing conditions and
the elimination of annual lifetime caps.
Given that an amputee can go through several prostheses in a lifetime,
“that’s a big deal. That’s a big thing for our industry.”
Ball said. “There’s also the pre-existing conditions part of the
bill…a lot of folks were barred from insurance companies for pre-existing
conditions to get coverage until the ACA provision that mandated insurance
companies to provide insurance to those people kicks in in 2014,” Ball
said.
Coverage for pre-existing conditions becomes particularly important
given the growing number of people with diabetes, and the subsequent potential
for limb amputation.
“Whether it’s due to complications from the amputation or due
to other socioeconomic factors — certainly, the Medicaid expansion will
provide help for the limb loss community,” Ignaszewski said.
Essential health benefits
In December 2011, the HHS released a report framing its future attempts
to define essential health benefits under the ACA. This report, summarized by
the American Orthotic & Prosthetic Association (AOPA) for the benefit of
its members, outlines 10 areas of care that benchmark insurance plans must
provide to consumers who use insurance exchanges established by the federal
government.
The HHS report included O&P benefits in the majority of plans and in
the same category in which physician visits and hospital visits were included,
“which is strong evidence that it’s an essential benefit,”
Ignaszewski said.
These 10 areas include:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance-abuse disorders
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventative and wellness services
- Pediatric services, including oral and vision care
“Benchmark plans can be one of the three largest small group plans
in the state; one of the three largest state employee health plans; one of the
three largest federal employee health plan options; or the largest HMO plan
offered in the states commercial market,” according to the AOPA summary
report.
One area of care not generally included in most insured plans is
habilitative services, such as those required to teach a child with cerebral
palsy how to walk. To remedy this, the HHS bulletin stated that an insurance
plan “would be required to offer the same services for habilitative needs
as it offers for rehabilitative needs and offer them at parity,” according
to the AOPA summary report.
“What that bulletin also pointed out, unfortunately, is the
difference in cost sharing among all the different categories of benefits. That
includes some of the caps and restrictions on prosthetics and orthotics. So
what we’re trying to do is make sure that the base standard of care in the
essential benefits package meets adequate standards. Whether those standards
are going to be at a parity level or at an insurance fairness level, which we
have tied to Medicare’s 80/20 reimbursement rate or to language indicating
that the benefit can be no less favorable than other benefits in the policy,
remains to be seen,” Ignaszewski said.
“What we don’t know is how they’re going to cover O&P
in that cost sharing method and to that end, we’re working hard on state
and federal legislation to make sure that we have something in the works to be
able to continue to move forward, depending on the outcomes in all 50
states…and the reality is, there may be situations where not all states
include adequate coverage.”
Advocacy never ends
For O&P patients and providers, the decision means the field should
continue to engage in the critical process of ensuring orthotics and
prosthetics are covered under the essential health benefits plans required
under the law. This requires proactive advocacy at both the federal and state
levels.
Ignaszewski said O&P patients need to reach out to advocacy groups
to help craft essential benefits packages in their states and emphasize the
importance of O&P care. Some states have already begun setting up their
plans, and patients should keep themselves appraised of the situation and
continue to lobby for inclusion in the plan.
O&P practitioners should engage their state governments in educating
them about orthotics and prosthetics as state exchanges, the Medicaid
expansion, and multiple insurance reforms are implemented.
“As far as practitioners, they should educate their patients and
they should get involved in advocacy. Having their voice heard and letting
legislators know that not only for their patients but for themselves, this is a
benefit that people need and it should not be excluded from the EHB.
That’s something that both practitioners and patients should be hitting
their legislators with,” Ignaszewski said.
“We need to stay in front of these folks: Congress, CMS, state
legislators, governors, insurance commissioners. We need to start collecting
data on health metrics and patient satisfaction so you can go to some of these
payers and says ‘this is why you need to do business with me.’”
Ball said.
“And you can offer that same info to Medicaid across the country
and say this is why prosthetics are important. This is why we should be
included in the EHB. It’s tough to prepare for something you don’t
know is going to happen, but you’ll feel better about it Nov. 7 if
you’re prepared, regardless of the outcome.”
In addition, O&P providers should monitor patient coverage to ensure
that plans are not currently denying children coverage based upon their health
status or pre-existing conditions, and that in 2014 the same is true for adult
patients.
The focus on the health reform law’s viability now turns to the
political process, where the ACA is expected to be a major issue in the
November presidential elections. Shortly after each major political party
reacted to the ruling, House Republicans once again voted to repeal the entire
law on July 11. The measure has very little chance in the Democratic-controlled
Senate and, in any event, would be vetoed by President Obama if it ever reached
his desk.
In addition, although several states have already stated their intention
not to expand Medicaid the in-state hospitals and other providers have begun
putting pressure on state governors and legislatures, and most, if not all,
states are expected to eventually expand their Medicaid programs. — by
Carey Cowles
Contributing authors: Peter W. Thomas, NAAOP General Counsel, Joel
Hamme, JD, and Theresa Morgan, Legislative Director, Powers Pyles Sutter &
Verville, PC
For more information:
Big subsidies will push states to expand Medicaid. Available at:
www.bloomberg.com/news/2012-07-10/big-subsidies-will-push-states-to-expand-medicaid.html.
Accessed Aug. 1, 2012.
Draft report for the American Orthotic and Prosthetic Association (AOPA)
compilation of coverage in essential health benefit benchmark plans: Available
at:
www.aopanetonline.org/Account/login?returnURL=%2Fdocuments%2FDraftReport412.
Accessed July 30, 2012.
Essential Health Benefits: HHS Informational Bulletin. Available at:
www.healthcare.gov/news/factsheets/2011/12/essential-health-benefits12162011a.html.
Accessed Aug. 6, 2012.
Where each state stands on ACA’s Medicaid expansion. The Advisory
Board Company. Available at:
www.advisory.com/Daily-Briefing/2012/07/05/Where-each-state-stands-of-the-Medicaid-expansion.
Accessed Aug. 1, 2012.
Disclosure: Ball and Ignaszewski have no financial disclosures. Thomas,
Hanne and Morgan have no finacial disclosures.
