Love It or Hate It …

Initiatives to enact major changes to our nation’s health care system have consumed the United States Congress over the last year. But the drama ended last month when the House and Senate passed two bills that will do just that.

Love it or hate it, this is truly historic legislation in our nation’s history. The landmark law signed by President Obama will provide coverage to 30 million people who currently lack it.

The new law will require most Americans to have health insurance coverage, add 16 million people to the Medicaid rolls and subsidize private coverage for low- and middle-income Americans. It will regulate private insurers more closely, banning practices such as denial of care for pre-existing conditions. The reform law will cost $940 billion over 10 years (according to the Congressional Budget Office), and will reduce the federal deficit by $138 billion over a decade.

Major political wrangling, extreme partisanship and high drama characterized much of the debate about the reform in Congress and across the nation. In the more than 2,000 pages of legislative language lie numerous details that will take much time to analyze.

The new law covers massive changes to the health insurance market; new health insurance exchanges; new individual and employer responsibilities; tax credits and revenue raisers; Medicare provider payment changes, delivery system reform; Medicare quality and transparency initiatives; Medicare fraud-and-abuse provisions; Medicaid changes; and prevention and wellness provisions.

Following is a summary of the key provisions that impact our industry. Note that there are numerous other provisions that will impact us, many in the fraud-and-abuse area, such as mandatory compliance plans for DME providers and mandatory face-to-face exams for every DME item.

• Excise tax on medical device manufacturers The bill includes a new tax on U.S. sales of medical device manufacturers or importers. The law will impose a yearly 2.3 percent sales-based or excise tax on medical device manufacturers starting in 2013. The excise tax will be deductible by the manufacturer on its federal tax return. The excise tax will not apply to medical devices that the Secretary of the Treasury determines are generally purchased by the general public at retail for individual use.
• Changes to the “competitive bid” program This provision will expand Round 2 of the competitive bid program by 21 additional metropolitan areas. It also requires the Secretary of HHS to bid all areas of the country or apply bid rates nationwide by 2016.
• Elimination of the first-month purchase option for standard power wheelchairs Effective for services beginning Jan. 1, 2011, beneficiaries will no longer have the option to have Medicare purchase a standard power wheelchair in the first month of medical need. Instead, Medicare will pay on a rental basis for 13 months, and ownership will transfer at that time. Providers will be paid 15 percent of the purchase price in months one through three, and 6 percent of the purchase price in months four through 13. Complex rehab power wheelchairs will retain the first-month purchase option. This provision will not apply to any contracts prior to Jan. 1, 2011, under competitive bidding.
• Fee schedule reductions The 2 percent add-on payment (above CPI) in 2014 for DME that Congress provided for in last year’s Medicare Improvements for Patients and Providers Act will be eliminated. Instead, DME fee schedule updates will be reduced each year by a “productivity adjustment” estimated to result in a minus 1 percent applied to the annual update factor for DME items.
• Accreditation exemption for certain pharmacies This provision will exempt from the accreditation requirement pharmacies with less than 5 percent of revenues from Medicare DMEPOS billings until HHS develops pharmacy-specific standards.
• Fraud and abuse Requires a 90-day period to withhold payment and conduct enhanced oversight for initial claims from DME providers in cases where HHS identifies a significant risk of fraud.

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A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington, D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her at 440/329-6226 or [email protected].