The Impact of Sequestration on Your Business

Sequestration_0Sequestration was never supposed to happen. It was written into law as a mandatory, across the board reduction in federal spending so distasteful to both democrats and republicans that it would be never allowed to occur. Think back to when you were a child and your mother threatened to punish you for a month if you didn’t eat your dinner. The punishment was so extreme that it made it worth it to choke down those last few bites of mashed potatoes. Lawmakers believed the same thing about sequestration right up until neither side blinked and sequestration became reality in March of 2013.

Lawmakers have somewhat come to their senses in that many of the spending cuts implemented with sequestration have been reversed through subsequent legislation, especially those related to defense spending and veteran’s benefits. Sequestration remains in full effect for Medicare payments however and was recently extended through 2024 when Congress passed legislation that reversed potential cuts to veteran pension benefits.

The direct result of sequestration in the Medicare program is a 2{b3e9dd6b2a2b9b0b8877c781f3059c6a19b65fa453cdc02b99584f3fd07dbcf4} reduction in all Medicare reimbursements to providers. This means that once the Medicare payment for a claim is calculated, it is reduced by 2{b3e9dd6b2a2b9b0b8877c781f3059c6a19b65fa453cdc02b99584f3fd07dbcf4}. For example, if a Medicare allowable is calculated at $100 and the Medicare payment after the 20{b3e9dd6b2a2b9b0b8877c781f3059c6a19b65fa453cdc02b99584f3fd07dbcf4} patient coinsurance is $80, the actual Medicare payment to the provider will be $78.40. It is important to note that sequestration reductions do not apply to patient coinsurance and deductibles which may continue to be collected from patients at their full value. In addition, it is important to note that sequestration reductions are not applied to the Medicare fee schedule but to the actual reimbursement sent to the provider. This is important because it means that the 2{b3e9dd6b2a2b9b0b8877c781f3059c6a19b65fa453cdc02b99584f3fd07dbcf4} sequestration reduction is not cumulative year after year. The Medicare O&P fee schedule continues to be updated annually based on the increase in the Consumer Pricing Index for Urban areas (CPI-U) and the annual productivity adjustment.

AOPA’s take on sequestration is that, for the moment, it is an unfortunate reality. In order for sequestration to end, Congress will have to pass new legislation that reverses the sequestration provisions that went into effect in 2013. While that is not likely given the current environment on Capitol Hill, AOPA continues to work with members of Congress and our industry partners to find a solution to the challenges of sequestration.

While nobody likes to have their Medicare payments reduced, at least sequestration reductions are a known entity for which adjustments can be made. AOPA will continue to fight for fair treatment of O&P providers and the valuable services they provide.

AOPA’s Take. Where you go…..when you need to know!

National O&P RAC Contract on Hold…….For Now

Stop signLess than two weeks ago, AOPA’s Take announced the award of the contract to serve as the single, national RAC auditor for all Medicare DMEPOS, home health, and hospice claims to Connolly Healthcare, LLC. On January 6, 2015 a formal award protest was filed with the Government Accountability Office (GAO) by Performant Recovery, who currently serves as the Jurisdiction A RAC auditor. The GAO has added Performant’s protest to its official docket and estimates that a ruling will be made by April 6, 2015.

The protest of the award of government contracts is not an unusual occurrence and actually happens quite regularly. The immediate result of the protest filing is that Connolly Healthcare, LLC will not be permitted to begin work as the national RAC auditor for DMEPOS, home health, and hospice claims until the Performant Recovery protest has been resolved. While the protest is being resolved, the existing four regional RAC auditors will be permitted to continue to perform RAC audits on DMEPOS, home health and hospice claims.

AOPA’s take on this development is that the protest filed by Performant Recovery does not represent a delay in RAC audits, but rather a shift in who is performing them. As mentioned above, the existing four RAC auditors, including both Connolly Healthcare, LLC and Performant Recovery have been authorized to continue to perform RAC audits on DMEPOS, home health and hospice claims until the protest is resolved. The protest will delay many of the improvements to the RAC audit program that were scheduled to be implemented with the award of the national RAC contract to Connolly Healthcare.  Unfortunately, these improvements will now be delayed until the protest is resolved by the GAO.

AOPA will continue to monitor this situation closely and report any updates as they occur.

AOPA’s Take. Where you go……….when you need to know!

The State of the O&P Union

State of the unionLast night, the President of the United States stood before Congress and presented his annual State of the Union address. Whichever side of the aisle you find yourself on, this annual tradition is an important one. It is one of the few opportunities for the President to address Congress directly regarding issues and challenges that the nation currently faces as well as those that may be coming in the future.

I cannot think of a better time to take a closer look at the state of the O&P union. O&P is facing a very challenging and uncertain future. The reimbursement climate is challenging to say the least as O&P providers deal with increasing audits from multiple directions including DME MAC pre-payment and post-payment reviews, renewed RAC efforts by a national DMEPOS, home health, and hospice RAC contractor, unreasonable delays in Medicare claim appeals (especially at the ALJ level), and the possibility of the implementation of competitive bidding for off the shelf orthoses. At the same time, there is encouragement, as evidenced by the enthusiasm and energy that was recently on display at the AOPA Leadership Conference, held in Palm Beach, Florida from January 9-11, 2015. This conference, in which over 150 O&P industry leaders participated, resulted in the valuable exchange of thoughts and ideas to ensure the future survival and success of the O&P industry.

AOPA’s Take on the state of the O&P union is one of cautious enthusiasm. While the challenges that O&P providers are facing are greater than ever, the enthusiasm and vision that was on display at the AOPA Leadership Conference set the stage for the future success of the O&P industry.  AOPA looks forward to seeing the fruit that will grow from the seeds that were planted during this tremendous event.

AOPA’s Take…..Where you go when you need to know!

Marilyn Tavenner Resigns as CMS Administrator


This morning, in an e-mail to her staff, Marilyn Tavenner announced her resignation as Administrator of the Centers for Medicare and Medicaid Services (CMS), effective at the end of February 2015. Administrator Tavenner, who was confirmed by the Senate by a vote of 91-7 in May 2013 served as Acting Administrator for several years before her permanent appointment.

In a separate e-mail also sent this morning, Department of Health and Human Services Secretary Sylvia Matthews Burwell announced that Andrew Slavitt, Principal Deputy Administrator will serve as the Acting Administrator once Administrator Tavenner leaves CMS in February.

AOPA’s Take on this development is that while this resignation is certainly a significant event, it is not expected to bring fundamental change to CMS or how it operates in the near future.  The tenure of Administrator Tavenner has been dominated by the worst period of excessive regulation of Medicare and Medicaid providers, including the implementation of over aggressive audit practices against O&P providers by both the DME MACs and Recovery Audit Contractors (RACs).  In addition, the problems surrounding the initial roll out of the website resulted in an immediate shift in CMS’ focus to address and correct these problems which were highly visible to the public.  This shift made it virtually impossible to address the need for fundamental change in other areas such as audit reform and fair treatment of O&P providers.  While Administrator Tavenner was always willing to listen to AOPA, she often was unable to deliver on specific commitments she made, especially those regarding the long awaited implementation of the qualified provider requirements outlined in section 427 of the Benefits Improvement and Protection Act of 2000 (BIPA).  AOPA will make every effort to engage Acting Administrator Slavitt to continue this dialogue.  Recognizing the complexity and sheer size of a government agency as large as CMS however, it is unlikely that a significant shift in CMS policies or actions will occur as a result of Administrator Tavenner’s resignation.

High level resignations are not uncommon during the latter stages of a President’s second term so it cannot be said that Administrator Tavenner’s announcement this morning is a surprise; rather it is a development that will cause AOPA to adjust its communication strategy with CMS to make sure that issues imprtant to O&P remain in the discussion.

AOPA’s Take………Where you go when you need to know!

Feeling the Effects of OTS


There is a new and alarming trend in Medicare audits. Recent reports from the Jurisdiction B and Jurisdiction D DME MACs indicate that they are actively auditing claims involving orthoses that can be delivered as either custom fitted or OTS and the results are not encouraging.

Jurisdiction D recently reported a 100{b3e9dd6b2a2b9b0b8877c781f3059c6a19b65fa453cdc02b99584f3fd07dbcf4} error rate on its prepayment review of claims for knee orthoses described by L1832, L1833, and L1843 and Jurisdiction B reported a prepayment error rate of 96{b3e9dd6b2a2b9b0b8877c781f3059c6a19b65fa453cdc02b99584f3fd07dbcf4} on claims for a broad range spinal orthoses. In both of these reports, lack of a detailed description of the modifications necessary at the time of fitting the orthosis to the beneficiary was listed as one of the reasons for claim denials. While the DME MAC LCDs and Policy Articles were revised to incorporate language requiring documentation to support the need of a custom fitted orthosis over an OTS orthosis in January of 2014, these recent reports signal the first instances where the DME MACs are actually denying claims based on this criteria.

AOPA’s take on these reports is one of trepidation. O&P providers must be aware of the need to document the specific modifications to the orthosis that are required when providing a custom fitted orthosis. In addition, the referring physician must also document the medical need for a custom fitted orthosis rather than an OTS orthosis. These documentation requirements create yet another hurdle in the attempt to provide medically necessary services to Medicare beneficiaries, one that is now being used as yet another reason for the DME MACs to deny claims.

AOPA continues its dialogue with the DME MACs and CMS surrounding all of the issues the introduction of the split code set in 2014 created. These audits represent yet another argument in AOPA’s efforts to ensure fair treatment of O&P providers.

AOPA’s Take……..Where you go when you need to know!

There’s a New (Old) Sheriff In Town


The long awaited and thoroughly contested national contract to serve as the CMS Recovery Audit Contractor (RAC) for Medicare DMEPOS, Home Health, and Hospice claims was awarded on December 30, 2014 to Connolly, LLC. For those of you in Jurisdiction C, Connolly is a familiar name as they held the original RAC contract for all Medicare claims for that region of the country.

While details of the contract award are fairly scarce, it is expected that Connolly will begin to serve its function as the DMEPOS, Home Health, and Hospice RAC auditor in the near future. As AOPA learns more details regarding when Connolly will officially take the reins of this new program we will let you know. In addition, the February 2015 O&P Almanac Reimbursement Page wil focus on the award of the RAC contract and what O&P providers should expect

AOPA’s take on the selection of Connolly, LLC. as the DMEPOS, Home Health and Hospice RAC auditor is somewhat mixed. While there is comfort in familiarity and the fact that Connolly is not new to this process, it is no secret that Connolly was one of the more aggressive RAC auditors who held the previous, regionally based, RAC contracts. AOPA hopes that the focused efforts of the RAC contract on only claims involving DMEPOS, Home Health and Hospice will lead to better trained and organized auditors who will make more sound decisions on their audits than may have occurred in the past.

This is a story that has just begun. AOPA’s Take will follow it closely and provide regular reports on the details as they become available.

AOPA’s Take…….Where you go when you need to know!!!