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Supreme Court In A 5-4 Decision Upholds Individual Mandate in ACA Under Taxing Powers (Not Commerce Clause Powers) of Congress AND Limits ACA's Medicaid Expansion So That States Which Choose Not to Expand Their Medicaid Programs Will Not Lose All Federal Medicaid Funding.
Remaining Provisions Intact - For Now!
WASHINGTON, D.C., June 28, 2012- The long awaited Supreme Court decision on the constitutionality of the Affordable Care Act (ACA) upheld the individual mandate based on Congress' taxing powers (though stating that it would not have prevailed on the basis of the commerce clause alone) basically preserving the remaining provisions of the ACA, with one significant refinement. So, in the absence of some subsequent Congressional actions to repeal or replace the ACA, the remaining provisions will go forward on schedule including the annual productivity adjustments which will reduce O&P reimbursements over the long term. The first productivity adjustment impact was felt in 2012 as the fee schedule update went from the 3.6 percent scheduled increase based on the urban Consumer Price Index to 2.4 percent after the 1.2 percent ACA productivity adjustment was applied.
Similarly, the medical device excise tax provision will also proceed to take effect as of January 1, 2013. At this point odds look favorable for O&P medical devices potentially to be exempted from the 2.3 percent medical device tax under a proposed rule issued by Treasury to implement provisions of ACA. AOPA met with U.S. Treasury and IRS officials in January of 2011 and made the case that O&P devices qualify for the same exemption in ACA which exempts eyeglasses and hearing aids which are also purchased at retail for individual use. While this view is reflected in the Proposed Treasury Rule, AOPA has requested both in comments submitted and in testimony we presented at the hearing on the Rule last month that further Treasury clarification is needed to assure that the Congressional purpose of the retail exemption available to O&P patient care facilities is not thwarted, which would occur if the tax were applied/collected higher up in the distribution chain, e.g. at the manufacturer/supplier/distributor levels. We anxiously await the final Treasury Rule in hopes that it will clarify more fully that point. However, until the proposed rule is published in final form prior to its effective date with the O&P exemption intact, the exemption remains in peril. In addition to meetings with Treasury and IRS officials, AOPA testified at the Internal Revenue Service Public Hearings May 16, 2012 seeking further clarifications and to also reinforce the merits of the O&P exemption so that it remains included in the final regulations.
All of the program integrity provisions designed to reduce waste, fraud and abuse in the Medicare and Medicaid programs remain. These include the procedures for screening, oversight, reporting and further activities by CMS audit contractors for providers that participate in Medicare, Medicaid and CHIP. Many of these provisions have already been implemented and are causing severe problems in O&P. AOPA's continued efforts to enact S. 2125 and H.R. 1958, the Medicare O&P Improvements Act, may be enhanced as an increased focus is placed on reducing fraud and abuse and finding dollars to pay for many of ACA's provisions. The AOPA legislation promises savings of $250,000,000 over four years.
The Independent Payment Advisory Board (IPAB) would remain intact but has emerged as one of the most controversial aspects of the ACA. The IPAB, like other parts of the ACA and the ACA itself, face continued repeal efforts and the election outcome may bolster or dampen chances for these repeal efforts.
While the Supreme Court Decision cleared the air on whether the future of healthcare in this country includes all provisions of the Affordable Care Act, uncertainty still remains on many of the provisions not yet implemented such as what will be included in the definition of "essential health benefits" as the states move forward in designating benchmark plans which will set the mark for included benefits in each state.
AOPA's state by state survey of benchmark plans available to members on the AOPA website can assist members seeking to make sure the plans designated in their state include O&P benefits. There is also the outside chance that the Department of Health and Human Services may re-impose its authority in the essential benefits area as a response to Congressional criticism of its delegating implementation of such an important provision of ACA to the various states.
Further, as to the Medicaid expansion established under the ACA, the Supreme Court said that the Medicaid provision is limited so that states do not lose all funding if they decide not to implement the expansion. This means that states that do not opt for the Medicaid expansion under the ACA are no longer in danger of losing all of their federal funding for their Medicaid program. Meanwhile, states that do meet the conditions related to Medicaid expansion under the ACA will be eligible for additional Medicaid funds.
Much will emerge in the next few weeks that will clarify the impact of the ACA on O&P and how the O&P community should react, but for now it's clear that the ACA will be a huge issue in the November elections and there could be another starting point in the ongoing healthcare drama if a new administration and/or new Congress takes office with different ideas. To access the Supreme Court's decision please click here.
This draft memorandum, written for AOPA by our counsel at Alston & Bird, in anticipation of the release of the Supreme Court decision addresses the outcome of the Supreme Court review of the Affordable Care Act (ACA).
AOPA, based in Alexandria, Virginia, is the largest non-profit organization dedicated to helping orthotic and prosthetic businesses and professionals navigate the multitude of issues surrounding the delivery of quality patient care. The association was founded when needs of returning veterans in the aftermath of World War I required a national organization to address the educational and research requirements of the industry.