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Midyear Report from ATRA Legislative Counsel

To:	ATRA Membership
From:	Peter W. Thomas, ATRA Legislative CounselJeremy Allen, Legislative Director, Powers, Pyles, Sutter & Verville, P.C.
Date:	March 26, 2002
Re:	Government Relations Update

2002 has already seen activity on a number of issues of importance to ATRA members. As is customary, the beginning of the year is normally dedicated to budget and appropriations issues. As the year progresses, however, Congress will likely tackle a number of important health care issues, including the possible creation of a Medicare outpatient prescription drug benefit, regulatory and administrative Medicare reform, and provider payment issues.

While Congress and the Bush administration have a formidable number of health care issues before them, the fact that 2002 is a congressional election year, coupled with the fact that the federal government will realize federal budget deficits over the coming fiscal years, will make this a difficult year to pass any costly or controversial measures. ATRA will continue to monitor developments in Washington and advocate for the interests of recreational therapists whenever possible.

CMS and the Three Hour Rule

ATRA is working closely with officials at the Centers for Medicare and Medicaid Services (CMS) to secure the issuance of a program memorandum (PM) to clarify Medicare's policy for coverage of recreational therapy in the inpatient rehabilitation hospital setting. Specifically, ATRA has argued that a PM is necessary because hospital CFOs, intermediaries, and others are misinterpreting CMS' stated position on coverage of inpatient recreational therapy services.

Currently, CMS identifies seven guidelines for determining whether a patient's condition necessitates inpatient rehabilitation services. One of the seven guidelines is known as the "3-hour rule." Under this requirement, a patient must require and receive physical, occupational, speech-language, and/or prosthetics-orthotics services therapy for at least 3 hours per day for at least 5 days per week. While those therapies are explicitly identified as services that satisfy the 3-hour rule, it is CMS' longstanding position that other skilled rehabilitation services, such as recreational therapy, may satisfy the 3-hour rule. However, some providers, Medicare contractors, and peer review organizations have been mistakenly interpreting CMS's policy to mean that only the specifically referenced services above satisfy the 3-hour rule.

ATRA participated in a conference call with senior CMS officials in late 2001 and forwarded a formal request that CMS issue a program memorandum to clarify coverage under the 3-hour rule of recreation therapy in the inpatient hospital setting. ATRA also submitted a draft PM to CMS in February that, if issued, would effectively address this problem. ATRA will continue to work with CMS to ensure that a PM is issued to clarify that recreational therapy satisfies the 3-hour rule.

TRICARE Reauthorization

Late in the 2001 congressional session, Congress passed by wide margins the Defense Reauthorization Act of 2001 and President Bush signed the bill into law on December 28th (Public Law 107-107). Among other things, the bill addresses the Department of Defense health care program known as TRICARE, formerly CHAMPUS, which serves active duty military, their dependents, and retirees. The new law dramatically improves the TRICARE benefit package to better meet the needs of TRICARE enrollees with disabilities and chronic illnesses, especially in the area of coverage of assistive technologies and rehabilitation therapies.

The new law stands in stark contrast to the existing TRICARE benefit package. "Any durable medical equipment" and "any rehabilitative therapies" that improve, restore, or even prevent deterioration in the function of a patient are considered covered benefits. Hearing aids are no longer excluded but are covered in certain circumstances. Augmentative communication devices (AACs) are specifically covered as voice prostheses without restrictions. Prosthetics (artificial limbs) and orthotics (braces) continue to be covered benefits but all accessories and supplies, as well as training in the use of these devices are covered as well. The new law also calls for a study on the adequacy of TRICARE's mental health benefits and institutes meaningful changes in TRICARE's long term care benefit.

ATRA has been working with the General Counsel's office at the Department of Defense to work on the development of regulations to implement this new law, and will strive to ensure that recreational therapy is covered as part of "any rehabilitative therapies in as many settings as possible."

FY 2003 Budget Process

President Bush released his FY 2003 budget proposal to Congress on February 4, which details his administration's spending priorities for the upcoming fiscal year. It also generally sets the tone for the annual debate in Congress over federal spending priorities.

If Congress were to follow regular procedural order, the House and Senate Budget Committees would consider the president's budget, mark up their own versions of a budget resolution, and then reconcile the two proposals. The House recently began this process by approving its version of a budget resolution for fiscal year (FY) 2003 by a party-line vote of 23-18. The $2.1 trillion budget includes a $350 billion fund over ten years for Medicare reform and a prescription drug benefit. This is significantly more than the $190 billion over ten years that President Bush included in his FY 2003 budget proposal and $50 billion more than the $300 billion recently proposed by Speaker Dennis Hastert (R-IL).

The budget resolution also includes increased funding for bioterrorism activities at the Department of Health and Human Services. The budget sets aside $4.3 billion, an increase of $1.3 billion, or 45 percent, above the FY 2002 for these efforts. It also contains the level of funding requested by President Bush for the National Institutes of Health, which is $27.2 billion, a $3.9 billion increase above FY 2002.

With different parties controlling the House and Senate, and considering the vastly different priorities of the two parties, it will be difficult for them to arrive at consensus on a budget resolution. Lawmakers will likely not want to endorse the large deficits that would be contained in a budget resolution, nor would they support additional tax increases needed to avoid deficits. This will probably leave them with an unrealistic resolution that won't pass. The appropriators expect to have a green light to proceed to mark up their bills by May 15th with or without a resolution. Since the budget resolution is a non-binding blueprint that Congress often overrides anyway, the lack of a budget resolution this year should not substantially impede the appropriations process.

Patients' Bill of Rights

Like many other health care issues not directly related to the ongoing war on terrorism, the patients' bill of rights was essentially shelved after the attacks of September 11. Now that 2002 is well underway, lawmakers may once again turn their attention to this historically controversial issue.

In late December, 2001, House Ways and Means Committee Chairman Bill Thomas (R-CA) and Ways and Means Health Subcommittee Chairwoman Nancy Johnson (R-CT) sent a letter to Senate Majority Leader Daschle in which they stated they were "baffled" that he had not appointed conferees to a formal House/Senate conference committee to negotiate out the differences between the two bills. The letter concluded with Reps. Thomas and Johnson urging Senator Daschle to schedule a conference as soon as possible.

Soon after that letter was sent, a spokesperson for Majority Leader Daschle said that he planned to appoint conferees to a joint House-Senate conference committee soon after Congress reconvened on January 23. However, Senator Edward Kennedy (D-MA), the lead sponsor of the Senate-passed bill endorsed by ATRA, has been in discussions with the White House on this issue and convinced Majority Leader Daschle to wait on appointing conferees to a conference committee, which may signal that Senator Kennedy believes that he can reach an agreement with the president and thus eliminate the need for a formal conference. A similar conference committee was unable to produce a compromise back in 2000. We will continue to monitor this issue and update ATRA members as events warrant.

Family Opportunity Act

Congress has yet to act on the popular Family Opportunity Act (S. 321/H.R.600). The bill currently has 74 cosponsors in the Senate and 216 cosponsors in the House. When the Democrats took over the Senate, the bill's chief sponsor, Senator Charles Grassley (R-IA) lost his position as chairman of the Senate Finance Committee, which holds jurisdiction over the bill. For various reasons, the Democratic leadership of that committee has been reluctant to move the bill.

The FY 2002 budget resolution included $227 million in fiscal year (FY) 2002 and $8.3 billion over ten years for the Family Opportunity Act. The House Budget Committee recently reported out a budget resolution that has yet to be considered on the House floor that also includes funds for the FOA, although in a less explicit fashion. It is unclear at this point whether the Senate will also include funds for this initiative in its version of the budget resolution.

ATRA will continue to work with other interested organizations to secure passage of FOA this year.

Medicaid Waivers

President Bush's FY 2003 budget proposal reaffirms his administration's commitment to the Health Insurance Flexibility and Accountability (HIFA) waiver demonstration. The Department of Health and Human Services (HHS) stated that it will "consult with stakeholders to develop proposals that would give States the statutory authority to provide broader coverage to low-income uninsured persons and allow States the flexibility to design their Medicaid programs without seeking waivers." While this may not sound problematic, because these waivers must be implemented on a budget-neutral basis, it is widely expected that the resources needed to expand coverage will come from optional services currently used to provide coverage to people with disabilities under other waivers or through the general Medicaid program.

In fact, HHS has already approved a Medicaid waiver in Utah that would expand Medicaid to certain low-income adults while imposing cost-sharing requirements and other benefit reductions on current Medicaid beneficiaries. Washington state has also submitted a similar waiver application to HHS that would expand coverage while reducing optional benefits and imposing premiums, co-payments, and deductibles for those who fall within certain optional categories (which includes many people with disabilities). ATRA will continue to monitor this troubling development and advocate for the interests of people with disabilities and chronic illnesses when appropriate.

Reauthorization of Rehabilitation Act of 1973

Although it will not be a priority of Congress' next year, the Rehabilitation Act of 1973 ("Rehab Act") will be up for reauthorization in 2003, when it is set to expire. The Department of Education will begin considering public comments on the reauthorization later this year. ATRA will continue to monitor the reauthorization of this important act and submit written comments when appropriate.

IDEA Reauthorization

Similar to the Rehab Act, IDEA is also up for reauthorization this year but it is widely expected that a reauthorization bill will not be enacted until next year at the earliest. ATRA will continue to monitor this important legislation.