< public policy < legislation updates

2003 Annual Legislative Report

September 11, 2003

ATRA Government Relations Update

During the First Session of the 108th Congress, ATRA has been hard at work on behalf of recreation therapists on the major health care and disability legislation moving through Congress. ATRA has also been very active on the regulatory front, working primarily with the Centers for Medicare and Medicaid Services (CMS), to advance the interests of recreation therapists and their patients. Following is a detailed summary of the major legislative and regulatory activities of the association over the course of 2003.

ATRA Scores Victory in CMS's IRF-PPS Final Rule

On August 3, 2003, the Centers for Medicare & Medicaid Services (CMS) published the Inpatient Rehabilitation Facility Prospective Payment System Final Rule (IRF-PPS), which establishes payment rates under the PPS for all services provided in inpatient rehabilitation settings. The IRF-PPS rule also confirmed what ATRA has been seeking for several years - a clear statement that recreation therapy is, in fact, a covered Medicare service under the in-patient hospital setting's IRF-PPS.

Currently, recreational therapy treatment services are furnished under an individualized plan of treatment. As stated by CMS, "the main goal of an Inpatient Rehabilitation Facility is to assist the patient in regaining his or her prior level of functional ability." (HCFA Proposed Inpatient Rehabilitation Facility Prospective Payment System HCFA-1069-P, November 3, 2000.) Since the implementation of the IRF-PPS, ATRA witnessed a significant increase in inquiries from our membership, rehabilitation supervisors, and hospital administrators regarding the use of recreational therapy in an inpatient rehabilitation setting.

In the past, ATRA has seen an alarming increase in the rate of attrition of recreational therapists employed in inpatient hospitals and units, which, of course, is an indicator of a reduction in access to recreational therapy services by Medicare patients in these settings. As reported to us by our members, many administrators believe, mistakenly in our view, that recreational therapy is not a covered service in inpatient rehabilitation settings for appropriate patients.

To relieve the confusion, ATRA undertook many steps to clarify that recreational therapy is covered under the IRF-PPS. Earlier this year, CMS officials confirmed to ATRA leadership that recreational therapy costs were included in the original actuarial analysis that formed the basis for the IRF-PPS payment rates.

In addition to meeting with CMS directly, ATRA responded to the proposed IRF-PPS rule on July 7 by stating the following "ATRA asks that CMS clarify in the final IRF PPS rule that recreational therapy costs were included in the IRF-PPS rates and, therefore, that recreational therapy services are covered in the inpatient hospital setting for appropriate patients."

In the August 3 final rule, CMS issued the following statement

We responded to similar comments in the IPPS January 3, 1984 final rule (49 FR 242) by stating that 'Neither the implementation of the prospective payment system nor the criteria for excluding certain hospitals and units from it will prohibit the provision of recreational therapy services to hospital inpatients. In particular, the absence of these services from the list of rehabilitative services in rehabilitation hospitals and units does not indicate that Medicare will no longer pay for them in those hospitals and units that provide them. On the contrary, these services will continue to be covered to the same extent they always have been under the existing Medicare policies.' Since the publication of the January 3, 1984 final rule, we have not made any changes to our policies that would preclude recreational therapy services from those covered by Medicare. In particular, the introduction of the IRF-PPS does not change this fact. Accordingly, since recreational therapy services were provided in the IRF base period, the costs of providing these covered services are included in standardized payment amount upon which the IRF-PPS rates are based.

75% Rule Revisited by CMS - Final Rule to be Published Later this Year

CMS has proposed changes in the criteria for classifying hospitals as inpatient rehabilitation facilities (IRFs). The proposed rule would temporarily reduce from 75% to 65% the number of patients in the facility that are required to be admitted with one of ten qualifying medical conditions (and who require intensive rehabilitation services in an inpatient setting). These conditions include stroke, spinal cord injuries, congenital deformity, amputations, major multiple traumas, fracture of femur, brain injuries, "polyarthritis," neurological disorders, and burns.

CMS will also consider comorbid conditions that may qualify as one of the ten identified conditions. After studying the data over the course of the next three year period, CMS will either publish a revised 75% rule or the rule will largely revert back to the existing 75% rule. CMS suspended enforcement of the current rule in June 2002 because of concerns that it was being enforced inconsistently. CMS will accept comments on the proposal until November 3, and will publish a final rule as soon thereafter as possible.

MDS 3.0 Section P2 Inclusion of Recreational Therapy

In response to recommendations submitted by ATRA, CMS has moved recreation therapy from Section T l.a of the Minimum Data Set (MDS), version 3.0, into Section P2. ATRA applauds CMS for the recognition of recreation therapy as a medically necessary therapy for long-term care patient rehabilitation. The inclusion of recreational therapy in Section P is a positive step consistent within the industry of accredited rehabilitation agencies.

CMS held a Town Hall meeting June 2, 2003, where ATRA and others from the recreation therapy community voiced their suggestions. ATRA recommended to CMS that recreation therapy be included in the mix of Section P2 rehabilitation therapies when determining the rehabilitation Resource Utilization Group (RUG) classification level. This would increase the likelihood of recreation therapy being a treatment option in the long-term care setting. ATRA will monitor this issue as it moves through the implementation process at CMS and report any developments.

Medicare Reform and Prescription Drug Update

During the month of August, limited progress was made in reconciling two differing Medicare reform and prescription drug bills passed by the House and Senate in June. During the August Congressional recess, the conferees reached tentative agreements on two elements of the Medicare bills, the regulatory reform and prescription drug discount card provisions. However, these provisions are generally viewed as non-controversial. What began as an ambitious timeline for negotiations to consider other major elements of the bills late in August and early in September bogged down late into the recess when staff for Senate Finance Committee Chairman Charles Grassley (R-IA) ceremoniously walked out of negotiations over his belief that rural provider issues were not being adequately addressed.

During internal meetings between Republican conferees, some progress was reported on bridging the gap between Grassley and Conference Chairman Bill Thomas (R-CA) (eg., a one year monatorium on the therapy caps), but overall the Conference Committee appears to be far from agreement on several major issues, including the extent of managed care involvement in a Medicare reform framework. It is unclear whether negotiations over a $25 billion package of rural provider payment adjustments will resume in the near future.

Despite the internal difficulties, President Bush and Senate Majority Leader Bill Frist (R-TN) have both expressed their confidence in Congress passing a Medicare bill before the end of the current session. Frist stated that problems should be expected in the process to reach an agreement because of the complexity of the legislation. Optimism among House Republicans appears to be limited. Congressman Mike Pence (R-IN), an influential conservative House member who was involved in last-minute negotiations on the House bill, stated, "There is significant doubt [among some House Republicans] that this legislation has the momentum to make it to the finish line."

GOP Medicare conferees have yet to decide whether negotiators or President Bush should set a firm deadline to finish work on a final Medicare bill. Grassley has been encouraging conferees to adopt a deadline of Columbus Day, October 13. Frist stated that he "would like to see [a final bill] by the end of September." However, many health care observers caution this deadline as unrealistic with actual negotiations likely extending late into the fall if a compromise appears possible.

Throughout September, the full conference will likely begin to formally adopt staff-led compromises on the regulatory reform, drug discount card, and preventive care services provisions. These provisions, however, are what many describe as "low hanging fruit." Among the issues still far from compromise are as follows: struggled to approve a bill and the House did not approve any bill. Finally, Labor, HHS, and Education appropriations for FY 2003 were completed in the "omnibus" spending bill in February of this year, a full six months after the beginning of FY 2003.

For FY 2004, the full House passed the Labor-HHS-Education bill by a vote of 215-208 on July 10. On June 26, the Senate Appropriations Committee approved the spending bill by a vote of 25-4. The full Senate is moving rapidly to approve the bill as well and in the process of approving a bill during early September. Generally, the Senate provides better funding for priority programs. However, overall funding levels are still lower, in most cases, than ATRA would prefer.

The following are key program appropriations in the House and Senate bills:

CDC Chronic Disease Prevention and Health Promotion received an increase of $72 million over FY 2003 levels to a total appropriation of $862 million in the House bill. The Senate, however, has allotted an increase of only $12 million to a total of $802 million.

CDC Injury Prevention and Control was increased $4 million to $152.4 million in the House and Senate bills. CDC is the lead Federal agency for injury prevention and control. Programs are designed to prevent premature death and disability and reduce human suffering and medical costs caused by: fires and burns; poisoning; drowning; violence; lack of bicycle helmet use; lack of seatbelt and proper baby seat use; and other injuries. The national injury control program at CDC encompasses non-occupational injury and applied research in acute care and rehabilitation of the injured. Funds are utilized for both intramural and extramural research as well as assisting State and local health agencies in implementing injury prevention programs.

Personnel Preparation under the Department of Education received level funding at $92 million in the Senate and House bills despite a requested cut of $1.9 million under the President's budget. Funds from this program support competitive awards to help address State-identified needs for qualified personnel to work with children with disabilities, and to ensure that these personnel have the skills and knowledge they need to serve these children.

Recreation programs received level funding at $2.6 million in the House and Senate despite being eliminated from the President's proposed budget. Grants are awarded to States, public agencies, and nonprofit private organizations, including institutions of higher education. Grants are awarded for a 3-year period with the Federal share at 100 percent for the first year, 75 percent for the second year, and 50 percent for the third year. Programs must maintain the same level of services over the 3-year period. The Senate bill made particular note of recreation therapy in report language:

"The Committee notes that the primary purpose of this program is to initiate recreational and related activities for individuals with disabilities. These programs are designed to aid individuals with disabilities in employment, mobility, independence and community integration. The Committee notes that almost three out of four programs whose last year of Federal funding ended in fiscal years 1998 through 2000 are still in operation and continue to meet the recreational needs of individuals with disabilities. These results show that this limited investment is having a national impact, as each new grant supports seed money for recreational programs throughout the United States."

Assistive Technology state grants were zeroed out under the President's budget but were reinstated in the House bill at a 58 percent cut from FY 2003 to a total of $11.1 million. In the Senate, The Assistive Technology program is funded at the FY 2003 level of $26.8 million. The Assistive Technology program is designed to improve occupational and educational opportunities and the quality of life for people of all ages with disabilities through increased access to assistive technology services and devices. It provides grants to States to develop comprehensive, consumer-responsive statewide programs that increase access to, and the availability of, assistive technology devices and services. The National Institute on Disability and Rehabilitation Research administers the program.

The National Institute for Disability and Rehabilitation Research received a light increase to the President's budget request of $110 million in the House and a level funding in the Senate at $109.3 million.

Medicaid

In the l08th Congress, major efforts to reform the Medicaid program are underway. The inclusion of $20 billion over two years in state fiscal relief in the tax legislation enacted in June has helped states somewhat and has taken some pressure off the Congress to pass more structural reforms. In addition to the initial state fiscal relief, provisions contained in the Medicare reform legislation and upcoming structural reform plans next year have the possibility to radically change how the Medicaid program is financed.

The House Energy and Commerce Committee, which has already held a hearing on Medicaid reform, has become increasingly vocal about the need for comprehensive reform of the program. The Bush Administration also has been vocal about Medicaid reform and unveiled in February an outline for reform in its FY 2004 budget. The National Governors Association (NGA), which has been a strong advocate and national leader for reforming the Medicaid program, failed to achieve a highly touted bipartisan Medicaid reform plan earlier this year. The NGA has expressed interest in revisiting the issue next year at the conclusion of the Medicare reform effort.

Medicaid provisions in the Medicare reform bill could complicate the expected Medicaid reform debate next year. Both House and Senate Medicare bills would reform the way the federal government reimburses states for costs associated with "dually eligible" beneficiaries (eligible for both Medicare and Medicaid). The NGA and other health care advocacy groups are supportive of the federal government assuming the high costs of these beneficiaries since under current law Medicaid pays for their prescription drug benefits.

The Senate Medicaid provision would provide approximately $17.5 billion over 10 years to states to help defray the costs associated with providing drug benefits to dual eligible beneficiaries. Under this provision, the federal government, not the states, would pay for Medicare Part B premiums for certain low-income seniors or persons with disabilities and would establish 100 percent matching for Medicare Part A deductibles and coinsurance for other certain low-income beneficiaries. However, because states often have differing eligibility levels for the categories covered in the legislation, the amount of fiscal assistance to each state is predicated on many state-specific details.

The House provision covers Medicaid costs that states pay for prescription drugs, but does not relieve states of non-drug Medicaid expenditures like the Senate bill. However, this approach is predicated on a steadily increasing federal match increasing up to 100% for all drug costs by 2020. The increasing match, which phases in slowly over 16 years, reduces the CBO score and immediate relief to states. The National Governors Association has endorsed the House provision as have many other major advocacy organizations.

WIA/Rehabilitation Act Reauthorization

Both the House and Senate are working on reauthorization of the Workforce Investment Act (WIA) and the Rehabilitation Act of 1973.

The House has already completed its committee markup of the legislation and passed their version of the bill on May 8, 2003, during a very partisan debate and subsequent vote of 220- 204. The Senate is moving slower to begin drafting legislation and, on June 18, the Senate Committee on Health, Education, Labor, and Pensions' Subcommittee on Employment, Safety and Training held the first hearing of 2003 on the reauthorization of the reauthorization. Chairman Michael Enzi (R-WY) expressed a desire to work with Democrats and Republicans on crafting a bill. Given other statements by Senators, such as Senator John Warner (R-VA), the process appears to be headed in a much less partisan direction than the House of Representative pursued in April and May. No hearings have occurred since, but more are expected this fall as the reauthorization process moves forward.

Some details have begun to leak from Committee staff on the draft Senate bill. Of major note, there is no new funding for implementation of the Olmstead decision, which guarantees placement for persons with disabilities in the most appropriate setting. Also, the bill would put into law the requirement for coverage of post-employment services. Currently post-employment services are mandated by regulation and this change would ensure future services are consistent across all state programs.

IDEA Reauthorization

The House and Senate are moving quickly to reauthorize the Individuals with Disabilities Education Act (IDEA) this year. IDEA guarantees a free, appropriate public education to more than six million children with disabilities between the ages of 6 and 21 years. Children are eligible for IDEA's services if they have a disability and need special education services to benefit from education. Special services may include special instruction, assistive technology, occupational, speech, and recreation therapy.

Thus far, the House passed its version of the reauthorization on April 30, 2003 by a vote of 251- 171 that saw much debate over key elements of what Democrats charged as a partisan bill. However, on June 25, 2003, the Senate Health, Education, Labor, and Pensions (HELP) Committee unanimously approved its version of the reauthorization. The Senate bill is the result of months of bipartisan effort and is a much more balanced bill than the one passed by the House of Representatives earlier this year. The Senate Health, Education, Labor and Pensions Committee unanimously approved S.1248 on June 25, 2003. The full Senate is expected to on the bill in late September, but this timeline may slip depending on other legislative priorities.

Conclusion

It is likely that major action on Medicare will extend into the fall and possibly even next year. If legislation passes, it will represent the most significant reform of the Medicare program since inception in 1965 and will significantly shift Medicare toward private insurance as a model the provision of Medicare-mandated benefits. It is too early to tell how this model will affect recreation therapy. In addition to ATRA being actively involved in the Medicare debate, and WIA/Rehabilitation Act reauthorizations, we will continue to press CMS for continued action on the 75% rule and other rehabilitation issues.

Prepared by Peter W. Thomas, ATRA Legislative Counsel, and Dustin W.C. May, Legislative Director, Powers, Pyles, Sutter & Verville, PC