In the most closely watched Supreme Court decision since Bush v. Gore, the Patient Protection Affordable Care Act (PPACA, Obamacare, ACA) was found to be constitutional today by a vote of 5-4. Chief Justice John Roberts, an appointee of President George W. Bush, joined the court’s four liberal justices (Kagen, Sotomayor, Breyer and Ginsberg) in voting to uphold the constitutionality of the most controversial provision, the individual mandate, which will force Americans to purchase private health insurance (if not eligible for Medicaid programs) beginning in 2014. The court rejected the government’s argument that the penalties for not adhering to the mandate were allowed under the Commerce, and Necessary and Proper clauses of the constitution, but did uphold Congress’ authority to impose a tax on citizens, so the “penalties” for not purchasing insurance beginning January 1, 2014 are now officially considered a “tax,” which congressional Republicans will now proudly tout on the campaign trail as the “largest tax increase in American history.”
The court did issue a split ruling, partially overturning the portion of the law that forces states to expand their Medicaid eligibility rules to 133% of the Federal Poverty Level (FPL). The court found that the federal government cannot force states to expand Medicaid eligibility to 133% of FPL by cutting existing Medicaid funds for noncompliance. Rather, the court found that states can choose to expand Medicaid eligibility in order to be eligible for additional federal funds. Essentially, it is up to states whether to apply to increase enrollment criteria and the additional federal funding that comes with it.
So, how does this ruling impact orthotic and prosthetic professionals? Well, as I’ve said in previous writings, the ACA is a mixed bag for O&P. With the entire law being upheld, we do see several insurance reforms that will prove positive for our profession, mainly the exclusion of preexisting conditions, exclusion of annual or lifetime caps on insurance policies, young adults being eligible to stay on their parents insurance plan until age 26, and an estimated 17 million Americans, with incomes up to 400% of the FPL who currently do not have health insurance, will now be able to receive subsidies from the federal government to purchase private insurance on state exchanges. The partial ruling on Medicaid expansions clouds the estimates of new Medicaid recipients, but prior estimates were nearly 16 million additional Medicaid recipients nationwide over 10 years.
Now, we get to the negative aspects of the new law. Individual states will create what are called “essential health benefits packages,” minimum health insurance plans that are eligible to be sold on the “state-based health exchanges” beginning in 2014. Orthotics and prosthetics are not guaranteed to be included in these 50 different essential health benefit packages at this time; in fact, no specific benefits have been determined yet. The law sets 10 broad categories for coverage and gives individual states nine existing plans to choose from (state/federal employee plans, large HMO plans, large small group plans). It is imperative that the O&P profession demonstrate our value, and that of our patients, to the health care system and society. Second, the medical device excise tax, a 2.3% tax on Class I, II and III medical devices will move forward in 2013. AOPA and NAAOP have done a great job of lobbying the Internal Revenue Service on the notion that O&P patient facilities are exempt from this tax because our items are “typically sold at retail.” This is not yet official and manufacturers of orthotics and prosthetics are less clear. The ACA also provides increased funding to fraud and abuse initiatives and other provider regulations that have proven costly and time-consuming for providers to date.
The ACA also gave birth to the Accountable Care Organization (ACO) concept. ACO’s, integrated health care networks formed to treat a large geographic area of patients, are the 800 pound gorilla in the room when speaking of the future impact ACA reforms will have on medical providers. There are currently over 220 ACO networks that have been formed since the inception of the ACA, 65 of which have been developed in concert with CMS, the rest of which have been formed by private payers (insurance companies) and hospital networks. In my opinion, the ACO concept revolves around a key component of the American health care system as it relates to payers: reimbursement levels are unsustainable, we are going to start paying providers less, so why don’t you participate in a program designed to save the system money as a way to recoup your anticipated losses. To date very few ACO’s have chosen to include O&P in their care networks, choosing instead to continue to refer their patients to other providers, but make no mistake, independent O&P providers need to start quantifying our value to payers or face extinction. We need to prove that qualified, quality practitioners have a dramatic impact on the overall health of a patient. We need to start collecting data on key health metrics and patient satisfaction in order to present an ACO why they need to work with us rather than approach these giant payers with a hand out begging for business.
There are other issues involving the Affordable Care Act that will undoubtedly have an impact on the orthotic and prosthetic profession moving forward, but above are a few of the major initiatives that absolutely will have an impact. Contact OPGA for additional information on the topics laid out above, or with any question concerning the Supreme Court ruling.