The Senate's failure last week to move forward on Medicare legislation to prevent the July 1st reductions in payments to doctors has garnered much attention.  Receiving less attention are two provisions of current law, addressed in the same legislation, that directly affect Medicare beneficiaries and that expire today.  They are (1) the Qualified Individual (QI) program that pays Medicare Part B premiums for certain low-income beneficiaries and (2) an "exception process" to contest financial caps on Medicare therapy services that has been in effect for several years.  A third provision of current law – a competitive bidding process for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) – that was expected to be postponed by the Medicare legislation will go into effect tomorrow.  This Alert discusses each of these three provisions and the likely effect of the changes that will occur.

Qualified Individual Program (QI)

This Medicare Savings Program (MSP), operated through state Medicaid programs, pays the Part B premium for Medicare beneficiaries with incomes below $1190/month (higher in some states) and limited resources.  About 1.5 million people are estimated to be eligible for the program, although fewer actually receive the benefit because states receive capped allotments to provide the benefit.  Receipt of QI benefits also entitles the beneficiary to the full low-income subsidy under Medicare's Part D program. 

Effective July 1, 2008, states have no authority to pay QI benefits, even for those individuals who had been receiving the benefit since January of this year.  Beneficiaries should have been notified by their state of the end of the benefit and their responsibility to pay the Part B premium beginning July 1, although some states may have taken emergency measures to continue the program with the expectation that it will be reinstated. No one who has received QI during the past six months should lose his or her Part D subsidy as a result of losing the QI benefit. If beneficiaries are told by their Part D plan that they are no longer eligible for the subsidy, they should immediately contact their local State Health Insurance Assistance Program (www.shiptalk.org).

Therapy Caps

In 1997, Congress placed caps (or limits) on the dollar amount that Medicare will pay for certain outpatient therapy services. Two separate caps exist:  one for a combination of physical therapy and speech-language therapy services and one for occupational therapy services.  Implementation of the therapy caps was delayed periodically until Congress, in the Deficit Reduction Act of 2006 (DRA), authorized CMS to create a process for an exception to be granted to the capped dollar amount.  The exception process, set to expire on December 31, 2007, was extended through June 30, 2008.

Effective July 1, the $1810 cap for physical therapy and speech-language therapy services and the $1810 cap for occupational therapy services will apply to all services in calendar year 2008.  Exceptions will be limited to services provided in the outpatient hospital setting after June 30, 2008.

DMEPOS

CMS's Competitive Bidding Program for DMEPOS,[1] remains on target for implementation on July 1, 2008.  At this point we do not know what steps, if any, CMS will take  should Congress pass and the President sign anticipated legislation containing language postponing the program.  Advocates should be prepared to go forward with assisting Medicare beneficiaries with understanding the program and with identifying Medicare-certified DMEPOS suppliers.

The DMEPOS program is an outgrowth of Congressional and agency efforts to rein in Medicare spending on what the agency had deemed costly or over utilized DMEPOS.  The Competitive bidding program is described in our "Weekly Alert" for May 5, 2008, http://www.medicareadvocacy.org/PartB_08_05.08.CompetitiveBidding.htm.  The Center for Medicare Advocacy discussed a series of CMS "Tip Sheets" on the implementation of this program in our "Weekly Alert" for June 5, 2008, http://www.medicareadvocacy.org/PartB_08_06.03.CompBiddingTipSheets.htm

Next Steps

Medicare legislation will likely soon pass both Houses of Congress and be signed by the President, but exactly when that will happen and what the legislation will include is unclear.  The legislation is likely to reinstate the QI program and the therapy caps exception process retroactively to July 1.  In the meantime, beneficiaries will experience confusion and denials of benefits.  It remains unclear what will happen to beneficiaries who change to Medicare-certified DMEPOS suppliers on or after July 1 should the program be postponed after that time.  The Center will continue to inform beneficiaries and their advocates about developments on these fronts.