The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 was signed into law on Dec. 8, 2003. Also known as “MMA,” the new law offers limited prescription drug coverage, adds new preventive benefits, waives a cap on physical and occupational therapy services, and promotes the role of “Medicare Advantage” health plans, also known as Medicare+Choice or Medicare HMOs. The long-awaited and historic changes to the Medicare system have supporters claiming it will allow the biggest improvements in senior health care in nearly 40 years, and provide seniors with prescription drug benefits and more choices in health care. Most importantly for beneficiaries and providers alike, the law provides immediate benefits to people in need of therapy services.

As most of the readers are aware, under the Medicare Part B Outpatient Rehabilitation Benefit, there is an annual $1,500 cap on occupational therapy services, and a separate $1,500 cap for physical therapy and speech language pathology combined. These caps do not affect hospital outpatient rehabilitation services. The caps were implemented as part of the Balanced Budget Act of 1997 ( BBA ) and are the only dollar limits on care in Medicare. The Medicare outpatient beneficiary caps on rehabilitation therapy took effect on September 1, 2003 , after twice being placed under a moratorium by Congress since 1999. During this process, the cap was raised to $1,590. These $1,590 beneficiary caps on speech-language pathology and physical therapy care combined and occupational therapy would have made it very difficult for seniors to receive the appropriate care once they reached the monetary cap on their therapy services. 

In late 2003, the Center for Medicare & Medicaid Services (“ CMS ”) advised its contractors to delay implementation of the cap so they could better prepare providers to track claims under a new reimbursement methodology. This gave Congress an opportunity to extend the moratorium, which some members attempted to do, introducing potential legislation over the next six months. It wasn’t until the introduction of MMA in December of 2003 that extended relief would be obtained.

Under the newly enacted Medicare law, the therapy cap moratorium that lapsed initially in 2003 is extended through December 31, 2005 . The cap applies to the BBA provisions that limited to $1590 per year per beneficiary non-hospital outpatient physical and speech-language pathology therapy services and to $1590 for occupational therapy services. MMA also requires the Secretary of Health and Human Services (“ HHS ”) to submit an overdue report by March 31, 2004 and the Comptroller General to undertake various studies allowing fee-for-service direct access Medicare beneficiaries without physician referral, to outpatient physical therapy services and those physical therapy services. MMA also prevents a proposed 4.5 percent cut in Medicare payments to physical therapists and other providers, and actually calls for a slight increase in those patients.

While the two-year moratorium on therapy caps is an important step in protecting this critical benefit, Congress must take action to prevent application of the cap in January 2006. Only through the hard fought efforts of the industry and beneficiary support can this be ensured.

Other important benefits included within MMA include:

Prescription Drug Savings for Seniors

• For the first time in Medicare's history, a prescription drug benefit will be offered to all 40 million seniors and disabled Americans in Medicare to help them afford the cost of their medicines.
• Beginning next year, seniors would save 10-25% off the cost of most medicines through a Medicare-approved drug discount card. Seniors would be able to take the card to their local pharmacy and receive the discount. Since the typical senior spends $1,285 annually on his or her medicines, the card could save a senior who lacks drug coverage as much as $300 annually. The card would provide savings until the full drug benefit goes into effect.
• Beginning in 2006, seniors without coverage would be able to join a Medicare-approved plan that would cut their yearly drug costs roughly in half, in exchange for a $35 monthly premium. In many cases, the savings will be even greater.
• Seniors with no drug coverage and monthly drug costs of $200 would save more than $1,700 on drug costs each year.
• Seniors with no drug coverage and monthly drug costs of $800 would save nearly $5,900 on drug costs each year.
• Seniors would be protected again high out-of-pocket costs with Medicare covering 95% of drug costs over $3,600 per year.
• Low-income seniors will receive additional help paying for their medicines.
• A $600 annual subsidy would be added to their drug discount card.
• There would be no additional premium, no deductible and low co-payments ($2 for generic or $5 for brand-name drugs) for seniors with limited savings and incomes at or below 135% of poverty (individuals with yearly incomes under $12,123 and senior couples under $16,362).
• There would be reduced premium, a $50 deductible, and 15% co-insurance (85% of their drug costs would be covered) for seniors with limited savings and incomes between 135% and 150% of the federal poverty level (individuals with yearly incomes under $13, 470 and senior couples under $18,180).
• All seniors will save from steps to bring safe, lower cost generic drugs to market sooner. The President took steps earlier this year to bring generic versions of drugs to market sooner, and this legislation will strengthen those efforts that are estimated to save American consumers about $35 billion over the next 10 years.

More Choices-Better Benefits-And the Choice to Stay with the Coverage You Have Today

• Seniors will have more choices in health care-including the same kinds of choices that members of Congress and other federal employees enjoy today. Seniors will be able to choose the health care plan that best fits their needs-instead of having that choice made by the government.
• Seniors can choose to stay in traditional Medicare and still get prescription drug coverage. Or, they can choose a new Medicare-approved private plan where the drug benefit is integrated into broader medical coverage, including disease management programs and protections against high out-of-pocket medical spending. Or, seniors who like the lower cost sharing and extra benefits often available in managed care plans would be able to make that choice as well.
• Under a modernized Medicare, there will be better coverage for preventive care (e.g., a "welcome to Medicare" physical that would include screening for cancer, diabetes, and heart disease, as well as immunizations against pneumonia and the flu).
• All Americans can benefit from provisions in the bill that will remove excessive restrictions on health savings accounts, which will give individuals more control over the costs of their health care and give them access to coverage that is affordable, flexible and portable.

Reforms to Strengthen and Modernize Medicare

• Private health plans will compete for seniors' business by providing better coverage at affordable prices-helping to control the costs of Medicare by using market-place competition, not government price-setting.
• Private sector competition will result in more innovation and flexibility in coverage. This will be a significant improvement over the way benefits are provided in Medicare today -where politicians and bureaucrats, rather than health care markets, dictate what is covered and what is paid.
• Private employers will receive incentives to continue to provide drug coverage to their retirees.

For the first time ever, the legislation will require the Medicare Trustees to analyze the combined fiscal status of the Medicare Trust Funds and warn Congress and the President when Medicare's general fund subsidy exceeds 45 percent. This new fiscal safeguard will put the program on a stronger financial foundation by alerting future congresses and Presidents when Medicare's dedicated revenues fall below adequate levels.