To amend title XVIII of the Social Security Act to modify the designation of accreditation organizations for prosthetic devices and orthotics and prosthetics, to apply accreditation and licensure requirements to such devices and items for purposes of payment under the Medicare program, and to modify the payment methodology for such devices and items under such program to account for practitioner qualifications and complexity of care.

Summary: Medicare Orthotics and Prosthetics Improvement Act of 2008 - Amends title XVIII (Medicare) of the Social Security Act with respect to recognized independent accreditation organizations which apply quality standards to which suppliers of items and services relating to prosthetic devices and orthotics and prosthetics.

Directs the Secretary of Health and Human Services (HHS) to designate and approve an independent accreditation organization for such purposes only if it is the American Board for Certification in Orthotics and Prosthetics, Inc., the Board for Orthotist/Prosthetist Certification, or a program that the Secretary determines has accreditation and approval standards essentially equivalent to those of such a Board.

Requires application to prosthetic devices and orthotics and prosthetics generally of existing accreditation and licensure requirements for certain prosthetics and custom-fabricated orthotics.

Directs the Secretary to report to Congress on: (1) the steps taken by the Department of HHS to ensure that such licensure and accreditation requirements are enforced; and (2) the effect of the requirements of this Act on the occurrence of fraud and abuse under the Medicare program with respect to prosthetic devices and orthotics and prosthetics.

Modifies the Medicare payment methodology for prosthetic devices and orthotics and prosthetics to account for practitioner qualifications and complexity of care.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Orthotics and Prosthetics 
Improvement Act of 2008''.

SEC. 2. MODIFICATION OF REQUIREMENTS APPLICABLE UNDER MEDICARE TO 
              DESIGNATION OF ACCREDITATION ORGANIZATIONS FOR SUPPLIERS 
              OF PROSTHETIC DEVICES AND ORTHOTICS AND PROSTHETICS.

    (a) In General.--Section 1834(a)(20)(B) of the Social Security Act 
(42 U.S.C. 1395m(a)(20)(B)) is amended--
            (1) by striking ``Not later than'' and inserting ``(i) in 
        general.--Subject to clause (ii), not later than'' with the 
        same indentation as the clause added by paragraph (2); and
            (2) by adding at the end the following new clause:
                            ``(ii) Special requirements for 
                        accreditation of prosthetic devices and 
                        orthotics and prosthetics.--For purposes of 
                        applying quality standards under subparagraph 
                        (A) for suppliers of items and services 
                        described in subparagraph (D)(ii), the 
                        Secretary shall designate and approve an 
                        independent accreditation organization under 
                        clause (i) only if such organization is a Board 
                        or program described in subsection 
                        (h)(1)(F)(iv). Not later than January 1, 2009, 
                        the Secretary shall ensure that at least one 
                        independent accreditation organization is 
                        designated and approved in accordance with this 
                        clause.''.
    (b) Effective Date.--An organization must satisfy the requirement 
of section 1834(a)(20)(B)(ii), as added by subsection (a)(2), not later 
than January 1, 2009, regardless of whether such organization is 
designated or approved as an independent accreditation organization 
before, on, or after the date of the enactment of this Act.

SEC. 3. APPLICATION OF EXISTING ACCREDITATION AND LICENSURE 
              REQUIREMENTS FOR CERTAIN PROSTHETICS AND CUSTOM-
              FABRICATED ORTHOTICS TO PROSTHETIC DEVICES AND ORTHOTICS 
              AND PROSTHETICS.

    (a) In General.--Section 1834(h)(1)(F) of the Social Security Act 
(42 U.S.C. 1395m(h)(1)(F)) is amended--
            (1) in the heading, by striking ``Special payment rules for 
        certain prosthetics and custom-fabricated orthotics'' and 
        inserting ``Payment rules'';
            (2) in clause (i), by striking ``an item of custom-
        fabricated orthotics described in clause (ii) or for an item of 
        prosthetics unless such item is'' and inserting ``a prosthetic 
        device or an item of orthotics or prosthetics, including an 
        item of custom-fabricated orthotics described in clause (ii), 
        unless such device or item, respectively, is'';
            (3) in clause (ii)(II), by striking ``a list of items to 
        which this subparagraph applies'' and inserting ``a list of 
        items for purposes of clause (i)''; and
            (4) in clause (iii)(III), by striking ``to provide or 
        manage the provision of prosthetics and custom-designed or -
        fabricated orthotics'' and inserting ``to provide or manage the 
        provision of prosthetics and orthotics (and custom-designed or 
        -fabricated orthotics, in the case of an item described in 
        clause (iii))''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to devices and items furnished on or after January 1, 2009.

SEC. 4. REPORTS.

    (a) Report on Enforcing New Licensing and Accreditation 
Requirements.--Not later than 18 months after the date of the enactment 
of this Act, the Secretary of Health and Human Services shall submit to 
Congress a report on the steps taken by the Department of Health and 
Human Services to ensure that the State licensure and accreditation 
requirements under section 1834(h)(1)(I) of the Social Security Act, as 
added by section 3, are enforced. Such report shall include a 
determination of the extent to which payments for prosthetic devices 
and orthotics and prosthetics under the Medicare program under title 
XVIII of such Act are made only to those providers of services and 
suppliers that meet the relevant accreditation and licensure 
requirements under such section, as well as a determination of whether 
additional steps are needed.
    (b) Report on Fraud and Abuse.--Not later than 30 months after the 
date of the enactment of this Act, the Secretary of Health and Human 
Services shall submit to Congress a report on the effect of the 
requirements under subsection (a)(20)(B)(ii) of section 1834 of the 
Social Security Act (42 U.S.C. 1395m), as added by section 2, and 
subsection (h)(1)(I) of such section, as added by section 3, on the 
occurrence of fraud and abuse under the Medicare program under title 
XVIII of such Act, with respect to prosthetic devices and orthotics and 
prosthetics for which payment is made under such program.

SEC. 5. MODIFICATION OF MEDICARE PAYMENT METHODOLOGY FOR PROSTHETIC 
              DEVICES AND ORTHOTICS AND PROSTHETICS.

    Section 1834(h) of the Social Security Act (42 U.S.C. 1395m(h)) is 
amended--
            (1) in paragraph (1)(B), by striking ``and (H)(i)'' and 
        inserting ``(H)(i), and paragraph (5)''; and
            (2) by adding at the end the following new paragraph:
            ``(5) Modification of payment methodology to account for 
        practitioner qualifications and complexity of care.--
                    ``(A) In general.--The Secretary shall modify the 
                payment basis under paragraph (1)(B) for prosthetic 
                devices and orthotics and prosthetics in a manner that 
                links the complexity of the respective item and the 
                qualifications of the individual or entity furnishing 
                and fabricating such respective item in determining the 
                payment basis for such item. Such modifications shall 
                be implemented in a manner that provides for the 
                application of such modifications to items furnished on 
                or after January 1, 2009. Such modifications shall be 
                designed to result in the same aggregate amount of 
                expenditures for prosthetic devices and orthotics and 
                prosthetics under this section for a year as would be 
                made if this subparagraph did not apply, as estimated 
                by the Secretary.
                    ``(B) Assignment of billing codes.--For purposes of 
                subparagraph (A), in modifying the payment basis under 
                paragraph (1)(B), the Secretary shall utilize and 
                incorporate the `2008 Orthotics and Prosthetics 
                Tripartite Document' a multi-organization compilation 
                of HCPCS codes to assign specific billing codes to the 
                category of orthotics and prosthetics care described in 
                each of clauses (i) through (iv) of subparagraph (C) 
                using the provider qualification designation for each 
                HCPCS code as stated in such document.
                    ``(C) Categories of orthotics and prosthetics care 
                described.--
                            ``(i) Custom-fabricated category.--The 
                        category of orthotics and prosthetics care 
                        described in this clause is a category for 
                        custom-fabricated devices that are made from 
                        detailed measurements, images, or models in 
                        accordance with a prescription and that can 
                        only be utilized by a specific intended 
                        patient. The provider qualification designation 
                        for the category shall reflect the following:
                                    ``(I) The category of care involves 
                                the highest level of complexity with 
                                substantial clinical risk.
                                    ``(II) The category of care 
                                requires a practitioner who is 
                                credentialed, certified, or licensed in 
                                orthotics or prosthetics, respectively, 
                                to insure the comprehensive provision 
                                of orthotic care or prosthetic care, 
                                respectively. Such care shall be based 
                                on sound clinical judgment and 
                                technical expertise based on the 
                                practitioner's education and clinical 
                                training, in order to allow the 
                                practitioner to determine the device 
                                parameters and design, fabrication 
                                process, and functional purpose 
                                specific to the needs of the patient to 
                                maximize optimal clinical outcomes.
                            ``(ii) Custom-fitted high.--The category of 
                        orthotics and prosthetics care described in 
                        this clause is a category for prefabricated 
                        devices that are manufactured with no specific 
                        patient in mind, but that are appropriately 
                        sized, adapted, modified, and configured (with 
                        the required tools and equipment) to a specific 
                        patient in accordance with a prescription. The 
                        provider qualification designation for the 
                        category shall reflect the following:
                                    ``(I) The category of care involves 
                                moderate to high complexity with 
                                substantial clinical risk.
                                    ``(II) The category of care 
                                requires a practitioner who is 
                                credentialed, certified, or licensed in 
                                orthotics or prosthetics or a related 
                                field in which orthotics or prosthetics 
                                is the primary focus of the course of 
                                study, to insure the appropriate 
                                provision of orthotic care or 
                                prosthetic care, respectively. Such 
                                care shall be based on sound clinical 
                                judgment and technical expertise based 
                                on the practitioner's education and 
                                clinical training, in order to allow 
                                the practitioner to determine the 
                                appropriate device relative to the 
                                diagnosis and specific to the needs of 
                                the patient to maximize optimal 
                                clinical outcomes.
                            ``(iii) Custom-fitted low.--The category of 
                        orthotics and prosthetics care described in 
                        this clause is a category for prefabricated 
                        devices that are manufactured with no specific 
                        patient in mind, but that are appropriately 
                        sized and adjusted to a specific patient in 
                        accordance with a prescription. The provider 
                        qualification designation for the category 
                        shall reflect the following:
                                    ``(I) The category of care involves 
                                a low level of complexity and low 
                                clinical risk.
                                    ``(II) The category of care 
                                requires a supplier that is 
                                credentialed, certified, or licensed 
                                within a limited scope of practice to 
                                insure appropriate provision of 
                                orthotic care. The supplier's education 
                                and training shall insure that basic 
                                clinical knowledge and technical 
                                expertise is available to confirm 
                                successful fit and device compliance 
                                with the prescription.
                            ``(iv) Off-the-shelf.--The category of 
                        orthotics and prosthetics care described in 
                        this clause is a category for prefabricated 
                        devices that require minimal self adjustment 
                        for appropriate use. The provider qualification 
                        designation for the category shall reflect that 
                        such devices do not require expertise in 
                        trimming, bending, molding, assembling, or 
                        customizing to fit the patient and that no 
                        formal credentialing, clinical education, or 
                        technical training is required to dispense such 
                        devices.
                    ``(D) Consultation.--In modifying the payment 
                basis, the Secretary shall consult with appropriate 
                experts in orthotics and prosthetics, including 
                practitioners that furnish devices and items within the 
                categories of prosthetics and orthotics care described 
                in subparagraph (C).''.