CADA A Health Care Update from Washington D.C. September 19, 2012

1. CADAA Health Care Update from Washington D.C.September 19, 2012 Cara C. Bachenheimer Sr. V.P., Government Relations, Invacare

2. Today’s Agenda This year in D.C. – The Political Climate Top Federal Issues for Us “Competitive” Bidding Health Care Reform Law Issues Device Tax ACOs

3. 2012 DC Political Climate Failure of Congressional Super Committee & August 11, 2011 Debt Ceiling Deal to agree on $1.2-1.5 trillion spending cuts Congress’ failure to enact $1.2 trillion spending cuts package means across the board spending cuts will be triggered to make up the difference, split evenly between defense and domestic spending = “sequestration” – January 2013 February 17, 2012: Congress agrees on “Doc Fix,” payroll tax cut, and unemployment package through December 31, 2012 Election Year Dynamics

4. DMEPOS Competitive Bidding Timing Round 1 began January 1, 2011 in 9 cities Round 2 will begin July 1, 2013 in 91 additional cities Government’s Objective Lower rates Reduce fraud, waste & abuse Reduce number of HME providers Industry’s Position Medicare-developed program is anti-competitive by eliminating competition Bid design incentivizes severe low-ball bids Must be replaced with a rational system Have a detailed legislative proposal to replace current program

5. Health Reform Law - Supreme Court Decision June 28, 2012 decision Upheld individual mandate as an allowable tax Generally upheld entire health reform law Except – one Medicaid issue States can opt out of Medicaid expansion and lose only the new federal subsidy rather than all their Medicaid funds

6. ACA-Device Excise Tax $20B savings over 10 years 2.3% excise tax on device manufacturers, begins January 1, 2013 Law exempts contacts, eyeglasses, hearing aids AND devices generally purchased by the public at retail Lots of House and Senate Bills to Repeal, but $20B price tag IRS Proposed Rule (February 7) to implement retail exemption Wheelchairs and other mobility devices likely exempt Respiratory – unclear, but we are optimistic that final rule will more explicitly exempt home respiratory devices Facts & Circumstances analysis for manufacturers Final Rule to be issued later this year

7. ACOs – Accountable Care Organizations A key component of the Health Reform Law Goal: Improve Care, Lower Costs via Integrated Delivery Systems Objective is to realign provider incentives to work together across care settings to provide better care more cost effectively ACO shares in the risks and the profits To participate in the Shared Savings Program, providers must come together to become a Medicare ACO.

8. CMS expects 270 Medicare ACOs will be created On April 10, 2012, CMS announced 27 New ACOs in 18 states to serve 375,000 beneficiaries in 18 states On July 9, 2012, CMS announced 89 new ACOs in 40 states and DC, to treat 1.2 million beneficiaries as of July 1 Brings number of ACO organizations to 154, servicing 2.4 million beneficiaries ACOs – Accountable Care Organizations

9. Cara C. Bachenheimer Senior Vice President, Government Relations cbachenheimer@invacare.com 440-329-6226 Invacare Corporation www.invacare.com