Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Medicare Payments for Orthotics 
Carrier Perspectives 
JUNE GIBBS BROWN 
Inspector General 
MARCH 2000 
OEI-02-99-00121  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's New York Regional Office prepared this report under the direction of John I. Molnar, 
Regional Inspector General, and Renee C. Dunn, Deputy Regional Inspector General.  Principal 
OEI staff included: 
REGION  HEADQUARTERS 
Demetra Arapakos, Project Leader  Stuart Wright, Program Specialist 
Vincent Greiber  Scott Horning, Technical Support 
Barbara Tedesco, Statistician 
To obtain copies of this report, please call the New York Regional Office at (212) 264-2000. 
Reports are also available on the World Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  E X E C U T I V E  S U M M A R Y  
PURPOSE 
To review carrier policies and procedures and obtain their perspectives on Medicare 
reimbursement for orthotics. 
BACKGROUND 
This study, a follow-up to a 1997 Office of Inspector General report entitled Medicare 
Orthotics (02-95-00380), was conducted to determine what changes, if any, have 
occurred with Medicare orthotics.  We have also prepared a companion report entitled 
Medicare Reimbursement for Orthotics which examines the extent of inappropriate 
Medicare reimbursement for orthotics. 
Orthotics are rigid devices, often called braces, which are applied to the outside of the 
body as a means of support.  They are categorized into one of three groups of devices: 
custom fitted, which require alterations to a prefabricated product; custom fabricated, 
which are made for a specific patient from his/ her individual measurements; and molded 
to patient model, which are created from a cast of the patients body part. Add ons, such 
as straps and linings, are billed separately.  Suppliers of orthotics include certified 
orthotists, medical equipment companies, and physicians offices.  Medicare claims for 
orthotics are processed and paid by one of four Durable Medical Equipment Regional 
Carriers (DMERCs). 
We combined two methods for this inspection.  First, we collected and reviewed written 
policies for orthotics from each of the four DMERCs.  We also conducted structured 
telephone interviews with staff from all four carriers. 
FINDINGS 
Carriers still lack policies for some groups of orthotics 
As noted in the 1997 OIG report on orthotics, while general coverage guidelines exist for 
all orthotic devices, specific guidelines are lacking for two groups - upper limb devices and 
hip devices.  The devices in these two groups represent approximately two-thirds of all 
orthotic codes. Without specific policies, they lack distinctive medical and fitting 
requirements that may restrict payment for some devices. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  Carrier practices still focus on assuring the appropriateness of orthotic claims 
Carriers utilize different billing practices for orthotics claims.  All four have payment 
screens and edits to isolate claims that may require additional scrutiny. Carriers also 
conduct post-payment reviews to monitor orthotic payments.  Some conduct these 
reviews for specific codes or groups of devices, such as high dollar codes and devices 
from groups that lack specific policies.  Carriers also use different procedures for dealing 
with problem suppliers, including conducting pre-payment reviews of and requesting 
additional information from problematic suppliers. 
Carriers suggest strengthening the orthotics billing process with better 
documentation and improved coding 
All carriers recognize the importance of adequate medical and supplier documentation to 
assure the appropriateness of orthotic claims.  They suggest that physicians write more 
detailed orthotic prescriptions which address the patients specific needs and diagnosis; 
Carriers also recognize that coding for orthotics is problematic and offer suggestions to 
improve it.  These include clarifying or eliminating miscellaneous codes and restricting 
certain codes to certain types of patients. 
All four carriers recommend developing standards for orthotic suppliers 
All four carriers believe there should be standards for suppliers of orthotics, particularly 
because they say not all providers are qualified to supply orthotic devices.  One argues 
that orthotic suppliers are neither licensed nor reviewed; another states that its 
reasonable that certain types of custom fabricated orthotics are only made by qualified 
people.  Some carriers do caution, however, that credentialing suppliers may not solve all 
of the problems associated with unqualified individuals crafting orthotics, since 
credentialed orthotists might supervise an unreasonable number of orthotic fitters. 
RECOMMENDATIONS 
We recommend that HCFA work with the DMERCs to strengthen the billing 
process for orthotics. 
In doing this, they may want to consider the practices and suggestions discussed in this 
report, such as developing additional screens and edit; requiring suppliers to submit a 
patient diagnosis as part of their claim; establishing more specific guidelines for 
miscellaneous codes; and continuing to educate physicians and suppliers on 
documentation and coding. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  We also recommend that HCFA establish standards for suppliers of custom molded 
and custom fabricated orthotic devices. 
Suppliers of these devices must be skilled in fitting and crafting an orthosis to the 
individual measurements of the patient.  We believe that establishing standards would help 
to ensure that suppliers providing custom molded and fabricated devices have such skills 
and that the devices they supply are appropriate. 
Comments 
We received comments on the draft report from the Health Care Financing Administration. 
The HCFA generally concurs with our recommendations.  In response to our 
recommendation that standards be required for suppliers of custom molded and fabricated 
devices, HCFA  states that it is currently working on a proposed rule that will set general 
provider standards but not specific standards for custom orthotic suppliers.  Given the 
specialized training and skills necessary for fitting and creating custom molded and 
fabricated devices, we continue to believe in the importance of additional standards for 
suppliers providing custom devices.  The full comments are presented in Appendix A. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  T A B L E  O F  C O N T E N T S  
PAGE

EXECUTIVE SUMMARY  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5

FINDINGS

Carriers lack specific policies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

Carriers practices focus on appropriateness  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9

Carriers suggest strengthening billing process . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

Carriers recommend standards for suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  12

APPENDIX 

A: Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13

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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  I N T R O D U C T I O N  
PURPOSE 
To review carrier policies and procedures and obtain their perspectives on Medicare 
reimbursement for orthotics. 
BACKGROUND 
This study, a follow-up to a 1997 Office of Inspector General report entitled Medicare 
Orthotics (02-95-00380), was conducted to determine what changes, if any, have 
occurred with Medicare orthotics.  In the 1997 report, we found that at least 19 percent of 
orthotics provided are medically unnecessary and that durable medical equipment 
companies more likely than orthotists to supply the questionable orthotics.  We have also 
prepared a companion report entitled Medicare Reimbursement for Orthotics which 
examines the extent of inappropriate Medicare reimbursement for orthotics. 
Additionally, in September, 1999, the OIG released another follow-up report entitled 
Medicare Payments for Orthotic Body Jackets (04-97-00390).  That study reported that 
while Medicare payments for orthotic body jackets had decreased, 42 percent of claims for 
these devices were upcoded.  This upcoding was attributed in part to a lack of coding 
uniformity and standardization. 
Orthotics 
Orthotics are rigid devices, often called braces, which are applied to the outside of the 
body as a means of support.  An orthotic device differs from a prosthetic in that, rather 
than replacing a body part, it supports and/ or rehabilitates existing body parts.  Orthotic 
devices are usually customized for an individuals use and are not appropriate for anyone 
else.  They have evolved in recent years to also include off the shelf devices that can serve 
functions similar to custom fitted components with little or no alteration necessary.  New 
computer programs are also available which can design orthotic devices based on the 
patients individual measurements.  Examples of orthotics include spinal body jackets, hip 
abductors, and knee braces. 
Individuals requiring orthotics range from the severely disabled, such as paraplegics or 
quadriplegics, to those who require an ankle brace for better gait or are recovering from a 
temporary back injury.  An individual may need to wear the orthotic continuously for the 
duration of his or her lifetime, every day until the condition improves, or for some other 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  time frame as prescribed by a physician. 
There are several different ways in which an orthotic may be supplied.  Typically, a 
physician prescribes the orthotic and refers the patient to an orthotist or other orthotic 
supplier.  Orthotic devices may also be supplied by a clinic, hospital, or nursing home. 
Some orthosis prescriptions are very specific, while others are more general.  The supplier 
uses these prescriptions, as well as their own examination of the patient, to determine the 
device needed.  If a device needs to be made, the patient is likely to return to the supplier 
to have the device fitted.  Ideally, the supplier also instructs the patient on how to put on, 
take off, and maintain the device, and provides follow-up care, although this is not 
required for payment. 
Medicare Orthotics:  Coverage and Payments 
Orthotic devices are primarily covered under Medicare Part B.  As with all Medicare Part 
B services, covered orthotics must be reasonable and necessary for the diagnosis or 
treatment of an illness or injury.  In order to meet Health Care Financing Administration 
(HCFA) coverage requirements, an orthotic must be a rigid or semi-rigid device used 
either to support a weak or deformed member or to restrict or eliminate motion in a 
diseased or injured part of the body.  Orthotic claims must have a prescription and/ or a 
certificate of medical necessity signed by a physician. 
Orthotic devices are classified into one of 465 different codes (L0100 through L4380) in 
the Common Procedure Coding system HCFA uses for billing.  These  L-Code listings 
give a brief description of the device.  These listings also define the device as one of three 
types: 
C	 Custom fitted, which require substantial adjustments to a prefabricated item by a 
specially trained professional to meet the needs and/or unique shape of an 
individual patient; 
C	 Custom fabricated, which are made for a specific patient from his/her 
individualized measurements and/ or pattern; or 
C	 Molded to patient model, whereby a cast is made of the specified body part and is 
used to create an orthotic device. 
Some orthotics may also have additional components which are billed separately.  For 
example, an ankle-foot orthosis may require special strap, joints, or linings that have their 
own codes and are therefore billed in addition to the basic device. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  Durable Medical Equipment Regional Carriers 
Orthotic claims are processed and paid for by one of four regional carriers called 
DMERCs (Durable Medical Equipment Regional Carriers).  In October 1993, HCFA 
began processing all Medicare Part B claims for medical equipment, supplies, orthotics, 
and prosthetics  through these carriers.  Their establishment was intended to help eliminate 
the inconsistency of coverage and reimbursement for medical equipment that had been 
problematic in the past.  The DMERCs are divided into regions A, B, C, and D and cover 
the entire country.  The DMERCs ensure that coverage requirements are met before 
approving payment and provide educational services to suppliers. 
Orthotic Suppliers 
Any supplier with a HCFA provider number can provide and bill for orthotics, and no

verification is done on their ability to provide orthotics.  Suppliers need no financial

investment and experience, and little verification is done of their applications.  Suppliers of

orthotic devices include orthotists, medical equipment companies, pharmacies, and

doctors offices.  Some general medical equipment suppliers may have an orthotist on

staff.  Suppliers may manufacture the devices in their own workshops or obtain them from

other companies.

Of all these supplier types, only orthotists have professional certification to provide

specialist services.  An orthotist provides care to patients with disabling conditions of the

musculoskeletal structure of the body.  At the request of, and in conjunction with

physicians, the orthotist assists in formulating prescriptions for orthoses and examines and

evaluates the patients orthotic needs in relation to their functional loss.  More specifically,

the orthotist:

<  formulates the devices design and selects materials and components; 

<  makes all necessary casts, measurements, model modifications, and layouts; 

<  performs fittings, including static and dynamic alignments; 

<  evaluates the orthosis on the patient; 

<  instructs the patient in its use; and 

<  maintains patient records.

As of now, no State licenses orthotists, although some are considering licensing legislation

for the future.  However, there are two organizations which do offer orthotist

certification: the American Board for Certification in Orthotics and Prosthetics, Inc.,

(ABC), and the Board of Certification (BOC).  The ABC sets standards of competency

and grants a Certified Orthotist (CO) credential.  To qualify for ABC certification on

orthotics, an individual must have a college degree, have completed a postgraduate

orthotist certificate program from an accredited institution, and have at least one year of

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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  patient management experience.  The candidate must also pass two written exams and a 
three-day clinical exam that tests the ability to design, fabricate, and fit a variety of 
orthoses.  Certified practitioners must meet continuing education requirements every five 
years to renew their credentials.  Currently, there are approximately 3,000 ABC certified 
orthotists in the United States. 
The BOC also certifies orthotists and there are currently more than 900 BOC certified 
orthotists.  In order to sit for the BOC certification exam, which includes written and 
practical components, the applicant is required to have one or more of the following: a 
bachelors degree with a major in orthotics or prosthetics; an associate degree in a related 
field, or; one or more years of orthotics/ prosthetics education, training and/ or supervised 
work experience, including intensive study.  In addition, all prospective BOC orthotists 
must document that they have had a minimum of two years (3,900 hours) of experience 
providing direct patient services. 
METHODOLOGY 
We combined two methods for this inspection.  First, we collected and reviewed written 
policies for orthotics from each of the four DMERCS.  We also conducted structured 
telephone interviews with staff from all four carriers. 
Carrier Policy Review 
We collected the most recent policies on orthotics from each of the regional carriers.

We then reviewed these policies, specifically looking at device definitions, indications,

coverage and payment rules, coding guidelines, documentation requirements, and medical

criteria.  We also compared the policies to look for any similarities and differences

between them.

Interviews 
We conducted telephone interviews with staff from each of the four DMERCs - three with 
the medical director and one with the medical affairs coordinator.  During our interviews, 
we discussed current practices and changes in policies and procedures relating to 
orthotics, suggestions for improving these policies and procedures, and the qualifications 
of orthotic suppliers. 
We conducted this inspection in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiciency. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  F I N D I N G S  
Carriers still lack specific policies for some groups of orthotics 
As noted in the 1997 OIG report on orthotics, while general coverage guidelines exist for 
all orthotic devices, specific guidelines are lacking for two groups - upper limb devices and 
hip devices.  The devices in these two groups represent approximately two-thirds of all 
orthotic codes.  Without specific policies, they lack distinctive medical and fitting 
requirements that may restrict payment for some devices.  None of the four carriers have 
made changes to their orthotics policies since 1997.  However, one medical director 
reports that the DMERCs are discussing developing policies for upper limb devices; no 
final changes have yet been made. 
Carriers practices still focus on assuring the appropriateness of 
orthotic claims 
Screens and edits.  Payment screens and edits are installed in all the DMERCs 
automated systems to isolate claims that may require additional scrutiny.  These screens 
and edits are used to identify multiple billings for the same device, multiple suppliers for 
one beneficiary or one code, and high dollar amounts.  For example, one carrier has edits 
for duplicate equipment and place of service, certain diagnoses, and specific suppliers.  At 
another carrier, the electronic billing system routinely selects ankle positioning splint 
claims for review.  Of the four carriers, only one has edits that can be changed based on 
the specifications of different codes.  One carrier has no edit for medical necessity, while 
another has no edits for frequent billings. 
While two carriers believe that existing screens and edits are sufficient, the remaining two 
think additional screens and edits would be helpful.  Suggestions for improvement include: 
screens for new codes; a one year edit for duplicate devices supplied within the same year; 
edits based on supplier type; and customized screens for specific devices. 
Post-payment reviews.  All four DMERCs utilize a variety of post-payment reviews to 
monitor payments for orthotics.  For example, one conducts post-payment reviews on 
claims for orthotics that are not governed by specific policies, such as upper limb devices, 
since these are considered to be more vulnerable to fraud.  Some carriers conduct reviews 
for specific codes or groups of codes.  One conducts focused medical reviews of high 
dollar codes, while another reviews codes that are increasing in utilization.  Two carriers 
request random samples of beneficiary records or products to look at medical necessity, 
coding, and co-payments. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  Supplier reviews.  Carriers also use different procedures for dealing with problem 
suppliers. Two in particular conduct pre-payment reviews of claims submitted by suppliers 
identified as problematic.  At one carrier, suppliers who have miscoded claims must 
correct their coding errors and send information on items they are actually providing 
before being reimbursed, whereas suppliers of devices with questionable medical necessity 
are asked to send additional information from the patients medical record.  In another 
region, suppliers who are under review are not allowed to file their claim electronically but 
instead must send a hard copy along with other supporting documentation. 
Carriers suggest strengthening the orthotics billing process with 
better documentation and improved coding 
All carriers recognize the importance of adequate medical and supplier documentation to 
assure the appropriateness of orthotic claims.  While medical records are not routinely 
requested and reviewed by carriers, they do suggest that physicians write more detailed 
orthotic prescriptions which address the patients specific needs and diagnosis.  One 
medical director  points out that while suppliers of other equipment must submit a patient 
diagnosis with their claim, orthotic suppliers are not governed by the same requirement. 
He believes that mandatory diagnosis codes would not only ease automated claim 
processing but would also allow carriers to check against physician records and tell the 
world what conditions we will pay for.  In fact, at one carrier ankle positioning splint 
claims are only paid when accompanied by an appropriate diagnosis.  With regard to 
suppliers, one medical director thinks that claims for custom fabricated and molded 
devices submitted without proof of touching the patient should be denied; he says that, I 
deny claims when (the supplier) doesnt touch the part of the body the orthosis is for. 
Carriers recognize that coding for orthotics is problematic and offer suggestions to 
improve it.  First, devices that suppliers consider difficult to categorize according to 
established guidelines can be coded as miscellaneous.  One medical director suggests that 
these codes make automated processing of codes difficult, and another director suggests 
eliminating miscellaneous codes altogether, including codes for miscellaneous suppliers 
such as hospital interns.  Also, medical directors believe certain codes should be restricted. 
For example, one says that custom made devices should be reserved for athletes and other 
extremely active people as well as older persons whose shapes are constantly changing. 
Another suggests that certain codes be limited to patients unable to undergo surgery.  One 
medical director notes that the amount of clinical literature outlining what is an 
appropriate and legitimate orthosis is limited and likens the current coding process to 
asking for a calculator and getting a computer. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  All four carriers recommend developing standards for orthotic 
suppliers 
All four carriers believe there should be standards for suppliers of orthotics, particularly 
because they say not all providers are qualified to supply orthotic devices.  One argues 
that orthotic suppliers are neither licensed nor reviewed; he adds that orthotics is the only 
unregulated healthcare industry.  The medical director of one carrier states that its 
reasonable that certain types of custom fabricated orthotics are only made by qualified 
people; similarly, another reports that in order to provide good quality items, it is helpful 
to have someone who is knowledgeable supplying the device.  Finally, one medical 
director makes the point that non-trained suppliers now have access to inexpensive off-
the-shelf devices and are less critical about selecting their patients, therefore resulting in 
over-utilization of these devices. 
Some carriers do caution, however, that credentialing suppliers may not solve all of the 
problems associated with unqualified individuals crafting orthotics.  One medical director 
says, hiring a certified orthotist to sit on the staff and sign off on all DME that is supplied 
be the DME supply store chain is no solution.  Another believes that credentialing would 
create problems with orthotists on staff who would supervise an unreasonable number 
of orthotic fitters. 
Carriers also believe that more instruction and education for orthotic suppliers and 
physicians would solve problems with miscoding and medical necessity.  They believe 
there is a general lack of understanding on orthotic policies.  One carrier suggests 
publishing an instruction booklet for suppliers with coding guidelines to assist them with 
accurately coding their devices.  Another says that physicians should become more 
knowledgeable of when an orthosis should be prescribed for their patient. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  R E C O M M E N D A T I O N S  
We recommend that HCFA work with the DMERCs to strengthen the billing process for 
orthotics. 
In doing this, they may want to consider the practices and suggestions discussed in this 
report, such as developing additional screens and edits; requiring suppliers to submit a 
patient diagnosis as part of their claim;  establishing more specific guidelines for 
miscellaneous codes; and continuing to educate physicians and suppliers on 
documentation and coding. 
We also recommend that HCFA establish standards for suppliers of custom molded and 
custom fabricated orthotic devices. 
Suppliers of these devices must be skilled in fitting and crafting an orthosis to the 
individual measurements of the patient.  We believe that establishing standards would help 
to ensure that suppliers providing custom molded and fabricated devices have such skills 
and that the devices they supply are appropriate. 
Comments 
We received comments on the draft report from the Health Care Financing Administration. 
The HCFA generally concurs with our recommendations.  In response to our 
recommendation that standards be required for suppliers of custom molded and fabricated 
devices, HCFA  states that it is currently working on a proposed rule that will set general 
provider standards but not specific standards for custom orthotic suppliers.  Given the 
specialized training and skills necessary for fitting and creating custom molded and 
fabricated devices, we continue to believe in the importance of additional standards for 
suppliers providing custom devices.  The full comments are presented in Appendix A. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121  APPENDIX A 
In this appendix, we present in full the comments from the Health Care Financing Administration. 
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Medicare Payments for Orthotics- Carrier Perspectives  OEI-02-99-00121