Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Medicare Payments for Orthotics 
Inappropriate Payments 
JUNE GIBBS BROWN 
Inspector General 
MARCH 2000 
OEI-02-99-00120  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 determine the extent of inappropriate Medicare payments 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 - Carrier Perspectives (02-99-00121) which 
examines orthotic policies from the four durable medical equipment regional carriers 
(DMERCs) and obtains their perspectives on Medicare reimbursement for these devices. 
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. 
Using a stratified random sample of 500 Medicare beneficiaries who had one or more 
orthotic claims in 1998, we combined three methods for this inspection.  They include a 
beneficiary medical record review, a coding review, and a supplier feedback survey. 
FINDINGS 
Inappropriate Medicare reimbursement for orthotics continues at significant 
levels 
Thirty percent of beneficiaries have one or more miscoded orthotic device.  The miscoded 
orthotics represent $33,071,800 in excessive Medicare payments when projected to the 
total Medicare population.  Three reasons account for nearly all of this miscoding: the 
device does not meet the specifications of the code billed; the device is not custom 
fabricated or molded, as indicated by the code billed; or the part billed is already included 
in the base code for a larger device. 
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Medicare Payments for Orthotics- Inappropriate Payments  OEI-02-99-00120  Seven percent of beneficiaries have one or more medically unnecessary orthotic device. 
The medically unnecessary orthotics represent $9,935,500 in excessive Medicare payments 
when projected to the total Medicare population.  Most of these beneficiaries lack a 
medical condition or diagnosis that warrants the prescription of an orthotic device; others 
could have used a less complex device to obtain the same medical benefit or are 
inappropriately using a device for preventive or palliative purposes.  Another 16 percent of 
beneficiaries have orthotics that are medically questionable.  The medically questionable 
orthotics represent $1,165,200 in Medicare payments when projected to the total 
Medicare population. 
In addition to the miscoded and medically unnecessary and questionable cases already 
discussed, other cases appear suspect.  Of the 1404 prescribed devices in our sample, 20 
percent fall into one of the following 3 categories: we were unable to locate the 
prescribing physician, the physician reported no record of a patient, or the physician 
claimed never having ordered the device.  These suspect cases represent approximately 
$28,145,200 in Medicare payments when projected to the total Medicare population. 
Lastly, inadequate medical and supplier documentation, as well as limited physician 
involvement in patients use of orthotics, also raise questions about the appropriateness of 
Medicare orthotic payments. 
Qualifications of orthotic suppliers vary, with non-certified suppliers in our 
sample the most likely to provide inappropriate devices 
The orthotic suppliers in our sample include a broad range of different provider groups 
and most commonly include individual certified orthotists and durable medical equipment 
companies.  Our supplier survey reveals that 68 percent of the suppliers in our sample 
employ and/or contract with certified orthotists and 32 percent do neither.  While there are 
fewer non-certified suppliers than certified suppliers in our sample, non-certified suppliers 
are more likely than certified suppliers to provide inappropriate devices.  Forty-six percent 
of these suppliers provide inappropriate orthotics, compared to 16 percent of certified 
suppliers.  Miscoding is the main reason devices they supply are inappropriate. 
RECOMMENDATIONS 
The findings of this report, as well those from the recently released OIG report Medicare 
Payments for Orthotic Body Jackets, reveal that Medicare is inappropriately paying for 
some orthotic devices.  Both studies identify miscoding as problematic, particularly for 
devices that are individually fitted to the patients measurements.  Furthermore, this report 
shows non-certified suppliers are the most likely to provide inappropriate devices. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  We therefore recommend that HCFA take action to improve Medicare billing for 
orthotic devices. 
The HCFA may want to consider the following options: 
CC	 Require suppliers to maintain a description of how custom fabricated and molded 
devices are made.  The OIG report on orthotic body jackets referenced above 
recommends that suppliers include detailed information on the products they 
provide on their claims.  The HCFA responded that this would be burdensome to 
providers and carriers.  To avoid such a burden, we suggest that a description need 
not be detailed and can be kept on file with the supplier.  It could include basic 
information such as whether or not a device was individually fitted to a patients 
specific measurements.  Such descriptions have already been developed by the 
SADMERC and are required when suppliers seek clarification on appropriate 
coding.  The SADMERC descriptions could be used as models for suppliers to use 
when billing for certain orthotic devices. 
C	 Develop product classification lists for all major groups of orthotic devices.  In its 
report on orthotic body jackets, the OIG recommended a revision of coding 
guidelines.  In its response, the HCFA stated that it would develop a product 
classification list for the body jacket code L0430.  We believe such lists would also 
be useful for all orthotic groups.  Given the complexity and rapid technological 
changes in the orthotics industry, understanding the appropriate coding for these 
devices can be confusing.  Product classification lists would help to clarify the 
appropriate codes for different types of devices.  The carriers are already 
discussing ways in which coding for orthotics can be clarified and we encourage 
their efforts. 
C	 Educate the supplier community.  We believe increased education of the supplier 
community will enhance their understanding of coding requirements and 
procedures. 
C	 Work with the DMERCs to strengthen the billing process for orthotics.  In our 
companion report on carrier perspectives on orthotics, we discuss several carrier 
practices and suggestions for improving the way in which orthotics are paid. 
These include developing additional screens and edits, requiring suppliers to 
submit a patient diagnosis as part of their claim, and establishing more specific 
guidelines for miscellaneous codes. 
We also recommend that HCFA require 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 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  and fabricated devices have such skills and that the devices they supply are appropriate. 
The HCFA may want to consider establishing their own standards for orthotic suppliers or 
using already established industry certification. 
We believe that implementing these recommendations would eliminate as much as 
$43,007,300 annually in inappropriate Medicare orthotic payments. 
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 D. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  T A B L E  O F  C O N T E N T S  
PAGE

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

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6

FINDINGS

Inappropriate reimbursement continues at significant levels  . . . . . . . . . . . . . . . . . . . .  11

Qualifications of suppliers vary, with non-certified most likely to be inappropriate  . . . .  15

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  17

APPENDICES

A: Confidence intervals for key estimates  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  19

B: Confidence intervals for dollar projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20

C: Non-respondent analysis  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21

D: Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26

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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  I N T R O D U C T I O N  
PURPOSE 
To determine the extent of inappropriate Medicare payments 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 that 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 - Carrier 
Perspectives (02-99-00121) which examines orthotic policies from the four durable 
medical equipment regional carriers (DMERCs) and obtains their perspectives on 
Medicare reimbursement for these devices. 
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 jacket code L0430 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  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 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  duration of his or her lifetime, every day until the condition improves, or for some other 
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 an 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 1 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-Inappropriate Payments  OEI-02-99-00120  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 to specifically address their ability to provide orthotics.  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.

Two organizations 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 1 year of patient management experience.  The candidate must also pass two

written exams and a 3-day clinical exam that tests the ability to design, fabricate, and fit a

variety of orthoses.  Certified practitioners must meet continuing education requirements

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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  every 5 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.  All BOC orthotists must document a 
minimum of 2 years (3,900 hours) experience providing direct patient services. 
METHODOLOGY 
We combined three methods for this inspection: a medical record review, a coding review, 
and a supplier feedback survey. 
Sample 
We selected a stratified random sample of 500 Medicare beneficiaries from the 1 percent 
National Claims History file who had one or more orthotic claim paid in 1998.  We 
excluded beneficiaries from skilled nursing facilities as well as beneficiaries with claims 
totaling less than 50 dollars.  We then stratified the remaining beneficiaries into three 
groups of high, medium, and low utilization based on the dollar amount of their collective 
payments.  The low stratum consisted of beneficiaries with orthotic claims totaling less 
than 500 dollars, the medium stratum consisted of those with between 500 and 1,000 
dollars of orthotic claims, and the high stratum comprised beneficiaries whose total claims 
were greater than 1,000 dollars. 
Of the 500 beneficiaries in our sample, 63 percent had 1 orthotic device billed during 
1998, 29 percent had 2 devices, and the remaining 31 percent had 3 or more devices billed 
during that time period.  The 500 beneficiaries had a total of 1,404 devices. 
Medical Record Review 
The 500 beneficiaries in our sample had 521 prescribing physicians.  We requested medical 
records from all 521 physicians from April to June 1999, and received a response from 
388, for a response rate of 74 percent; see Appendix C for a non-respondent analysis.  We 
were unable to locate 43 physicians. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Of the 388 responding physicians: 
C  304 provided a medical record; 
C  43 indicated that they had no record of the patient; 
C  16 indicated they had not prescribed the device; and 
C	 26 responded with only a letter discussing the reason why they ordered an orthotic 
for their patient. 
Once we obtained the medical records, we used a medical review contractor to review the 
records to determine if the orthotic(s) the beneficiary had a claim paid for was medically 
necessary.  Using a screening instrument based on DMERC medical guidelines and input 
from one of the DMERC medical directors, an occupational therapist screened records 
and passed any records which failed the initial screening to a physician who then made a 
final determination of medical necessity. 
Coding Review 
The 500 beneficiaries in our sample had 547 orthotic suppliers.  We requested 
documentation on the device(s) provided from all 547 suppliers from April to June 1999. 
We received information from 412 suppliers, for a response rate of 75 percent; see 
Appendix C for a non-respondent analysis.  Most of these suppliers provided some 
combination of a brochure or pamphlet, invoice, photocopy from the AOPA orthotic 
manual, or a claim form. 
Once we obtained information from the suppliers, the HCPCS coordinator at the 
Statistical Analysis DMERC reviewed the documentation to determine if the orthotic(s) 
the beneficiary had a claim paid for was appropriately coded.  The HCPCS unit at this 
carrier is responsible for resolving coding issues and provides guidance to providers on the 
appropriate codes to use.  Using a structured review sheet to evaluate the materials sent to 
us by suppliers, the reviewer made a final determination of appropriate coding. 
Supplier Survey 
We also conducted a mail survey of all of the suppliers in our sample.  Along with 
documentation for the devices they supplied, we asked them to fill out and return a short 
survey about their staff.  We specifically asked if they employ or contract with certified 
orthotists, who molds and fits devices, or who supervises the crafting of orthotics.  Of the 
547 suppliers in our sample, 412 returned our feedback survey, for a response rate of 75 
percent.  While we are unable to project to the universe of all orthotic suppliers, we report 
the findings of this survey within the context of suppliers in our sample. 
We conducted this inspection in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  F I N D I N G S  
Inappropriate Medicare reimbursement for orthotics continues at 
significant levels 
One-third of Medicare beneficiaries have miscoded orthotics 
Based on the coding review, 30 percent of beneficiaries have miscoded orthotics, as 
illustrated in Chart 1 below.  This represents 22 percent of the 1404 devices billed for our 
sample beneficiaries. 
Chart 1 
Medicare Beneficiaries Using Orthotics: Coding Review 
The miscoded orthotics used by these beneficiaries represent $33,071,800 in excessive 
Medicare payments when projected to the total Medicare population.  This is a 
conservative estimate, however, since we assumed that all the beneficiaries for whom we 
had inadequate information had appropriately coded orthotics. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Three reasons account for nearly all of this miscoding: the device does not meet the 
specifications of the code billed; the device is not custom fabricated or molded, as 
indicated by the code billed; or the part billed is already included in the base code for a 
larger device.  Examples of typical miscoding include: 
<	 a less expensive off-the-shelf device without individualized fitting that was coded 
as an orthosis that should have been molded to a plaster model of the patient; 
<	 a flexible device that was coded as an orthosis that should have provided rigid 
control; 
<	 a device that was worn without a shoe but was coded as an orthosis that was 
designed to be worn with a supportive shoe; and 
<	 devices that are not orthotics at all but some other item, such as a girdle or athletic 
sock. 
All orthotics must meet general Medicare guidelines in order to be covered.  However, 
several groups of devices lack any additional coverage guidelines specific to their use. 
These include upper limb and hip devices, most of which have no requirement that they be 
individually fitted to the patient.  A majority of the miscoded devices we reviewed (59 
percent) do not have additional coverage guidelines specific to their use. 
Many beneficiaries with miscoded orthotics (43 percent) have more than one device that is 
problematic.  Of these, many have 3 or more miscoded devices.  In some instances, it is 
the combination of devices used that is not appropriate.  For example, a beneficiary may 
not have needed a particular add-on to their base orthotic or may have had more than one 
add-on device. 
Seven percent of beneficiaries have medically unnecessary orthotics 
Based on the medical necessity review, 7 percent of beneficiaries have one or more 
orthotic devices that is medically unnecessary, as illustrated in Chart 2 on the following 
page.  This represents 7 percent of the 1404 devices billed for our sample beneficiaries. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Chart 2
Medicare Beneficiaries Using Orthotics: Medical Necessity Review
The medically unnecessary orthotics used by these beneficiaries represent $9,935,500 in
excessive Medicare payments when projected to the total Medicare population.  This is a
conservative estimate, however, since we assumed that all the beneficiaries for whom we
had inadequate information had medically necessary devices. 
Most of the beneficiaries with medically unnecessary devices lack a medical condition or
diagnosis that warrants the prescription of an orthotic device.  Some beneficiaries could
have used a less complex device to obtain the same medical benefit.  Other reasons for the
lack of medical necessity include the use of an orthosis for preventive or palliative
purposes and a lack of evidence that the device is rehabilitative.  Specific examples of
beneficiaries using medically unnecessary devices include:
< a wheelchair-dependent patient who received devices to assist with ambulation;
< a patient who was prescribed an orthotic device for a foot condition that
developed only after the device was used; and
< a patient who had both a shoulder brace and an ankle-foot orthotic but whose
medical records only indicate a need for the latter.
About half of beneficiaries with medically unnecessary orthotics have more than one
problematic device.  For example, a beneficiary may have obtained several devices over a
short time frame when not all were required.  In one case, one beneficiary received six of
the same ankle-foot device within 1 year. 
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Medicare Payments for Orthotics-Inappropriate Payments      OEI-02-99-00120 An additional 16 percent of beneficiaries have orthotics that are medically 
questionable 
An additional 16 percent of beneficiaries have medically questionable orthotics.  The 
medically questionable orthotics used by these beneficiaries represent $1,165,200  in 
Medicare payments when projected to the total Medicare population.  In these cases, 
while there was often insufficient information to make a final determination on medical 
necessity, the physician reviewer noted devices that are suspect.  In many of these cases, 
our physician reviewer noted a questionable medical need for the device being used and a 
lack of documentation of the specific medical condition for which a device was prescribed. 
In other cases, there was no match between the device provided and the device prescribed 
or the claim date preceded the date of the physician prescription.  Another physician 
ordered the same exact devices for all of his patients, regardless of their medical condition. 
The physician reviewer also questioned the need for certain add-on devices and multiple 
billings for the same device.  In several cases, beneficiaries were provided with non-
corrosive finishes to braces that were made of stainless steel. 
Other cases are highly suspect 
In addition to the miscoded and medically unnecessary and questionable cases already 
discussed, other cases appear suspect.  Of the 1404 prescribed devices, 20 percent fall into 
one of the following 3 categories: we were unable to locate the prescribing physician, the 
physician reported no record of a patient, or the physician claimed never having ordered 
the device.  These suspect cases represent approximately $28,145,200 in Medicare 
payments when projected to the total Medicare population. 
Inadequate documentation and limited physician involvement also raise 
questions about the appropriateness of Medicare orthotic payments 
Inadequate documentation.  One concern noted in our reviews is the lack of adequate 
documentation to support beneficiaries appropriate use of orthotics. 
<	 Thirty-five percent of beneficiaries had suppliers who sent insufficient 
information to determine coding accuracy.  Most of these were custom fabricated 
and molded devices for which the supplier sent only a picture of the device from an 
industry manual.  Without an accompanying description of how the device was 
molded and fitted to the patients individual measurements, our coding reviewer 
was reluctant to make a final decision on coding accuracy. 
<	 Ten percent of beneficiaries had physicians who had inadequate documentation 
to determine medical necessity.  Of the cases passed to a physician for review, 10 
percent had inadequate medical information for our physician reviewer to make a 
determination on medical need. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Limited physician involvement.  Our medical record review also revealed a lack of 
physician involvement in beneficiaries use of orthotics.  Although physicians must sign the 
order for their patients device, there is not always an indication of their follow-up or 
other involvement.  More specifically, only 63 percent of devices were selected by 
patients physicians, and just 10 percent of devices are being used with a plan of care. 
Also, physicians notes are not consistently specific as to their patients need for an 
orthosis and do not always address how the device should be used. 
Furthermore, beneficiaries using orthotics appear to not always be receiving adequate 
care.  Only one-third of devices are being used with follow-up care to assure they are 
working as intended and are benefitting patients medically.  Nearly one half of the devices 
(47 percent) are not being used with physical therapy and more than half (64 percent) are 
not being used with occupational therapy, both of which could facilitate patients 
rehabilitation . 
The qualifications of orthotic suppliers vary, with non-certified 
suppliers in our sample the most likely to provide inappropriate 
devices 
Different groups supply orthotics 
The orthotic suppliers in our sample include a broad range of different provider groups. 
They most commonly include individual certified orthotists and prosthetists, as well as 
large durable medical equipment companies, some of whom report having certified 
orthotists on staff.  Podiatrists, orthopedic surgeons, and general practice physicians are 
also providing beneficiaries with orthotic devices.  Less typically, the suppliers in our 
sample include hospitals, radiologists, dermatologists, neurosurgeons, cardiologists, and 
anesthesiologists. 
Our supplier survey reveals that the qualifications of orthotic suppliers in our sample also 
differ.  Sixty-eight percent are certified; of these, some employ certified orthotists, some 
contract with certified orthotists, and others do both.  These differences in supplier 
qualifications are illustrated in Table 1 on the following page. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Table 1 
Orthotic Suppliers Staff Qualifications 
Staff Qualification  % of Suppliers* 
Certified Orthotist on Staff  52 
Contract with Certified Orthotist  9 
Both  7 
Neither  32 
*25% of suppliers did not return survey  Source: Supplier Feedback Survey 
Some orthotic suppliers also use technicians to mold and fit orthotic devices.  According 
to our survey, when specifically asked who molds and fits orthotics, 57 percent of 
respondents said non-certified staff.  However, most have a certified orthotist 
supervising the molding and fitting. 
Nearly half of non-certified suppliers provide inappropriate devices 
As shown in Table 1 above, we classify a supplier as non-certified if it has no certified 
orthotist on staff or does not contract with certified orthotists.  While there are fewer 
non-certified suppliers than certified suppliers in our sample, non-certified suppliers are 
more likely than certified suppliers to provide inappropriate devices.  Nearly half of 
these suppliers  (46 percent) provide inappropriate orthotics, compared to 16 percent of 
certified suppliers.  Miscoding appears to be the major problem with the devices 
provided by non-certified suppliers.  Most of the inappropriate devices they provide are 
inappropriate because they are not accurately coded.  Furthermore,  some suppliers 
provided insufficient documentation to make a determination on coding accuracy. 
Certified suppliers are the most likely to provide such insufficient documentation. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  RECOMMENDATIONS 
The findings of this report, as well those from the recently released OIG report 
Medicare Payments for Orthotic Body Jackets, reveal that Medicare is inappropriately 
paying for some orthotic devices.  Both studies identify miscoding as problematic, 
particularly for devices that are individually fitted to the patients measurements. 
Furthermore, this report shows that non-certified suppliers are the most likely to provide 
inappropriate devices. 
We therefore recommend that HCFA take action to improve Medicare billing for 
orthotic devices. 
The HCFA may want to consider the following options: 
CC	 Require suppliers to maintain a description of how custom fabricated and molded 
devices are made.  The OIG report on orthotic body jackets referenced above 
recommends that suppliers include detailed information on the products they 
provide on their claims.  The HCFA responded that this would be burdensome to 
providers and carriers.  To avoid such a burden, we suggest that a description need 
not be detailed and can be kept on file with the supplier.  It could include basic 
information such as whether or not a device was individually fitted to a patients 
specific measurements.  Such descriptions have already been developed by the 
SADMERC and are required when suppliers seek clarification on appropriate 
coding.  The SADMERC descriptions could be used as models for suppliers to use 
when billing for certain orthotic devices. 
C	 Develop product classification lists for all major groups of orthotic devices.  In its 
report on orthotic body jackets, the OIG recommended a revision of coding 
guidelines.  In its response, the HCFA stated that it would develop a product 
classification list for the body jacket code L0430.  We believe such lists would also 
be useful for all orthotic groups.  Given the complexity and rapid technological 
changes in the orthotics industry, understanding the appropriate coding for these 
devices can be confusing.  Product classification lists would help to clarify the 
appropriate codes for different types of devices.  The carriers are already 
discussing ways in which coding for orthotics can be clarified and we encourage 
their efforts. 
C	 Educate the supplier community.  We believe increased education of the supplier 
community will enhance their understanding of coding requirements and 
procedures. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  C	 Work with the DMERCs to strengthen the billing process for orthotics.  In our 
companion report on carrier perspectives on orthotics, we discuss several carrier 
practices and suggestions for improving the way in which orthotics are paid. 
These include developing additional screens and edits, requiring suppliers to 
submit a patient diagnosis as part of their claim, and establishing more specific 
guidelines for miscellaneous codes. 
We also recommend that HCFA require 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. 
The HCFA may want to consider establishing their own standards for orthotic suppliers 
or using already established industry certification. 
We believe that implementing these recommendations would eliminate as much as 
$43,007,300 annually in inappropriate Medicare orthotic payments. 
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 
D. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  APPENDIX A 
CONFIDENCE INTERVALS FOR KEY ESTIMATES 
We calculated confidence intervals for five key estimates.  The point estimate and 95% confidence 
interval are given for each of the following: 
KEY ESTIMATE  POINT ESTIMATE  CONFIDENCE 
INTERVAL 
Beneficiaries with  30%  +/- 4% 
miscoded device(s) 
Beneficiaries with medically  7%  +/- 4% 
unnecessary device(s) 
Beneficiaries with medically  16%  +/- 6% 
questionable device(s) 
Suspect cases (devices that  20%  +/- 3% 
physician did not prescribe, 
physician had no record of patient 
for, or for which we were unable 
to locate the physician) 
Certified suppliers in sample  68%  +/- 7% 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  APPENDIX B 
CONFIDENCE INTERVALS FOR DOLLAR PROJECTIONS 
We calculated confidence intervals for our dollar projections.  The projected total and 95% 
confidence interval are given for each of the following: 
CATEGORY  PROJECTED  CONFIDENCE 
TOTAL  INTERVAL 
Miscoded devices  $33,071,800  +/- $6,341,00 
Medically unnecessary devices  $ 9,935,507  +/- $4,440,683 
Medically questionable devices  $ 1,165,224  +/- $1,017,577 
Suspect cases  $28,145,200  +/- $ 6,617,352 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  APPENDIX C 
NON-RESPONDENT ANALYSIS 
We tested for the presence of any non-response bias in our coding and medical necessity reviews. 
For this inspection, a beneficiary for whom we did not obtain supplier documentation is a non-
respondent for our coding review; a beneficiary for whom we did not obtain medical records is a 
non-respondent for our medical necessity review. 
CODING REVIEW 
To test for non-response bias in our coding review, we obtained information from HCFAs 
National Claims History 1 percent file for all 500 beneficiaries for whom we requested supplier 
documentation.  We obtained such documentation for 390 beneficiaries.  The following table 
illustrates the number of supplier responses obtained and the response rate by strata 
STRATA  NUMBER  RESPONSE RATE 
1 ($50 - $100)  112  22% 
2 ($501- $1,000)  118  24% 
3 (> $1,000)  160  32% 
We analyzed three variables for the 500 beneficiaries in our sample - gender, total orthotic claims, 
and number of devices used.  These categorical variables were tested using Chi-square with the 
appropriate degrees of freedom.  In order for the results to be statistically significant at the 95 
percent confidence level, the Chi-square value must be higher than 3.84 with 1 degree of freedom. 
The results of this analysis are presented in Tables A, B, and C.  The Chi-square values given in 
the tables provide a test of the difference between the distribution of respondents and that of the 
non-respondents for the variable of interest.  Also provided in the tables are the response rates by 
the different values of the variables. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Table A 
GENDER 
Respondents  Non-respondents  Total  Response rate 
Male  147  38%  38  35%  185  79% 
Female  243  62%  72  65%  315  77% 
Total  390  110  500  78% 
Chi-square = .365  Degree of freedom = 1 
Table B 
CLAIM 
TOTALS 
Respondents  Non-respondents  Total  Response rate 
< $1,000  229  58%  71  64%  300  76% 
> $1,000  161  41%  39  35%  200  80% 
Total  390  110  500  78% 
Chi-square = 1.214  Degree of freedom = 1 
Table C 
# OF DEVICES 
Respondents  Non-respondents  Total  Response rate 
1 device  146  37%  55  50%  201  73% 
> 1 device  244  62%  55  50%  299  82% 
Total  390  110  500  78% 
Chi-square = 5.634  Degree of freedom = 1 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Tables A and B show no statistically significant differences between coding review respondents 
and non-respondents for gender and total orthotic claims. 
However, Table C shows a statistically significant difference between respondents and non-
respondents with respect to number of devices.  In order to test whether this difference 
introduced any bias, we analyzed the miscoding rate for differences between beneficiaries with 1 
device and those with more than 1 device.  The  miscoding rate differed by 9 percentage points 
between beneficiaries with 1 device and those with more than 1 device, so further analysis was 
required.  Assuming that non-respondents and respondents from the same group of beneficiaries 
had the same miscoding rate, we calculated a hypothetical miscoding rate for all 500 beneficiaries 
in the sample.  This calculation gave only a slightly higher miscoding rate of 32 percent (compared 
to 30 percent for respondents).  This difference is not statistically significant. 
Given the results of this analysis, we believe that the inspection findings fairly represent the 
experience of Medicare beneficiaries in our sample. 
MEDICAL NECESSITY REVIEW 
To test for non-response bias in our medical necessity review, we obtained information from 
HCFAs National Claims History 1 percent file for all 500 beneficiaries for whom we requested 
medical records.  We obtained such records for 314 beneficiaries.  The following table illustrates 
the number of medical records obtained and the response rate by strata 
STRATA  NUMBER  RESPONSE RATE 
1 ($50 - $100)  90  29% 
2 ($501- $1,000)  95  30% 
3 (> $1,000)  129  41% 
We analyzed three variables for the 500 beneficiaries in our sample - gender, total orthotic claims, 
and number of devices used.  These categorical variables were tested using Chi-square with the 
appropriate degrees of freedom.  In order for the results to be statistically significant at the 95 
percent confidence level, the Chi-square value must be higher than 3.84 with 1 degree of freedom. 
The results of this analysis are presented in Tables D, E, and F.  The Chi-square values given in 
the tables provide a test of the difference between the distribution of respondents and that of the 
non-respondents for the variable of interest.  Also provided in the tables are the response rates by 
the different values of the variables. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Table D 
GENDER 
Respondents  Non-respondents  Total  Response rate 
Male  114  36%  71  38%  185  62% 
Female  200  64%  115  62%  315  63% 
Total  314  186  500  63% 
Chi-square = .175 Degree of freedom = 1 
Table E 
CLAIM 
TOTALS 
Respondents  Non-respondents  Total  Response rate 
< $1,000  185  59%  115  62%  300  62% 
> $1,000  129  41%  71  38%  200  64% 
Total  314  186  500  63% 
Chi-square = .412  Degree of freedom = 1 
Table F 
# OF DEVICES 
Respondents  Non-respondents  Total  Response rate 
1 device  126  40%  75  40%  201  63% 
> 1 device  188  60%  111  60%  299  63% 
Total  314  186  500  63% 
Chi-square = .002  Degree of freedom = 1 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  Tables D, E, and F show no statistically significant differences between medical review 
respondents and non-respondents for gender, total orthotic claims, and number of devices. 
Given the results of this analysis, we believe that the inspection findings fairly represent the 
experience of Medicare beneficiaries in our sample. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120  APPENDIX D 
In this appendix, we present in full the comments from the Health Care Financing Administration. 
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Medicare Payments for Orthotics-Inappropriate Payments  OEI-02-99-00120