Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

MARCH 2000 

OEI-02-99-00121 

Medicare Payments for Orthotics 

Carrier Perspectives 
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 
EXECUTIVE SUMMARY 

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 patient’s 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 1 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 patient’s 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 “it’s 

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 2 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 3 OEI-02-99-00121 
TABLE OF CONTENTS 

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 4 OEI-02-99-00121 
INTRODUCTION 

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 individual’s 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 

patient’s 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 5 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 6 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 device’s 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 7 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 

bachelor’s 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 President’s Council on Integrity and Efficiciency. 

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Medicare Payments for Orthotics- Carrier Perspectives 8 OEI-02-99-00121 
FINDINGS 

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 9 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 patient’s 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 patient’s 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) doesn’t 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 10 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 “it’s 

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 offthe-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 11 OEI-02-99-00121 
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 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 12 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 13 OEI-02-99-00121 
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