Department of Health and Human Services 

OFFICE OF


NSPECTOR GENERAL


MARKETING OF ORTHOTIC 

BODY JACKETS 

MANAGEMENT ADVISORY REPORT 

MARCH 1994 OEI-O4-92-O1O81

Department of Health and Human Services 

OFFICE OF 

NSPECTOR GENERAL 

MARKETING OF ORTHOTIC 

BODY JACKETS 

MANAGEMENT ADVISORY REPORT 

MARCH 1994 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services’ (HHS) 

programs as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspections conducted by three OIG operating components: the Office of Audit Services, the 

Office of Investigations, and the Office of Evaluation and Inspections. The OIG also informs 

the Secretary of HHS of program and management problems and recommends courses to 

correct them. 

OFFICE OF AUDIT SERVICES 

The OIGS Office of Audit Services (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. 

Audits examine the performance of HHS programs and/or its grantees and contractors in 

carrying out their respective responsibilities and are intended to provide independent 

assessments of HHS programs and operations in order to reduce waste, abuse, and 

mismanagement and to promote economy and efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIGS Offke of Investigations (01) conducts criminal, civil, and administrative 

investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 

unjust enrichment by providers. The investigative efforts of 01 lead to criminal convictions, 

administrative sanctions, or civil money penalties. The 01 also oversees State Medicaid fraud 

control units which investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECTIONS 

The OIGS Office of Evaluation and Inspections (OEI) conducts short-term management and 

program evaluations (called inspections) that focus on issues of concern to the Department, 

the Congress, and the public. The findings and recommendations contained in these inspection 

reports generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, 

and effectiveness of departmental programs. 

OEI’SAtlanta Regional Office prepared this report under the direction of Jesse J. Flowers, 

Regional Inspector General, and Christopher Koehler, Deputy Regional Inspector General. 

Principal OEI staff included: 

Atkmta Region Headquarters 

Jacqueline Andrews, Project Leader Tom Noplock


Betty Apt, Team Leader Barbara Tedesco


Peggy Daniel


Joe Townsel


To obtain a copy of this report, call the Atlanta Regional Office at (404) 331-5022.

EXECUTIVE SUMMARY


PURPOSE 

To describe marketing practices of orthotic body jacket suppliers. 

BACKGROUND 

In 1993, the Office of Inspector General (OIG) conducted an inspection to determine 

whether or not Medicare was appropriately billed for orthotic body jackets. We found 

that 

�	 Medicare claims and allowed charges for orthotic body jackets have increased 

substantially since 1990, and 

�	 95 percent of the orthotic body jacket claims paid by Medicare in 1991 under 

code L0430 were for non-legitimate devices. They did not meet the 

construction requirements and medical purpose of legitimate body jackets. 

While conducting the inspection, we found that many suppliers had questionable 

marketing practices and billed Medicare for non-legitimate devices. 

FINDINGS 

SupplikIX,Rather ?7um Physkians, Initiated Orders for Non-Le@imate Body Jackets 

Licensed orthotists told us physicians should refer patients needing orthotic body


jackets to orthotic suppliers. The orthotists said suppliers should not independently


market devices to patients themselves. The suppliers of orthotic body jackets should


have licensed orthotists trained to take patients’ measurements and custom-fit devices.


The non-legitimate devices we found in our sample were marketed by Durable


Medical Equipment (DME) salespersons before prescriptions or Certificates of


Medical Necessity (CMNS) were written by physicians. Typically, DME salespersons


marketed their devices for use by nursing home residents. Salespersons presented


their products to nursing home directors and physical therapists as restraint


alternatives to help patients sit upright in wheelchairs. When a patient agreed to


purchase a device, salesmen either completed a CMN or prescription, or gave nursing


home staff wording to use and they completed the CMN. The nursing home staff then


sent the CMN to a physician for signature. Either the DME salesperson or the


nursing home physical therapist, not a trained orthotist, made any adjustments to the


device.


i 
Physic&ms Roviiez.i No Control for I%venting Sales of Non-Legitimate Devices 

Most physicians of beneficiaries in our sample with non-legitimate devices were not 

aware of what they had signed a prescription or CMN for. They simply signed 

prescriptions or CMNS that had been completed either by suppliers or nursing home 

staff using suppliers’ wording. Twenty-two of 38 physicians who had signed CMNS for 

non-legitimate devices had never seen the devices. Eleven of the 22 had no record of 

prescribing any type of device. Most physicians who had seen devices did not realize 

suppliers had billed Medicare for more sophisticated devices. They assumed suppliers 

had billed for cushioned wheelchair seating supports rather than custom-fit orthotic 

body jackets. 

CMNS Did Not Assure Mdical Necessity 

CMNS were signed by physicians even though patient diagnoses and conditions listed 

on CMNS did not support the need for orthotic body jackets. 

Licensed orthotists told us legitimate orthotic body jackets are commonly used to treat 

injuries to the spine such as vertebra fractures and compression, and to facilitate 

healing following a surgical procedure on the spine or related tissues. 

None of the diagnoses listed on CMNS for non-legitimate devices indicated spinal 

injuries or surgical procedures. The diagnoses suggested that the patients could have 

problems sitting upright in wheelchairs, but most conditions were associated with 

advanced age rather than spinal injuries. Frequently mentioned conditions were 

dementia, osteoarthritis, Alzheimer’s and Parkinson’s. 

CONCLUSION 

To market a non-legitimate device as an orthotic body jacket, DME suppliers took 

advantage of (1) nursing homes’ desires for restraint alternatives, (2) nursing home 

patients with both Medicare and Medicaid not having to pay for the products, and (3) 

physicians’ laxity in attention to CMNS they signed. The extent of this practice raises 

serious questions about the value of CMNS and marketing in nursing homes (95 

percent of our sample were non-legitimate devices). 

OIG has inspections planned that will study this issue in detail. The inspections will 

look at (1) the usefulness of CMNS, (2) the appropriateness of payments for 

equipment, supplies, and professional services provided to beneficiaries in nursing 

homes, and (3) the role of physicians in controlling patients’ medical care. 

In the meantime, we suggest that HCFA continue to alert their regional fraud and 

abuse coordinators and contractors to potential abuse in this area, and advise 

contractors to exercise diligence in reviewing claims for orthotic body jackets. 

ii 
TABLE OF CONTENTS


PAGE 

EXECUTIVE SUMMARY 

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1


FINDINGS 

Suppliers Initiated Orders for Non-Legitimate


Body Jackets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...3


Physicians Provided No Control in Preventing


Sales of Non-I@timateD evices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...3


CMNs Did Not Assure Medical Necessity . . . . . . . . . . . . . . . . . . . . . . . . . . . ..4


CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

INTRODUCTION


PURPOSE 

To describe marketing practices of orthotic body jacket suppliers. 

BACKGROUND 

In 1993, the Office of Inspector General (OIG) conducted an inspectionto determine 

whether or not Medicare was appropriately billed for orthotic body jackets.1 The 

inspection was conducted in response to an allegation from a company which provides 

Medicare billing services to nursing homes. The allegation was that suppliers were 

billing Medicare approximately $1,200 per claim for devices consisting of “nothing 

more than a $50 piece of foam rubber.” The bills were submitted to Medicare with a 

code used for devices described by the Health Care Financing Administration (HCFA) 

as a ‘Thoracic Lumbar Sacral Orthosis (TLSO), Anterior-Posterior-Lateral Control 

(Body Jacket) with interface material custom fitted.” 

The OIG inspection found that 

�	 Medicare claims and allowed charges for orthotic body jackets have increased 

substantially since 1990, and 

�	 95 percent of the orthotic body jacket claims paid by Medicare in 1991 under 

code L0430 were for non-legitimate devices. They did not meet the 

construction requirements and medical purpose of legitimate body jackets. 

While conducting the study, we found that many suppliers used questionable 

marketing practices and billed Medicare for non-legitimate detices. Their practices 

differed from marketing practices of suppliers of legitimate devices. We describe 

those differences in this Management Advisory Report. 

SCOPE 

We focused this inspection on marketing practices for devices sold under code L0430 

of the HCFA Common Procedure Coding System. Our analysis of 1991 data for all 

body jacket codes showed that code L0430 had the most significant increase in number 

of claims. We conducted our inspection between May and October, 1993. 

~Officeof Inspector General, United States Departmentof Health and Human Sewices,Medicare 

Paymentsfor Orthotic BodyJackets. OEI-O4-92-O1O8O. 

1 
METHODOLOGY


We reviewed a one percent random sample of all Medicare paid claims for code


L0430 shown in HCFA’S 1991 Common Working File. Our sample comprised 95


claims.


To determine marketing practices of the suppliers who sold devices to beneficiaries in


our sample, we interviewed 46 nursing home administrators. Forty-four of our


intemiews were by telephone. We also reviewed marketing brochures for all 21


suppliers who had claims appearing in our sample.


To determine how suppliers of legitimate body jackets marketed their devices, we


consulted five licensed orthotists, three of whom were members of the American


Orthotic and Prosthetic Association (AOPA).


To determine physicians’ awareness of what they had prescribed, we sent


questionnaires to the 55 physicians in our sample for whom we had addresses.


Medicare requires that body jackets be prescribed by physicians. We got physicians’


addresses from Certificates of Medical Necessity (CMNS) that suppliers submitted with


their claims. Sixty-four of the claims in our sample were accompanied by CMNS, and


55 of those CMNS listed the physician’s address. Forty of the 55 (73 percent)


responded to our suwey.


This inspection was conducted in accordance with the Quality Standards for Inspections


issued by the President’s Council on Integrity and Efficiency.


2

FINDINGS


Suppliers, Rather Than Physicians, Initiated Orders for Non-Legitimate Body Jackets 

The licensed orthotists we interviewed said physicians of patients needing body jackets 

should refer patients to orthotic suppliers. The orthotists said suppliers should not 

independently market the devices to patients themselves. Medicare requires that 

medical necessity exist in order for an orthotic device to be covered by Medicare. The 

licensed orthotists told us physicians of patients with spinal problems should call 

orthotic suppliers to order body jackets for their patients. Trained orthotists employed 

by the suppliers then take patients’ measurements, order devices from manufacturers, 

and custom-fit the devices to ensure they provide the support needed to stabilize the 

spine. 

Conversely, the non-legitimate devices we found in our sample were marketed by 

Durable Medical Equipment (DME) salespersons before prescriptions or CMNS were 

written by physicians. Typically, DME salespersons marketed their devices for use by 

nursing home residents. Salespersons presented their products to nursing home 

directors and physical therapists as restraint alternatives to help patients sit upright in 

wheelchairs. When a patient agreed to purchase a device, the salesperson either 

completed a CMN or prescription, or gave nursing home staff appropriate wording to 

use and they completed the CMN form. The nursing home staff then sent the CMN 

or prescription to a physician for signature. Either the DME salesperson or the 

nursing home physical therapist, not a trained orthotist, made any adjustments to the 

device. 

This particular marketing strategy was effective because the 1990 Omnibus Budget 

Reconciliation Act prohibited the use of physical restraints with nursing home patients, 

and nursing home staff needed alternatives. Further, salespersons pointed out to the 

nursing home staff and patients’ families that there is no expense to patients covered 

by Medicaid. Medicare covered 80 percent of the cost and Medicaid the remaining 20 

percent. 

Physicians Provided No Control For Preventing Sales of Non-Legitimate Devices 

Physicians provided no control for assuring the medical need and legitimacy of orthotic 

body jackets. Most physicians of beneficiaries in our sample with non-legitimate 

devices were not aware of what they signed a prescription, or CMN, for. They simply 

signed prescriptions or CMNS that had been completed either by suppliers or nursing 

home staff using suppliers’ wording. In many instances, physicians never saw the 

products, and when they did, they did not realize suppliers had billed Medicare for 

more sophisticated devices. They assumed suppliers had billed for cushioned 

wheelchair seating supports rather than custom-fit orthotic body jackets. 

3

One physician we surveyed said he was “outraged by the commercialization of the 

[non-legitimate] product.” He had a large nursing home practice, and in one nursing 

home with approximately 60 patients, he had received 30 to 40 requests for such 

products. According to the physician, “Salesmen go out and sell the nursing home 

staff on the product and then believe the doctor will simply sign off.” 

In our survey, we found that many physicians did simply sign off on suppliers’ orders, 

and, typically, their patients received non-legitimate devices. Most of the CMNS 

physicians signed either had the word orthotics or TLSO on the CMN. However, 

many physicians expressed surprise when we told them Medicare had paid for an 

orthotic body jacket. 

�	 Of the 40 physicians who had signed CMNS and responded to our survey, 2 had 

patients with legitimate orthotic devices. Patients of the other 38 physicians 

received non-legitimate devices. 

�	 Twenty-two of the 38 physicians who had signed CMNS for non-legitimate 

devices had never seen the devices they had prescribed. 

�	 Eleven of the 22 who had not seen the devices had no record of prescribing 

any type of device. Two physicians said their patients would have had no need 

for devices because they were totally bedridden. All the CMNS had signatures, 

and we did not try to determine if the signatures were those of the physicians 

or had been forged. 

�	 Of 16 physicians who had seen the devices, 13 described the devices their 

patients had as cushioned wheelchair supports, which according to the licensed 

orthotists we interviewed, are not legitimate orthotic body jackets. Yet, these 

devices were billed to Medicare as custom-fitted body jackets. 

�	 Thirteen of the 16 physicians who had seen the devices said they thought the 

approximate $900 Medicare allowed for orthotic body jackets (under code 

L0430) was excessive for the cushioned wheelchair supports received by their 

patients. One physician said the device his patient had was “unsophisticated, 

[and] clearly inexpensive to produce.” 

CMNs Did Not Assure Medical Necessity 

CMNS provided no control for assuring medical need for orthotic body jackets. CMNS 

were signed by physicians even though patient diagnoses and conditions listed on the 

CMNS did not support the need for orthotic body jackets. 

The licensed orthotists we interviewed told us legitimate orthotic body jackets are 

commonly used to treat injuries to the spine such as vertebra fractures and 

compressions, and to facilitate heaIing following a surgical procedure on the spine or 

4 
related tissues. Diagnoses on the CMNS of the two patients with legitimate body 

jackets were spinal stenosis (narrowing and constriction of diameter) and compression 

fracture. 

None of the diagnoses listed on the CMNS for non-legitimate devices indicated spinal 

injuries or surgical procedures. The diagnoses suggested that the patients could have 

had problems staying upright in wheelchairs, but most conditions were associated with 

advanced age rather than spinal injuries. 

Most CMNS listed more than one diagnosis for each patient. Frequently mentioned 

conditions were dementia (18 patients), osteoarthritis (12 patients), Alzheimer’s and 

Parkinson’s (five patients each). Over three-fourths of the CMNS (55 of 64) listed 

“lumbar sacral dysfunction” as a primary or secondary diagnosis. None of these 

conditions normally require an orthotic body jacket, according to the licensed 

orthotists we interviewed. At least two of the CMNS stated that previous treatment 

for the patients’ conditions had been restraints. 

CONCLUSION 

To market a non-legitimate device as an orthotic body jacket, DME suppliers took 

advantage of (1) nursing homes’ desires for restraint alternatives, (2) nursing home 

patients with both Medicare and Medicaid not having to pay for the products, and (3) 

physicians’ laxity in attention to CMNS they signed. The extent of this practice raises 

serious questions about the value of CMNS and marketing in nursing homes (95 

percent of our sample were non-legitimate devices). 

OIG has inspections planned that will study this issue in detail. The inspections will 

look at (1) the usefulness of CMNS, (2) the appropriateness of payments for 

equipment, supplies, and professional services provided to beneficiaries in nursing 

homes, and (3) the role of physicians in controlling patients’ medical care. 

In the meantime, we suggest that HCFA continue to alert their regional fraud and 

abuse coordinators and contractors to potential abuse in this area, and advise 

contractors to exercise diligence in reviewing claims for orthotic body jackets. 

5