HHS OIG Releases Report Comparing Medicare Payment for Orthoses with Payments by Other Insurers


HHS Office of Inspector General Releases a Report Comparing Medicare Payment for Orthoses with Payments by Other Insurers

On October 30, 2019, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) released a report that compared Medicare payments for orthoses to payments made by non-Medicare payers from 2012-2015.  The OIG cited an increase in Medicare payments for certain spinal, knee, elbow, and wrist orthoses from $631.8 million in 2012 to $815.5 million in 2015 as the reason for conducting its investigation.  The OIG reported that for 142 orthosis codes, Medicare paid $337.5 million more than non-Medicare payers during the three-year review period.  The OIG reported that for 19 orthotic codes, Medicare actually paid $4.7 million more than non-Medicare payers during the same three-year period. 

AOPA was aware that the OIG was considering reviewing Medicare payments for orthoses compared with  non-Medicare payments, as the issue has been included in the OIG’s annual workplan since 2016.  Upon first mention in the 2016 workplan, AOPA notified members of the potential report and commissioned a legal memo from McGuire Woods, LLP that discussed the potential risks associated with charging Medicare more than a provider’s usual and customary charges. The 2016 communication to AOPA members and McGuire Woods memo can be viewed here.

In its recent report, the OIG recommended that, where applicable, the Centers for Medicare and Medicaid Services (CMS) consider using its inherent reasonableness or other authority to reduce (or to a much lesser extent, increase) the Medicare fee schedule for the 161 codes identified in the OIG report.  The OIG pointed out that existing CMS regulatory authority could be used to adjust fee schedules for 95 of the 161 codes.  The other 66 codes would require statutory changes to properly adjust the fees.  In its response to the OIG report, CMS stated that certain off-the-shelf (OTS) spinal and knee codes have already been included in the competitive bidding program scheduled for implementation in 2021 and fees should be adequately reduced as a result of provider competition. CMS also indicated that it would consider including additional OTS orthoses in future rounds of DMEPOS competitive bidding.  CMS also indicated that it has recently issued a final rule regarding calculating Medicare fee schedules for new HCPCS codes that may be useful in determining appropriate fees for new orthotic codes.

The potential impact of the OIG report will most likely take several years for CMS to implement through regulatory and legislative channels. AOPA understands the significant ramifications that this report may have on its members, the O&P industry in general, and especially Medicare beneficiaries who may be forced to receive substandard orthotic care from unqualified, non-certified, or non-licensed practitioners as a result of arbitrary and unreasonable reimbursement reductions.

Over the next several weeks, AOPA will be performing a comprehensive analysis of the potential impact, including individual analysis of each HCPCS code discussed in the report, the current and historic O&P provider market share of each code, and the potential impact a reimbursement reduction may have on each code.  Based on this analysis, AOPA will aggressively pursue all strategies that will reduce the impact of the OIG report and ensure that AOPA members can continue to provide high quality orthotic care to Medicare beneficiaries and receive equitable Medicare reimbursement.  AOPA will continue to provide updates on this issue.

The complete OIG report can be found here.

Questions regarding this issue may be directed to Joe McTernan at jmcternan@AOPAnet.org or Devon Bernard at dbernard@AOPAnet.org.