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Report (OEI-07-10-00410)

CMS Has Not Promulgated Regulations To Establish Payment Requirements for Prosthetics and Custom-Fabricated Orthotics

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Section 427(a) of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) prohibits Medicare payments for prosthetics and custom fabricated orthotics unless the items are (1) furnished by a qualified practitioner and (2) fabricated by either a qualified practitioner or a qualified supplier. Section 427(b) of the BIPA required the Secretary to promulgate regulations to implement the requirements at section 427(a) of the BIPA. As required by 42 CFR 424.57(c)(12), Medicare suppliers must also maintain documentation supporting that prosthetics and custom fabricated orthotics were delivered to beneficiaries. In 2010, CMS allowed $276 million in Medicare payments for 257,797 prosthetic and custom fabricated orthotic claims (excluding accessories, additions, and other supplemental prosthetic and orthotic items).


We selected a sample of 1,135 Medicare-allowed claims for prosthetics and custom fabricated orthotics in 2010 to determine whether the claimed items (1) were furnished by qualified practitioners, (2) were fabricated by either qualified practitioners or qualified suppliers, and (3) met delivery documentation requirements. We interviewed CMS staff regarding the implementation status of the BIPA payment requirements.


To date, CMS has not promulgated regulations related to BIPA payment requirements for practitioner and supplier qualifications for prosthetics and custom fabricated orthotics. CMS has used other legal authorities that limit who can be paid for prosthetics and custom-fabricated orthotics; notwithstanding, in 2010, Medicare allowed nearly 1,000 claims inappropriately. Despite the lack of regulations, most claims were allowed for prosthetics and custom-fabricated orthotics furnished and/or fabricated by practitioners and/or suppliers that were licensed, certified, or accredited. Finally, Medicare inappropriately allowed 12 percent of claims for prosthetics and custom-fabricated orthotics that did not meet Federal requirements for delivery documentation.


We recommend that CMS (1) promulgate regulations to implement the BIPA payment requirements, (2) ensure that suppliers maintain delivery documentation that meets Federal requirements, and (3) take appropriate action to address inappropriately allowed claims identified in our sample. CMS concurred with all three recommendations.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.

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