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MedPAC Annual Report to Congress Focuses on Orthoses

Posted by David McGill | June 18, 2018

​The Medicare Payment Advisory Commission – a nonpartisan legislative agency that provides Congress with policy advice about the Medicare program – just released its annual report to Congress. It includes a section that focuses in significant part on orthotic devices. Here's what you need to know:

  1. MedPAC notes that Medicare spending for OTS orthotics has grown rapidly, doubling from $255M to $547M between 2014 and 2016. That spending "is concentrated on relatively few products." Specifically, L0650 accounted for $190M and L1833 accounted for $107M of Medicare's 2016 total orthotics spend.

  2. According to the report, in 2016, only 25 physicians ordered 20% of all back braces paid for by Medicare. Many of these doctors have been disciplined by state medical boards before. This appears to be driven by telehealth companies employing these physicians and generating most of their business from television ads.

  3. The MedPAC also noted that internet searches it conducted for products described by L0650 and L1833 revealed huge differences between private payer rates for these items and "direct purchase" rates online, "suggest[ing] that the private-payer rates, while already below Medicare's rates, do not necessarily represent the lowest payment rates that Medicare could potentially obtain."

The MedPAC therefore recommended that OTS braces be included in a future round of competitive bidding. However, it also specifically floated the possibility of exempting physicians, orthotists, PTs, OTs and hospitals from the competitive bidding process. In other words, MedPAC signalled that it would be comfortable with orthotists, physicians, etc. being allowed to provide OTS orthoses without a competitive bidding contract; they would just have to accept the competitive bidding rates applicable to their geography.

What does this mean for you?

First, based on this data, scrutiny of spinal and knee bracing claims will likely continue to escalate. Second, we would also expect to see headlines about investigations into those companies that aggressively market spinal and knee orthoses to Medicare beneficiaries on television. Finally, talk of competitive bidding for orthoses will probably become more prevalent in the coming months. A key issue to watch is whether the concept of exempting orthotists, physicians and other providers from the competitive bidding process gains traction or not.

We will keep you advised of any further developments as they occur. 

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