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Recent Medicare Fraud in Florida and the Need for Restrictions on Billing for Orthotic and Prostheti

To: Mark B. McClellan, MD, PhD Administrator – Centers for Medicare & Medicaid Services Department of Health and Human Services

From: Mark DeHarde – NAAOP President Michael E. Hamontree – AOPA President David F. Moretto, CP, FAAOP – AAOP President William W. DeToro, CO, FAAOP – ABC President

Dear Dr. McClellan:

The aforementioned organizations wish to express our deep concern regarding the recent fraud in southern Florida involving the submission of claims for prosthetic care. We believe that the actions in Florida demonstrate the need for CMS to restrict payment for orthotics and prosthetics to qualified orthotists and prosthetists. Such a policy will help ensure that the fraud perpetrated in Florida does not occur again.

It is our understanding that 48 Medicare durable medical equipment (“DME”) suppliers acted in concert and billed Medicare for approximately 21,000 artificial limbs that were neither medically necessary nor provided to Medicare beneficiaries. Based on published reports of this incident, the direct cost to the government for this fraud was approximately $122 million.

After independent investigation of this incident, we have found that none of the 48 suppliers that billed for these prostheses are accredited by the American Board for Certification in Orthotics and Prosthetics (“ABC”), a nationally recognized credentialing authority for prosthetists and orthotists. To the best of our knowledge, none of these DME suppliers had a licensed prosthetist on staff, despite the fact that Florida requires licensure for prosthetists. Finally, none of these suppliers are members of the Florida Association of Orthotists and Prosthetists, the American Academy of Orthotists and Prosthetists, the American Orthotic and Prosthetic Association, or the National Association for the Advancement of Orthotics and Prosthetics. In other words, the fraud that recently occurred in Florida involving the submission of claims for prosthetic services was not committed by prosthetists (or prosthetic facilities) who are in the mainstream of organized, professional prosthetic care.

The federal government has long recognized an increased likelihood of abuse in the orthotics and prosthetics (“O&P”) field when unqualified suppliers provide such services. For example, in 1997 the HHS Office of Inspector General recommended that CMS “consider stricter standards for whom is allowed to bill for orthotics, such as requiring professional credentials for orthotic suppliers.”1 In Section 427 of the Benefits Improvement and Protection Act of 2000 (“BIPA”), Congress addressed the matter by providing that Medicare shall only pay for prosthetics and custom-fabricated orthotics if furnished by a “qualified practitioner.”2 We believe that the recent events in southern Florida should reinforce the government’s longstanding view that Medicare should not pay for O&P care provided by unqualified practitioners.

Our research has revealed that in the recent past, approximately 28,000 Medicare suppliers have indicated their intention in their Medicare supplier application form to submit claims for orthotic and prosthetic services. However, there are only approximately 1,320 O&P facilities accredited by the ABC. This discrepancy reflects the fact that a large number of suppliers are routinely billing Medicare for O&P services without any certification or accreditation (or other objective indication) to demonstrate that they are qualified to provide the full range of professional O&P services.

In the immediate future, CMS has two opportunities to address this concern. First, we understand that CMS expects to publish proposed regulations in November 2005 implementing the “qualified practitioner” and “qualified supplier” requirements of §427 of the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 (“BIPA”). BIPA §427 limits Medicare payment of prosthetic and certain types of orthotic care to the following providers:

‘(iii) QUALIFIED PRACTITIONER DEFINED- In this subparagraph, the term `qualified practitioner’ means a physician or other individual who–

‘(I) is a qualified physical therapist or a qualified occupational therapist;

‘(II) in the case of a State that provides for the licensing of orthotics and prosthetics, is licensed in orthotics or prosthetics by the State in which the item is supplied; or

‘(III) in the case of a State that does not provide for the licensing of orthotics and prosthetics, is specifically trained and educated to provide or manage the provision of prosthetics and custom-designed or -fabricated orthotics, and is certified by the American Board for Certification in Orthotics and Prosthetics, Inc. or by the Board for Orthotist/Prosthetist Certification, or is credentialed and approved by a program that the Secretary determines, in consultation with appropriate experts in orthotics and prosthetics, has training and education standards that are necessary to provide such prosthetics and orthotics. ‘(iv) QUALIFIED SUPPLIER DEFINED- In this subparagraph, the term ‘qualified supplier’ means any entity that is accredited by the American Board for Certification in Orthotics and Prosthetics, Inc. or by the Board for Orthotist/Prosthetist Certification, or accredited and approved by a program that the Secretary determines has accreditation and approval standards that are essentially equivalent to those of such Board.’.

If appropriate regulations implementing these statutory provisions were in effect today, the fraudulent activity that occurred in southern Florida may well have been prevented.

Second, we understand that CMS is in the process of implementing §302(a)(1) of the Medicare Modernization Act of 2003, which requires the Secretary to establish “quality standards” for orthotic and prosthetic providers. It is also our understanding that CMS is currently inclined to rely on independent accreditation of providers to satisfy this legislative mandate. Implementation of regulations interpreting these statutory sections offers CMS the opportunity to potentially eliminate a recurrence of the recent events in southern Florida by limiting Medicare reimbursement for comprehensive O&P services to certified orthotists and prosthetists and accredited O&P facilities. To this end, we encourage CMS to coordinate the regulatory teams developing these two different sets of regulations so that the final regulations will be substantively consistent.

We recognize and agree that CMS must avoid unnecessarily curtailing patient access to O&P care as it implements regulations for these statutory provisions. CMS, therefore, may want to consider a tiered credential that would permit “off-the-shelf” orthotics to be provided by individuals and facilities that achieve a lesser qualification standard, and more comprehensive orthotics and all prosthetics to be provided by those who achieve a higher credential, namely state licensure where applicable, or certification and/or accreditation by the ABC or BOC.

By limiting reimbursement for comprehensive O&P care to accredited O&P facilities or through state licensure, CMS will protect both beneficiaries and the Medicare program. CMS will protect beneficiaries because reliance on state licensure or ABC or BOC accreditation ensures that only practitioners with sufficient education, experience, and appropriate patient care facilities to ensure patient evaluation and follow-up will provide complex O&P care. CMS will protect the Medicare program because Medicare will only reimburse the full range of orthoses and prostheses when provided by an individual who has made a substantial commitment to the profession of orthotics and prosthetics, as reflected by the individual having completed the often rigorous education requirements of state licensure or the ABC or BOC certification processes. In contrast, the recent fraud in southern Florida demonstrates the problem with the current system—individuals can bill Medicare for comprehensive O&P care merely by securing a DMEPOS supplier number.

In conclusion, we hope that CMS recognizes the recent events in southern Florida for what they are—not a black mark on the O&P profession, but evidence of the need for CMS to work closely with existing O&P organizations in order to protect the Medicare program, the O&P field, and beneficiaries from the actions of unqualified suppliers.


  1. Medicare Orthotics (OEI-02-95-00380), HHS Office of Inspector General (October 1997), available at

  2. Benefits Improvement and Protection Act of 2000, Pub. L. No. 106-554, § 427, 114 Stat. 2763, 2763A-520 (2000).

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