Medicare

Medicare pays for braces and artificial limbs when beneficiaries need them due to injury or illness. Beginning in 1989, a fee schedule replaced the reasonable charge system as a way of paying for these items. GAO believes that because the fee schedule for braces and artificial limbs covers the costs of the devices as well as related professional services, there is no need to establish separate fees for orthotic and prosthetic practitioners. Also, contrary to industry concerns, physician charges had little effect on Medicare's initial fee schedule payment rates. GAO identified 42 items paid for under the orthotic and prosthetic fee schedule that did not require professional fabrication or fitting services. These items, including sterile saline solutions, ostomy supplies, and off-the-shelf braces, could be moved to a more suitable fee schedule category, saving an estimated $12 million annually. GAO also found considerable variation in coverage criteria for braces and artificial limbs among Medicare's claims-processing contractors. This variation could result in payments for the same item being authorized in some areas and denied in others. Recent steps taken by Medicare should remedy this problem.

GAO found that: (1) a separate fee schedule for the O&P practitioners' professional services is not needed; (2) the current fee schedule includes a category for O&P professional services; (3) ostomy and urological supplies could be reclassified as inexpensive or routinely purchased durable medical equipment, since they do not require a significant amount of service from the supplier; (4) carriers use different medical criteria when making coverage decisions for braces and artificial limbs; (5) the Health Care Financing Administration's reduction in the number of carriers processing claims could result in the application of more consistent criteria; and (6) Medicare carriers make coverage decisions based on local medical policy and national guidance.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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