Massive Medicare Orthotics Fraud Scheme Bolsters O&P Legislative Effort

Calling it “one of the largest health care fraud schemes in U.S. history,” the Department of Justice recently indicted 24 defendants and suspended Medicare payment privileges for 130 durable medical equipment companies for fraudulently billing $1.7 billion in Medicare orthotics.  The indictments included CEO’s and others associated with five telemedicine companies, including three licensed medical professionals.  The investigation involved over 80 search warrants in 17 federal districts, with tentacles reaching internationally into the Philippines and throughout Latin America.

The joint investigation involved the DOJ, the HHS Office of Inspector General, the FBI, CMS’s Center for Program Integrity, and the Internal Revenue Service.  The alleged scheme involved the payment of illegal kickbacks and brides by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that were medically unnecessary, according to the DOJ statement.  The defendants allegedly paid doctors to prescribe these orthoses either without any patient interaction or with only a brief telephonic conversation with patients they had never met, which were then shipped to the patient directly.

This type of announcement potentially tarnishes the reputation of the field, but NAAOP and its Alliance partners have been warning CMS, Congress, MedPAC and anyone else who would listen of these types of arrangements for months.  We continue to press CMS to move forward with implementing BIPA Section 427 to link Medicare payments for custom O&P care to accreditation and licensure status.

In addition, the new version of the Medicare O&P Improvement Act, which will likely be called the Medicare O&P Patient-Centered Care Act upon introduction in the 116th Congress, is likely to directly prohibit the drop shipment of orthoses and prostheses to beneficiaries, with certain limited exceptions.  This proposal to prohibit the shipment of orthoses and prostheses is expected to save the government money, which could be used to offset the cost of the proposal to restore Congressional intent by limiting the range of off-the-shelf orthotics subject to competitive bidding.

NAAOP will continue to work with AOPA, which is taking the lead on this legislation, as well as its Alliance partners, to advance this legislation and implement BIPA 427 for the benefit of O&P patients and the providers who serve them.

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