Medicare Remains Vulnerable to Fraud, Waste, and Abuse Related to Off-the-Shelf Orthotic Braces, Which May Result in Improper Payments and Impact the Health of Enrollees

Why OIG Prepared This Portfolio

From calendar years (CYs) 2014 through 2020, Medicare paid approximately $5.3 billion for orthotic braces provided to Medicare enrollees. The Centers for Medicare & Medicaid Services (CMS) found that orthotic braces were consistently among the top 20 items of durable medical equipment, prosthetics, orthotics, and supplies with the highest improper payment rates. Adequate CMS oversight is critical in ensuring that Medicare enrollees continue to have access to and receive medically necessary braces.

This portfolio provides an overview of vulnerabilities identified in prior Office of Inspector General (OIG) audits, evaluations, and investigations and issues identified in our analysis of Medicare claims data related to off-the-shelf (OTS) orthotic braces from CYs 2018 through 2020.

Issues Identified in This Portfolio

Based on our review of the vulnerabilities identified in OIG’s prior work and our analysis of Medicare claims data, we identified issues related to CMS’s oversight of OTS braces, including the following: (1) providers ordered braces for enrollees for whom there was no history of a treating relationship, (2) new suppliers were located in geographic areas with known Medicare fraud, (3) Medicare paid more than private payers for OTS braces, and (4) suppliers used prohibited solicitation to contact enrollees.

These issues continue to put Medicare and its enrollees at risk and demonstrate the need for CMS to strengthen its oversight related to supplier billing requirements, ordering provider requirements, supplier enrollment and monitoring, Medicare allowable amounts for OTS braces, telemarketing to Medicare enrollees, and fraud related to OTS braces. If not addressed, these issues could result in improper payments, potential enrollee harm, and Medicare paying more than non-Medicare payers, such as private insurance companies, for OTS braces.

What Action Is Needed and CMS Comments

To reduce the risk of fraud, waste, and abuse related to OTS braces and to protect the health of Medicare enrollees, we recommend that CMS strengthen its oversight of Medicare billing for OTS braces by: (1) taking steps to prevent payments for claims for replacement OTS braces billed without required modifiers; (2) identifying providers who ordered OTS braces for enrollees with whom they had no treating relationships, and use that information to determine whether to provide additional education to or take administrative or legal action against the ordering providers or associated suppliers; (3) analyzing supplier billing patterns to determine whether to conduct additional prepayment or postpayment reviews of suppliers; (4) ensuring that Medicare allowable amounts are reasonably comparable with payments made by non-Medicare payers; (5) educating suppliers and enrollees on telemarketing practices for OTS braces; and (6) using predictive data analysis and information from other Federal agencies and from State agencies to identify emerging fraud schemes related to OTS braces, and using CMS’s authority to prevent further losses to the Medicare program.

CMS did not state whether it concurred with our recommendations but described its efforts to reduce and prevent improper payments related to OTS braces.