Business Solutions

A Springboard into Orthotics & Prosthetics

Exploring the opportunities, considerations of diving into orthotics and prosthetics.

orthotics and prostheticsSwimming in sparkling blue waters of the orthotics and prosthetics sector have been looking increasingly inviting to many HME providers who have been treading water in the increasingly murky depths of Medicare.

With the chilling effects of competitive bidding; draconian pre- and post-payment audits; as well as a host of discipline-specific cuts, such as the removal of the first month purchase option for power mobility, or the rental cap on oxygen, many long-time HME providers are ready to dive into O&P.

If anything, pursuing O&P is not an attempt to jump out of traditional HME services, but rather an attempt to jump out of the way of a slash-happy CMS juggernaut that is on an seemingly unstoppable trajectory, crushing Medicare funding for HME in its path. And for many providers, it is a jump up into expanded business horizons, as well as the opportunity to return to providing high quality care to patients that need it.

A Logical Option

These factors have naturally generated increased interest on the part of traditional providers in recent years to investigate the O&P sector to see if there are opportunities to expand into that space. And, in many cases, it can make logical sense for a provider to springboard into O&P.

“As revenues are being compromised in the HME/DME world, the HME businesses are looking to find other areas of increasing their revenue; what other portions of the market they can get into,” says Dennis Clark, CPO, president of the VGM Group’s Orthotics and Prosthetics Group of America. “And I think that a close ally in terms of patient population, in terms of referral sources, and in terms of demographics is orthotics and prosthetics.”

And here we might want to define some terms. O&P covers both off-the-shelf orthotics and prosthetics, as well as the truly custom items that are made to fit a single patient’s needs. The custom O&P offerings are the items that have the largest margins and offer the best opportunity for true business growth, but both types can fit well with many HME provider business models and disciplines, notes Clark, who also is president and co-owner of Clark and Associates Prosthetics and Orthotics, which operates five locations in Iowa.

“For instance, the business flow and structure for the provision of custom orthotics and prosthetics is very similar to the provision of complex rehab technology,” says Tim Pederson, director of The MED Group National Rehab Network and National Orthotics and Prosthetics Network. “This means we have detailed medical policies for the qualification of these items along with the need for credentialed clinical personnel to deliver these items to patients. Providers need to understand that custom orthotics and prosthetics will require an investment of both time and money to be fully credentialed and meet all the clinical requirements. There is also a growing need for qualified off the shelf orthotic providers to work with the aging population.”

So, for a provider that has a history of understanding custom patient needs, custom O&P makes solid sense, whereas providers coming into O&P without that perspective might be better suited to non-custom options.

“Complex Rehab providers will recognize the business model of the custom O&P provider,” Pederson explains. “We also have significant opportunities for HME providers to branch into the non-custom side of O&P. Off-the-shelf bracing, with proper metrics, can be a tremendous opportunity for HME providers.”

But to get to right down to the real nitty-gritty, the central attraction for the O&P sector is, simply put, funding. Apart from margins, the funding environment for O&P isn’t nearly as unstable as it is in traditional DME. For starters, it isn’t subject to competitive bidding.

“O&P is not covered in the competitive bidding scenario,” Clark says. “Now when it comes to audits and things like that, certainly we’re being looked at, because it is DMEPOS, which means that orthotics and prosthetics are lumped into that same basket.

“But there are a couple of caveats,” he continues. “One, in the O&P world, there is a need for credentialed practitioners, and, two, facility accreditation. Those two things lend themselves to a little more finite documentation potential, so you tend to fare fairly well with respect to the audits, because of that and the governance procedures that are built into the facility accreditation that have been there for a number of years.”

Clark adds that O&P association leaders would be quick to argue that increasing regulatory requirements are putting strain on the O&P world, but it is not experiencing the drastic regulatory constraints and funding cuts that are happening in the HME environment. However, that doesn’t necessarily mean things will stay that way.

“The state of funding for O&P is stable with a history of consistent increases in reimbursement,” Pederson says. “It was thought that CMS would try to include off-the-shelf orthotics in Round Two of competitive bidding, but the O&P industry trade associations and practitioner groups that make up the O&P Alliance were successful in preventing this.

“This doesn’t mean that the industry doesn’t face some significant challenges,” he adds. “The audits that have become common for HME and complex rehab suppliers are now becoming more common on the O&P side. Since CMS has not had a history of vigorous auditing on the O&P side, providers have been largely unprepared for this level of scrutiny. CMS is finding significant error rates in certain areas of O&P. As a result, it is expected that CMS will ramp up these efforts in the near future.”

Essential Credentials

The essential, underpinning element to providing O&P is credentials. Before a provider puts workshop space into place, before it integrates billing and claims procedures, before it starts talking to referral sources, it must have the right staff and expertise on board. In that regard, there are three key credentials: Certified Prosthetist, Certified Orthotist, and the combination Certified Prosthetist-Orthotist. There is also a certification for Certified Orthotic Fitter.

There are two main deemed authorities for credentialing in O&P that truly specialize in the space, and they are the American Board for Certification in Orthotics and Prosthetics, and the Board of Certification/Accreditation International (BOC). Each has a national board exam, and both have educational requirements in accredited educational facilities from universities and colleges, followed by a residency program, as well as ongoing continuing educational requirements of roughly 15 hours’ approved education per discipline.

“I advocate strongly for credentialed practitioners credentialed by nationally recognized credentialing organizations,” Clark says, joking that he might be a bit biased because he was once president of the American Board for Certification in Orthotics and Prosthetics. “So those practitioners come with a price tag. You need to be able to provide a full line of service. You’re going to have a space requirement within your facility. You’re going to have to do some marketing to let people know you’re in the O&P world and what services you provide. So, it comes down to quality and speed just like HME/ DME. But it’s really important to credentialed and trained staff.

“The value of the credentials is so that the people who are getting serviced and are reimbursing for service know what they are getting, and that the people that are providing it are making decisions that keep patients from getting into troublesome situations,” he continues. “By going through your requisite education prior to going into your residency program, and then taking national board exams, you have actual education in both anatomy and physical sciences. So these courses let you understand what’s going on more clearly. It doesn’t’ put you in a diagnostic mode, but you’re able to recognize warning signs for patients so that they don’t end up with an ulceration, for instance.”

There are many comorbities that can occur with O&P patients, Clark says, with a primary example being diabetic patients. As diabetes moves forward to the point that a patient has undergone an amputation, these high-risk patients might have balance and visual issues, as well as insensate parts of their bodies. The O&P providers’ credentialed staff can be part of helping those patients plan and prevent problems from occurring as a result of those conditions, as well as helping them manage their care in regard to their O&P needs.

“It’s a management service of orthotic and prosthetic needs,” he explains. “In doing so, you’re establishing long-term goals, and doing followup appointments, and you’re measuring patients’ performance to make sure that they’re functioning at as high a level as they can — and to make sure that they’re not putting themselves at risk.”

Pederson echoes Clark’s point about properly qualified and credentialed staff, and adds that it’s not just a good idea, but required for operation in many states.

“In 13 states this is mandated by the licensure process,” he says. “In the remaining states it is considered a best practice, and this is largely regulated through the efforts of the accreditation bodies, the manufacturers, and industry trade associations. If you don’t have certified O&P practitioners on staff you should absolutely not provide custom O&P. There are areas of non-custom O&P that may be provided by Certified Fitters, and it is a good idea to have one of these people on your staff regardless of the existence of state licensure mandates in your particular location.”

Besides credentials, accreditation is crucial for providers wishing to pursue providing O&P for Medicare beneficiaries, according to Sandra Canally, RN, BS, president of accrediting organization The Compliance Team.

“When a provider wants to either add or maintain O&P items to the products for which it is accredited and for which it can bill Medicare, it must adhere to additional ‘Specialty Standards’ that are labeled as Appendix C in CMS Quality s See us at Medtrade Spring Booth #1661 tandards,” Canally says.

“This section includes items that are Custom Fabricated and Custom Fitted Orthoses, Prosthetic Devices, External Breast Prostheses, Therapeutic Shoes and Inserts, and their Accessories and Supplies; Custom-Made Somatic, Ocular and Facial Prostheses.

“A provider billing or bidding for those products must meet all of the requirements in the Quality Standards,” she says.

Those quality standards can be downloaded from CMS as a PDF at It’s important to not that those quality standards are not just limited to custom O&P providers, but those offering off-the-shelf options, as well.

“Depending on the product, in-person fitting and adjustment may be required, which then eliminates having the item drop shipped,” Canally adds. “The provider must reference CMS quality Standards for definition of terms in order to get a complete picture of what is required.”

Shop Space

While there are many off-the-shelf opportunities, custom O&P really comes does to custom manufacture for each patient. No two prosthetics are identical. They are all built to each patient’s specific needs, measurements and capabilities, and, of course, the interface between the prosthetic and the patient’s body is uniquely designed and built. This requires manufacturing assets and space.

“Without question there is going to be a capital expansion need,” Clark says. “There are going to be some dollars needed and space requirements. Prosthetically, every single job is custom; orthotically, sometimes custom, sometimes not custom. But if you’re really going to compete in the orthotic and prosthetic world, you have to be able to do custom orthotics and prosthetics.

“In order to do that custom work and manage that custom work, you’re going to have to have some pieces of equipment; you’re going to have to have some space for doing adjustments and repairs; some equipment in terms of microprocessor technology and computer equipment,” he adds.

To do all the work, the provider can manufacture in-house, or it can outsource fabrication. This is becoming a popular mode for some O&P providers, because it lets them realize current technologies without having expend front end capital on the latest assets and staff training, which could make a “very good first step” for some providers.

“And then, possibly down the road, you can make the decision that you want to do more things in-house,” Clark adds. “But outsourcing is getting to be so good and so fast that you can almost outsource it as fast as you can built it in-house.”

The Right Relationships

Just like the HME space, forging relationships with the right referral partners is critical to success in orthotics and prosthetics. Providers must identify which sources will send the right patients their way and then ensure they stay at the fore of those partners’ minds. Fortunately, many providers moving into O&P will be covering familiar territory in this regard.

“In many cases, the referral sources for O&P are the same people who refer complex rehab,” Pederson says. “Orthopedic surgeons, neurosurgeons, physiatrists, and neurologists are the key physician groups in this space. “In addition, inpatient rehab centers, outpatient rehab centers, schools, long term care facilities, and therapy clinics are excellent sources of patients,” he adds. “HME suppliers who provide comprehensive services may be surprised to find out how many of their existing patients use O&P services. Since they already have a relationship with this patient base, it is possible to convince those patients to try your new O&P services. Patients would rather deal with fewer providers, and if they have comprehensive needs, they might wish to deal with one comprehensive provider.”

“This is a great opportunity to re-think their marketing objectives and business goals,” Clark says. “A lot people are successful and business and continue to do things the way they’ve always done. Now you’re looking at adding a new line of business potential, and a light comes on and you start visiting case managers and discharge planners and people like that, and you start working a little more closely with some of the people outside your normal referral network and start learning about their goals and objectives for their patients, and it expands you into other areas.

“I’m a firm believer that multiple attempts and multiple projects lead to multiple successes,” he explains. “So for some people it will always be the same referral sources they’ve worked with, and yet other people will find new avenues and create a new level of cross referral that they have never done before because of the professional that they will meet who are really tuned into orthotic and prosthetic care.”

In terms of identifying new referral partners, there are multiple specialties providers which whom providers want to meet.

“There are specialties everywhere,” Clark explains, from the patient’s perspective. “Sometimes the family practice physician doesn’t have the expertise to help you navigate the care that you need prosthetically and orthotically. So, within the community, you might have physical medicine rehabilitation physicians, rehabilitation centers that you talk with who can assess your physical status and talk to you about your goals and objectives, and work with a credentialed practitioner in orthotics and prosthetics to help you meet those goals.”

And when it comes to forging patient relationships, it is worth noting that this degree of specialization and custom fitting involved in the creation of prosthetics and orthotics can forge patient relationships that last a lifetime. That kind of long-term relationship is not only rewarding from a business standpoint from the perspective of patient care, which is what drives many providers to come to orthotics and prosthetics in the first place.

“If I’m in a hospital, and you come to see me and you talk to me about life after my amputation, and you make me my first prosthesis and I’m able to get up and get back to my normal activities, I’m going to love you forever, and I’m going to come to you forever for my care,” Clark says. “If you hook up with orthotist or prosthetist that is caring and educated in providing quality care, you’ll be with them for the life of your prosthetic and orthotic needs.”

This article originally appeared in the April 2012 issue of HME Business.

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