Orthotics & Prosthetics
A Likely Expansion Opportunity
The most difficult part about the funding pressures being put upon HME providers is that, simply speaking, providers don’t want to leave the business in order to survive. HMEs are desperately seeking ways that they can somehow stay in home medical equipment, while gaining new revenue streams in order to content with the ravaging effects of programs such as CMS’s massive increase of pre- and post-payment audits and competitive bidding Rounds One and Two.
So, providers aren’t looking for an exit; they’re looking for an opportunity to expand, to branch out. One of the ways providers are doing this is through retail sales, but for businesses that are focused on revenue through funded patients, retail might serve as a supplement, but not necessarily a sustaining revenue source. Enter orthotics and prosthetics.
O&P leveraging providers’ expertise in helping patients, working with referral patients and handling claims to funding sources in order to give patients medical equipment that helps them live their daily lives. It’s a natural path of expansion. 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. Moreover, custom O&P represents an attractive funding environment, but it requires providers gain additionalexpertise and resources.
Funding in O&P is far more stable than traditional HME categories are, and the reimbursement margins are typically more favorable. Best of all, it’s not affected by competitive bidding. While CMS was considering adding off-the-shelf orthotics to competitive bidding, various industry and practitioner groups were able to preventthat from happening.
That said, it could be that CMS will increase audits in the area of O&P. While O&P facilities must be accredited and staff must be credentialed, CMS has seen higher error rates in certain types of O&P claims, which could drive increased audits. That said, HME providers might have an edge in that regard in that they have been creating the sorts of documentation procedures and systems for their standard HMEclaims that could help them ensure cleaner O&P documentation and claims.
The lynchpin element to providing O&P is credentials. A provider must found its O&P business on having 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. Moreover, in 13 states credentialing is mandated by those states’ licensureprocesses, and in the remaining states it is considered a best practice.
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 roughly15 hours’ approved education per discipline.
This ensures staff have education in both anatomy and physical sciences, as well as an understanding in the many comorbities that can occur in O&P patients, Clark says, with a primary example being diabetic patients. 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&Pneeds.
Accreditation is crucial for providers wishing to pursue providing O&P for Medicare beneficiaries. Providers adding or maintaining O&P must adhere to additional “Specialty Standards” that are labeled as Appendix C in CMS Quality standards. This section includes items that are Custom Fabricated and Custom Fitted Orthoses, Prosthetic Devices, External Breast Prostheses, Therapeutic Shoes and Inserts, and theirAccessories 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. Those quality standards can be downloaded from CMS as a PDF. It’s important to not that those quality standards are not just limited to custom O&P providers, but those offering off-theshelfoptions, as well.
Apart from off-the-shelf products, custom O&P requires custom manufacture for each patient. Each prosthetics is built to each patient’s specific needs, measurements and capabilities. This is especially true for the interface between the prostheticand the patient’s body , which is uniquely designed and built.
So providers must invest in manufacturing assets and space. This means equipment and space for doing adjustments and repairs, as well as specialized gear interms of microprocessor technology and computer equipment.
That said, not all manufacturing work must be done in house. Providers can outsource fabrication, which is becoming a popular mode for some O&P providers. Outsourcing lets those providers 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.
Points to take away:
- O&P represents a likely expansion opportunity for HME providers looking to leverage the sorts of business expertise and processes they already have in place.
- The funding environment for O&P is more stable, offers attractive margins, and doesn’t appear threatened by competitive bidding. That said, providers should expect an increase in audits.
- O&P requires a deep level of education and credentialing that is often required by state licensing requirements. Accreditation for Medicare is also required.
- For custom O&P, HMEs must put into place necessary shop space and equipment for unqiue fitting and fabrication.
In addition to credentials for Certified Prosthetist, Certified Orthotist, Certified Prosthetist-Orthotist, and Certified Orthotic Fitter from the American Board for Certification in Orthotics and Prosthetics, and the Board of Certification/Accreditation International, providers should check out MED Group’s Orthotics and Prosthetics Network and the VGM’s Orthotics and Prosthetics Group of America (OPGA). Both provide special networks and a tremendous level ofeducation, resources and support for HME’s moving into O&P.
This article originally appeared in the June 2012 issue of HME Business.