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The Damage of Regulation in the Healthcare Industry: Nothing New

The Affordable Care Act has been the focus of the media’s attention for months. As the website fails, premiums skyrocket, and millions lose their health insurance plans and doctors, a once polarizing bill has congregated Democrats and Republicans as they question the law and attempt to fix it.

Yet, this law isn’t entirely novel. Big government policies have crippled fields within the healthcare industry for years. While President Obama attempts to defend his broken promise by claiming Obamacare options are better than the insurance people have lost because of it, this “we know best” mentality of big government is overplayed and dangerous. This is particularly true within the Orthotics and Prosthetics field (O&P).


O&P is not a well-known profession—there are only about 6,000 practitioners in the country. Nevertheless, it comprises many small businesses and large companies that provide invaluable care: enabling amputees the ability to walk, for example. My Dad is one of these practitioners, and I remember seeing the gratification he experienced after many long days of work while I was growing up. I’ll never forget the joy on his face when he recounted helping a little girl walk for the first time. But within the last few years, government regulation has overwhelmed and stymied these rewarding opportunities. Like most well intentioned government solutions, the Health and Human Services (HSS) Department’s attempt to crackdown on fraud and abuse has led to onerous and far-reaching regulation that has done more harm than good to the O&P field.

In an August 2011 “Dear Physician” letter sent to all physicians participating in the Medicare program, the HHS set in place a new standard of documentation for prosthetic care that requires doctor notes as justification for payment of artificial limbs: “The prosthetist’s records must be corroborated by the information in your patient’s medical record. It is the treating physician’s records, not the prosthetist’s, which are used to justify payment” (emphasis added).

[pullquote]     Yet again, bureaucrats made poor decisions thinking they know best in a field in which they have no experience.[/pullquote]

Yet, physicians do not typically document these notes because they are too burdensome and technical; after all, prosthetists are the experts. Physicians also do not record this documentation for privacy concerns, as protected by the Health Insurance Portability and Accountability Act (HIPAA). Even still, Medicare is not compensating practitioners who provide individuals with artificial limbs because the devices are deemed medically unnecessary on account of there not being proper documentation. Medically unnecessary? Tell that to the little girl my dad helped and her family.

As a result of this new regulation, Recovery Audit Contractors (RACs) have increased dramatically, even though most claims are not based upon actual fraud; they hinge upon not having enough information, which is out of the practitioner’s control, and dependent upon a party who is not involved: the physician. So, the government now reserves the right to not authorize payments, and demand money back on products that practitioners delivered in good faith years earlier before the law was even written.

To put this in perspective, practitioners provide a service to enable people to walk by fitting them with a device. Although fitting the device can take up to ten visits, practitioners cannot charge for these visits. They can only bill for the device, and have to go through Medicare because they cannot bill patients. Now, the government is demanding money back on devices that were provided to patients two and three years earlier, and is withholding payments on new claims until the money is paid back.

This has taken a serious toll on small businesses in particular. Not only do small businesses lack the liquidity necessary to give thousands of dollars back to the government, they also cannot afford losing thousands of dollars on a product they essentially end up giving for free. Practitioners in this predicament typically go out of business, as Medicare freezes payments on new claims, thereby cutting off any inflow they could earn to pay back the owed money.

The only way to fight these audits is by going to court, which is expensive and a devastating hit to small businesses. Consequently, people who have been in the field for years are going out of business, young people who want to go into the business can’t and others are closing down and selling out because they are tired of all the regulation. My Dad has seen these scenarios play out time and time again.

Ultimately, legislation that was supposed to help leaves the O&P industry weaker and its patients worse off, limiting their care and freedom of choice. Yet again, bureaucrats made poor decisions thinking they know best in a field in which they have no experience.