CMS Expands Medicare Competitive Bidding of OTS Orthoses

Despite widespread opposition from multiple O&P stakeholders, the Centers for Medicare & Medicaid Services (CMS) is pressing forward with another round of Medicare competitive bidding for off-the-shelf (OTS) orthoses, expanding the program from knee and back braces to include upper-limb braces as well. There are many changes to the way the competitive bidding program will be administered, including significant changes to accreditation requirements and prior authorization under Medicare. On November 28, 2025, CMS issued a final rule updating the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program (CBP). 1 The Orthotic and Prosthetic Alliance, including the National Association for the Advancement of Orthotics and Prosthetics (NAAOP), submitted comments on the proposed rule on August 29, 2025. 2 This article summarizes the final rule, including the agency’s responses to the issues and concerns raised by the O&P organizations. Despite receiving over 18,000 public comments on the proposed rule, CMS finalized all changes as proposed to competitive bidding, and in many circumstances, failed to address fundamental concerns raised by stakeholders. The final rule includes changes to existing or new policies on the following topics: Products included in the CBP Remote item delivery (RID), a new system that relies on regional and national suppliers Limitations on the number of CBP contract suppliers Single payment amount calculations Bid amount limitations DMEPOS supplier accreditation and accrediting organization requirements An exemption from prior authorization for compliant Medicare DMEPOS suppliers CBP Product Categories CMS confirmed in the final rule that it is moving forward with another round of competitive bidding for OTS orthoses but has not detailed the specific Healthcare Common Procedure Coding System (HCPCS) codes that will be included in the next round of bidding. The OTS orthotic codes subject to the CBP are expected to be announced in late spring or early summer. 3 In the final rule, however, CMS gave examples of HCPCS codes that would be impacted and stated that “items like” these codes would be included in the CBP: L-1852 for OTS knee braces, L-3916 for OTS upper-limb braces, and L-0651 for OTS back braces. 4 The national O&P provider organizations recommended that CMS exclude OTS orthoses—particularly orthoses that can be provided either OTS or custom fitted to a specific patient by an individual with expertise (“custom-fit” orthoses)—from the next round of competitive bidding. The O&P organizations detailed how CMS’ existing regulatory interpretation of the meaning of OTS orthoses is overly broad and, therefore, improperly includes in the OTS category orthoses that require clinical care to safely and effectively perform their intended therapeutic purpose. The O&P Alliance detailed the harm to beneficiary access and quality of care when knee and back braces were added to the CBP from 2021 to 2023. O&P stakeholder comments also detailed concerns that there is no established mechanism for reimbursement of an orthotist’s clinical services if the orthoses are drop shipped to a patient’s home by a national supplier and the patient or caregiver has no access to a clinician to assist with instruction and fitting of the orthosis. Specifically, because orthotists bill HCPCS L-Codes that bundle both the device and clinical services into a single payment, there is no established payment pathway for needed follow-up care after a patient is provided an OTS orthosis that requires adjustment by a certified or licensed orthotist. Further, the competitive bidding process does not account for the expertise orthotists provide to assess and determine the specific orthosis that is appropriate for a particular patient’s needs. In response to the O&P Alliance’s concerns, CMS simply stated that the CBP is “intended solely for OTS orthotics, products that do not require clinical customization, in-person fitting, or direct patient assessment. These items are standardized and designed to be used with minimal self-adjustment….” 5 CMS stated, “In-person instruction, while beneficial, is not always necessary to achieve appropriate outcomes for [OTS orthotics] particularly when the devices are low-risk, low-complexity, and clearly indicated by diagnosis.” 6 The agency did not further elaborate on the O&P Alliance’s access and quality of care concerns, nor did it respond to the O&P Alliance’s objection to CMS’ interpretation of the overly broad definition of OTS orthoses. CBP Timeline In a published fact sheet of the final rule, CMS provided the following timeline to carry out the next round of competitive bidding: 7 December 2025: CMS begins pre-bidding supplier awareness program Late spring/early summer 2026: Specific registration and bidding dates and lead items announced Late summer/early fall 2026: Bidder window opens Late summer/early fall 2027: Contracts awarded and single payment amounts (SPAs) announced January 1, 2028: Start of next round Remote Item Delivery CBP CMS finalized its proposal to create a Remote Item Delivery Competitive Bidding System (RID CBP). Under the RID CBP, contract suppliers will furnish items and services primarily via mail order. CMS finalized its definition of RID CBP as “a competitive bidding program wherein contract suppliers are responsible for furnishing remote item delivery items under a product category to all Medicare beneficiaries regardless of where they live in the CBA.” 8 In each product category, CMS will implement a nationwide or regional RID CBP, which will replace the current use of local contracts in Metropolitan Statistical Areas (MSAs) across the country. Multiple stakeholders, including the O&P Alliance organizations, strongly opposed the creation of the RID CBP system, and stressed to CMS that the RID CBP will limit patient access, fracture existing patient-provider relationships, and limit and disrupt clinical care. Further, the O&P Alliance highlighted how the policy would favor large, national entities over local and small clinical practices, accelerating healthcare consolidation and reducing competition. It will also likely accelerate overseas production of orthoses that are of lesser cost and quality than those made domestically. CMS dismissed concerns about access to local clinicians by stating that the RID CBP is established for items furnished primarily remotely. Further, the agency stated that OTS orthoses “do not require expertise in trimming, bending, molding, assembling, or customizing to fit the beneficiary” and reiterated that its proposal was limited to orthoses appropriate for remote delivery. 9 In response to the concern that the policy would favor large providers, CMS pointed to its regulatory goal of awarding a minimum of 30 percent of contracts to small suppliers as sufficient to address these concerns. 10 CMS Limitation on Number of Contract Suppliers CMS finalized, as proposed, significant modifications to the process for determining the number of contract suppliers under the DMEPOS CBP. Products included in the 2018 or 2023 CBP processes are subject to a different methodology for determining the number of suppliers than products that were not included in the CBP in 2018 or 2023. The two methodologies CMS will use to determine the number of suppliers it will contract with to serve the beneficiary population under future rounds of the CBP is unnecessarily complex and confusing. The bottom line of these two methodologies is that CMS intends to dramatically reduce the number of contract suppliers eligible to provide OTS orthoses under the Medicare program, disrupting long-standing patient-provider relationships and largely eliminating access to clinical involvement in the orthotic care provided, unless the national supplier has numerous locations throughout the United States. In its comment letter, the O&P Alliance stressed the devastating impact this methodology would have on beneficiary access and provider participation. The O&P Alliance stressed to CMS that, by its own admission in the proposed rule, this methodology would result in no more than nine RID CBP contracts for OTS upper-limb braces; nine RID CBP contracts for OTS back braces; and ten RID CBP contracts for OTS knee braces. The O&P Alliance recommended that if CMS chose to move forward with this proposal, it should exempt certified and/or licensed orthotic practitioners from the CBP, much like physicians and therapists who may provide competitively bid items to their patients without a contract but at the competitively bid rate in that geographic area. In the final rule, CMS noted that commenters opposed the significant reduction in the number of contracts with suppliers but stated that commenters did not provide viable alternatives. 11 CMS did not respond to the O&P Alliance’s suggestion that certified and/or licensed orthotic practitioners should be exempt from the extreme limitations on contract suppliers. Single Payment Amounts CMS finalized its proposal to calculate SPAs by using the 75th percentile of winning bids, rather than the maximum winning bid as in previous rounds of the CBP. Lead item SPAs will be based on the 75th percentile of bid amounts for the lead item that are equal to or below the pivotal bid for the product category. For non-lead items in CBAs (other than a nationwide or regional CBA), CMS will multiply the lead item SPA by a relative ratio based on the 2015 fee schedule amount for the non-lead items in the applicable state divided by the 2015 fee schedule amounts for the lead item in the applicable state. Using the 75th percentile will virtually guarantee CMS savings, even for OTS orthoses that were previously bid in 2021-2023 and whose reimbursement levels are now baked into Medicare’s fee schedule. SPAs will be updated at the beginning of the second and third year of the contract period by the percentage change in the Consumer Price Index for all urban consumers, a welcome addition to the program, but the updated SPA cannot exceed the unadjusted fee schedule amount for the item or 110 percent of the adjusted amount. The O&P Alliance opposed this new SPA methodology and detailed how anchoring reimbursement rates to a 75th percentile-based formula will drive payment rates downward, despite the rising costs of providing care. The O&P Alliance requested that CMS instead calculate a unique SPA for each item in the product category instead of its “lead” and “non-lead” methodology and requested that CMS maintain its maximum winning bid methodology. CMS acknowledged stakeholder comments on the unsustainability of this new payment methodology but reasoned that the changes were necessary to ensure the statutory requirement for savings. CMS pointed to the allowance for prices to increase up to 10 percent from the previous round’s adjusted amount as sufficient to alleviate these payment concerns. 12 In rejecting the maximum winning bid methodology, CMS stated that the methodology would not result in accurate payment amounts, as high-cost outliers would be more likely to be selected as the SPA. 13 Limit on Bid Amounts CMS also finalized its proposal that the bid submitted for each lead item cannot exceed (1) the lesser of the most recent SPA for the item plus 10 percent or (2) the unadjusted fee schedule amount for the item. If it has been more than one year since the most recent SPA was last paid due to a temporary gap in the CBP, the bid for the lead item must not exceed (1) the lesser of the most recent SPA for the item, adjusted by an inflation factor, plus 10 percent or (2) the unadjusted fee schedule amount for the item. Further, bid amounts for OTS back or knee brace lead items in 2025 cannot exceed the average 2026 nonrural fee schedule amounts. Bid amounts for upper-limb brace lead items cannot exceed the average 2026 fee schedule amounts. The O&P Alliance opposed the bid ceiling proposals, noting that these artificial constraints would lead to inaccurate market prices and a continuous downward reimbursement spiral. While CMS acknowledged stakeholders’ concerns that these changes would lead to successive decreases in pricing each CBP round, the agency did not substantively address these concerns. Instead, CMS stated that it was complying with the statutory mandate to create savings. 14 DMEPOS Supplier Accreditation Outside of the CBP, CMS also finalized stricter requirements for becoming and remaining a DMEPOS accreditation organization and supplier. First, suppliers are now required to be surveyed and reaccredited annually instead of every three years, although CMS subsequently clarified that annual accreditation only begins when the supplier’s existing accreditation status expires. This represents a massive increase in provider burden and cost. Second, CMS is requiring that supplier surveys be unannounced. Third, accrediting organizations must provide CMS “reasonable assurance” that they meet Medicare requirements, describe their operational processes in greater detail, and detail their procedures to avoid conflicts of interest. They must also identify and correct program deficiencies, manage data, and respond to complaints, among additional new documentation requirements. The O&P Alliance expressed serious concerns with these new requirements, especially the requirement for annual accreditation, as did many other accreditation and stakeholder organizations. First, the O&P Alliance shared with CMS how moving to an annual accreditation model would place significant and unnecessary administrative and financial burdens on suppliers, particularly those in rural and underserved communities. CMS acknowledged these concerns but did not find them persuasive. CMS cited the significant annual savings to the Medicare program this change would provide, its obligation to oversee prudent spending of taxpayer dollars, and how similar concerns with other policies did not come to fruition. The agency then finalized the new annual survey and reaccreditation requirements as proposed. Additionally, the O&P Alliance requested that CMS provide narrowly tailored exceptions to the requirement that onsite supplier surveys be unannounced, where unannounced surveys are not practically or logically feasible due to extreme weather, a public health emergency, or alternative supplier business models. CMS dismissed this suggestion, stating that “for reasons already noted…unannounced surveys are the best means of ensuring quality standard compliance.” 15 Prior Authorization Exemption Pathway for Compliant DMEPOS Suppliers CMS finalized a new exemption process for certain DMEPOS suppliers that demonstrate high compliance with Medicare rules. This exemption process is modeled on a similar exception process in the hospital outpatient department prior authorization program. 16 DMEPOS suppliers with a 90 percent affirmation rate or higher in a post-payment medical review will be exempt from prior authorization requirements, effective until CMS withdraws the exemption. CMS will provide suppliers with a 60-day notice before granting or withdrawing an exception. The O&P Alliance supported this proposal and noted in its comments that it would reduce administrative burden while ensuring compliance with program requirements. However, the O&P Alliance requested that the exemption be voluntary, as prior authorization can provide suppliers with greater assurance that payment will not later be recouped based on alleged failure to meet medical necessity requirements. In response, CMS clarified that the exemption is voluntary and suppliers that wish to continue to use the prior authorization program may do so. 17 Analysis and Take-Aways With few exceptions, CMS clearly ignored the more than 18,000 public comments it received on this proposed rule and finalized a rule that was widely opposed by a wide range of stakeholders, including individuals and organizations representing providers, manufacturers, clinicians, patients, and individuals with disabilities. With respect to OTS orthoses, it is unclear whether CMS will rebid the 22 OTS back and knee brace codes it competitively bid in 2021-2023 as much of the savings to be achieved with these orthoses have already been captured and baked into the current fee schedule amounts. However, the new RID model, coupled with the bid ceilings and 75th percentile SPAs may result in additional savings with the orthoses identified by these billing codes. However they proceed with the codes already competitively bid once, CMS will likely target some or all of the remaining 33 codes it has designated as either OTS or hybrid codes (i.e., codes that have an OTS and a custom-fit version). With the massive shift to national or regional suppliers as part of the RID CBP, traditional patient access to local orthotists for this patient population will largely be lost as a small number of nationwide orthotic companies provide a mail-order OTS orthotic benefit without any meaningful clinical care. The annual accreditation and unannounced survey requirements are extremely disruptive, burdensome, and counter-productive. They also fly in the face of this administration’s oft-stated goals of reducing regulatory and administrative burdens on providers. The O&P Alliance will continue to oppose these provisions under this final rule and seek additional dialogue with CMS officials as soon as possible to further discuss the implications of this program, seeking to limit the negative impacts going forward. Peter W. Thomas, JD, is managing partner at Powers Law Firm, Washington DC, NAAOP general counsel, and counsel to the O&P Alliance. Leela Baggett, JD, is a principal at Powers Law Firm and counsel to both the O&P Alliance and NAAOP. Delaney Bounds, JD, is an associate at Powers Law Firm. Michael Barnett, JD, is a director of government relations at Powers Law Firm. Opener image: Ice pick/stock.adobe.com References Final Rule, Medicare and Medicaid Programs; Calendar Year 2026 Home Health Prospective Payment System (HH PPS) Rate Update; Requirements for the HH Quality Reporting Program and the HH Value-Based Purchasing Expanded Model; Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program Updates; DMEPOS Accreditation Requirements; Provider Enrollment; and Other Medicare and Medicaid Policies, 90 Fed. Reg. 55342 (Dec. 2, 2025). O&P Comment on CMS-2025-0242-0002 (Sept. 9, 2025), https://www.regulations.gov/comment/CMS-2025-0242-14614. CMS, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program – Updates and Important Information (Nov. 28, 2025), https://www.cms.gov/newsroom/fact-sheets/durable-medical-equipment-prosthetics-orthotics-supplies-competitive-bidding-program-updates. Final Rule, 90 Fed. Reg. at 55525. Id. at 55533. Id. at 55532. CMS, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program – Updates and Important Information (Nov. 28, 2025), https://www.cms.gov/newsroom/fact-sheets/durable-medical-equipment-prosthetics-orthotics-supplies-competitive-bidding-program-updates. Id. at 55604. Id. at 55532. Id. at 55531. Id. 55513. Id. at 55513. Id. at 55503. Id. at 55519. Final Rule, 90 Fed. Reg. at 55485. See 42 C.F.R. § 419.83(c). Final Rule, 90 Fed. Reg. at 55495.

CMS Expands Medicare Competitive Bidding of OTS Orthoses

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CMS Expands Medicare Competitive Bidding of OTS Orthoses

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