S2329

The Medicare Orthotics and Prosthetics Patient-Centered Care Act, S. 2329, directly amends Section 1834(h)(1) and Section 1847(a)(7)(A)(i) of the Social Security Act. The primary impact is a prohibition on Medicare payment for orthotics and prosthetics delivered via 'drop shipment' without prior training or education from a qualified practitioner. This eliminates a channel for low-cost, potentially ill-fitting devices and mandates professional involvement, thereby increasing the value and necessity of qualified orthotists and prosthetists. Additionally, the bill expands the list of practitioners exempt from competitive acquisition to include physical therapists, occupational therapists, orthotists, and prosthetists, alongside physicians. This broadens the scope of professionals who can directly provide these services without competitive bidding pressures, ensuring better reimbursement for specialized care. The money trail for this legislation flows directly to companies involved in the manufacturing and provision of custom-fitted and custom-fabricated orthotics and prosthetics. By eliminating drop shipments, the bill funnels Medicare beneficiaries towards services provided by qualified practitioners, who will source devices from established manufacturers. The exemption from competitive acquisition for a wider range of practitioners means these providers can maintain higher reimbursement rates for their services and the devices they supply. This creates a more stable and profitable environment for companies focused on quality, custom solutions rather than mass-produced, direct-to-consumer models. Historically, legislative actions that increase access to specialized medical devices and services for Medicare beneficiaries have positively impacted the relevant sectors. For instance, when the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 included provisions for improved access to durable medical equipment (DME), companies like Invacare ($IVC, now delisted) saw increased demand. While direct comparisons for orthotics and prosthetics are less common, any legislation that mandates professional involvement and reduces commoditization of medical devices typically leads to improved margins and demand for specialized providers. The current bill is sponsored by Senator Warner (D-VA), a senior member of the Senate Finance Committee, indicating significant legislative momentum for its passage. Specific winners from this legislation include manufacturers of custom orthotics and prosthetics such as Hanger Inc., a leading provider of orthotic and prosthetic patient care services and products. Other companies like Stryker Corporation ($SYK) and Zimmer Biomet Holdings ($ZBH), which have orthopedic divisions, may see indirect benefits through increased demand for related orthopedic solutions. Smaller, specialized manufacturers like Össur hf. ($OSSR) and Ottobock (private, but its market share would be impacted) also stand to gain. Companies that rely heavily on direct-to-consumer or drop-ship models for orthotics and prosthetics, without integrated professional fitting services, will lose market share. The bill does not appropriate new funds but redirects existing Medicare spending towards qualified care. The next step is committee consideration in the Senate Finance Committee, with potential for a floor vote later in the year. Key takeaways are that the bill mandates professional involvement in orthotic and prosthetic care, eliminates unqualified drop shipments, and expands the types of practitioners exempt from competitive bidding. This strengthens the market for custom, professionally-fitted devices and services.