The State of O&P: Government Regulation Issues, Concerns, and Associations and Organizations

Published in Orthotics & Prosthetics on January 05, 2023

State of O&P

The operations of O&P practices are subject to a variety of federal, state, and local governmental regulations. Failure to comply with applicable governmental regulations may result in significant penalties, including exclusion from the Medicare and Medicaid programs.

Violations of fraud and abuse laws are punishable by criminal and/or civil sanctions, including False Claims Act (FCA) liability, imprisonment, and exclusion from participation in federal healthcare programs such as Medicare, Medicaid, VA health programs, and the Department of Defense’s TRICARE program (formerly known as CHAMPUS). 

Laws include, but are not limited to, federal and state anti-kickback laws, false claims, physician self-referral, and federal criminal healthcare fraud laws. Failure to adhere to any requirements, even unintentionally, could result in altered O&P practice operations and possible refunds to government authority. Refunds can be grand, which may lead to implementation of massive penalties.

Practices might successfully defend against such actions for violation of these laws or regulations; however, this could result in significant legal expenses and divert management’s attention from business operations.

Anti-Kickback Laws

O&P operations are subject to federal and state anti-kickback laws. The federal AntiKickback Statute (Section 1128B(b) of the Social Security Act) prohibits “persons or entities from knowingly and willfully soliciting, offering, receiving, or paying any remuneration in any form (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for, or to induce, the referral of persons eligible for benefits under a federal healthcare program (including Medicare, Medicaid, the VA health programs, and TRICARE), or the ordering, purchasing, leasing, or arranging for, or the recommendation of purchasing, leasing, or ordering of, items or services that may be paid for, in whole or in part, by a federal healthcare program.”1

This statute may possibly be violated when even a single purpose, and not necessarily the main purpose, of remuneration is to induce referrals or other business. The Office of Inspector General of the Department of Health and Human Services, recognizing the broadness of the Anti-Kickback Statute, implemented regulations that can offer protection from scrutiny under this statute.

Known as Safe Harbors, they describe actions that may be protected under the Anti-Kickback Statute, given that all requirements have been met. For instance, if a business was offering a discount to healthcare providers and contracting with physicians or other bodies that could refer business that would be billed to federal healthcare programs, as long as this discount is disclosed and reflected properly on claims, the Safe Harbors would cover this.

An arrangement is not necessarily considered illegal if it fails to qualify for Safe Harbor protection. All aspects of the arrangement would need to be analyzed to determine improper intent to pay/reimbursement for referrals. If arrangements do not fully satisfy Safe Harbors, this may just result in raised surveillance from government authorities.

Some states’ anti-kickback laws can vary in scope and may apply whether there is involvement from federal healthcare programs. State anti-kickback laws may extend similar antikickback prohibitions to other payers, including commercial payers. These state laws do not always contain the same safe harbors as the federal regulatory scheme.

Frequently O&P operations and business arrangements include, for example, discount programs or other financial arrangements with individuals and entities, such as lease arrangements with hospitals and certain participation agreements. Therefore, operations and business arrangements are required to comply with the anti-kickback laws.

Self-Referral Laws (the “Stark Law”)

Practices are subject to federal and state physician self-referral laws. The Stark Law (Section 1877 of the Social Security Act) prohibits a physician from referring Medicare beneficiaries to an entity for “designated health services” (durable medical equipment, O&P supplies, etc.) if the physician or the physician’s immediate family member has a financial relationship with the entity.

Financial relationships include ownership/investment interests and compensation arrangements. Entities that supply these health services to a prohibited referral cannot present a claim or bill for these services. Refunding payments, civil monetary penalties, FCA litigation, and being exempt from Medicare or Medicaid programs are all possible outcomes for violating the Stark Law.

O&P practices are also subject to federal and state laws forbidding individuals or entities from knowingly presenting claims for reimbursement to third-parties that are fraudulent, items/ services not provided as claimed, or contain misleading information.

Also, prosecutors and so-called “qui tam” relators (whistleblowers) may claim that a regulatory violation or wrongfully retained overpayment may be the basis of False Claims Act litigation. Successful relators can receive a share of the recovery in a False Claims Act case ranging from 15% to 30% depending on whether the government “intervenes” in the case. Penalties in a False Claims Act case may include double or triple damages, plus penalties ranging from $11,665 to $23,331 per claim. 

Certification or Licensure Requirements

Clinicians and/or certain operating units may be subject to certification or licensure requirements under the laws of some states. Most states do not require separate licensure for clinicians. However, several states currently require clinicians to be certified by an organization such as ABC or BOC.

Failure to comply with state licensure requirements could result in suspension or termination of licensure, civil penalties, termination of Medicare and Medicaid agreements, and repayment of amounts received from Medicare and Medicaid for services and supplies furnished by an unlicensed individual or entity.

The Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act (HIPAA) implemented standards for privacy and specifications concerning use and disclosure of protected health information (PHI) by health plans, clearinghouses, and providers that transfer PHI electronically in connection with certain standard transactions known as “Covered Entities.”

It is required by HIPAA for Covered Entities to protect the confidentiality of PHI by adhering to security standards and implementation specifications. Also, Covered Entities must utilize standardized formats and data elements if certain administrative and financial transfers are made electronically.

Civil monetary penalties can be imposed by HIPAA for noncompliance. Criminal penalties can be enacted for entities knowingly violating privacy standards, violating standards under false pretense, or the intent to sell, transfer, or use PHI for commercial gain. Covered entities’ business associates also must adhere to HIPAA guidelines.

Practices have business associates and are business associates to other Covered Entities. These requirements have had a significant effect on the way practices handle health data and communicate with payers. In addition, state confidentiality and privacy laws may impose civil and/or criminal penalties for certain unauthorized or other uses or disclosures of PHI. 

Associations and Organizations in O&P

American Orthotic & Prosthetic Association (AOPA)

AOPAA trusted partner, advocating for and serving the orthotic and prosthetic community, the American Orthotic & Prosthetic Association (AOPA) fosters relationships with decision makers, provides education, supports research, and advances equality to strengthen the orthotic and prosthetic profession and improve the lives of its patients.

Since 1917, AOPA has been the largest nonprofit organization consisting of more than 2,000 patient care facilities and suppliers that together manufacture, distribute, design, fabricate, fit, and provide clinical care for patients using orthopedic braces and prostheses (artificial limbs).To learn more about AOPA, visit

The Orthotic and Prosthetic Group of America (OPGA) 

OPGAThe Orthotic and Prosthetic Group of America (OPGA) works to advance the independent orthotic and prosthetic profession— and helps you advance within it. OPGA is the largest network of independent O&P facilities in the nation. Representing nearly 1,300 locations, OPGA offers services that help each facility operate more efficiently and increase profitability.

OPGA offers constantly evolving, professional business services to sustain your company’s competitive advantage—administered by knowledgeable associates who truly care about your success.

For over 25 years, OPGA has provided savings and solutions to independent O&P practitioners. OPGA members can take advantage of exclusive OPGA member services, such as audit protection, insurance and surety bonds, referral source data, continuing education webinars, practice management software, outcomes program, payer relations, and so much more. To learn more about OPGA, visit


NAAOPThe NAAOP is a nonprofit that promotes public policy that is in the interest of an O&P patient. Founded in 1987, the nonprofit trade association has helped shape healthcare legislation and regulation through governmental advocacy and education efforts. Members of the NAAOP advocate for better evidence, better education of practitioners, greater and better technology for the O&P consumer, and greater access to care. For more information about NAAOP, visit

Orthotic & Prosthetic Alliance (O&P Alliance) 

O&P AllianceThe Orthotic and Prosthetic Alliance (O&P Alliance) is a coalition of five of the leading groups that represent the O&P profession, including: the American Academy of Orthotists and Prosthetists (AAOP); the American Board for Certification in Orthotics, Prosthetics & Pedorthics (ABC); the American Orthotic & Prosthetic Association (AOPA); the Board of Certification/Accreditation (BOC), and the National Association for the Advancement of Orthotics and Prosthetics (NAAOP).  The O&P Alliance represents the scientific, research, professional, business, and quality improvement aspects of the O&P field. The O&P Alliance advocates for state and federal policies that improve the practice of O&P and quality of services provided to patients. For more information, visit

Read the Full Report

State of O&PThis article was originally featured in the The State of Orthotics & Prosthetics:  2022 and Beyond. To read the full report, download your copy of the report here


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