As a result of the Affordable Care Act, prosthetics are considered an “Essential Health Benefit.” This means that most insurance plans in the United States cover prosthetic devices. The actual cost and coverage of the prosthesis varies widely depending on the level of amputation and complexity of the different components, such as the prosthetic knee, foot, hand, and finger. The Centers for Medicare and Medicaid Services (CMS) developed the Healthcare Common Procedure Coding System (HCPCS), which is a collection of standardized codes that represent medical procedures, supplies, products, and services. The HCPCS codes used to bill for prosthetic devices are commonly referred to as “L-codes” because they begin with the letter L and are followed by 4 numbers. Reimbursement for a single prosthesis is typically described by a “base” L-code that relates to the level of amputation along with several “add-on” L-codes that describe the different components and features of the prosthesis. The reimbursement for these codes not only includes the cost of the individual prosthetic components, but also the time and labor costs associated with the evaluation, fabrication, fitting, delivery, and follow-up appointments. With narrow exceptions (i.e, some repairs), prosthetists are not able to bill payers separately for their time.

CMS establishes a fee schedule every year for each HCPCS code, which varies by state. This is the amount that Medicare will “allow” for each code, commonly known as the allowable. Other payers – commercial health plans, the VA, workers compensation, etc. – will have different allowable amounts that are typically a specific percentage of the Medicare fee schedule, which is determined by the provider’s individual contract with the payer. In general, a single prosthesis can vary from several thousand dollars for something with very basic components to $40,000 or more for components with advanced technology.

Recurring Costs

Once you receive your prosthesis and regain your mobility, your prosthesis will need to be adjusted periodically as your residual limb changes shape and volume over time. For a new prosthetic patient, it is very common to have a rapid decrease in volume when you first start using a prosthesis, and you may need several new prosthetic sockets within the first year or two to accommodate for these changes. Once your limb shape and volume stabilize, you will likely use the same prosthetic socket for longer periods of time, and replacement will depend on long-term changes to your residual limb or damage to the socket. The mechanical components will also wear out over time, depending on various factors such as your activity level and how well you look after your prosthesis.

When your prosthesis needs repairs, it is important to first determine whether it is covered by warranty. Any adjustments to the prosthesis within the first 90 days after delivery are covered by the initial reimbursement of the device. Individual prosthetic components, such as the foot and knee, have a separate manufacturer’s warranty that typically ranges from 6 months to 3 years, depending on the device. Any repairs needed within the warranty period are provided by the manufacturer at no cost, as long as they fall within the terms of warranty. Extended warranties may also be available from the manufacturer at the time the device is purchased, but they are typically not covered by insurance. Warranty information for specific prosthetic components can be obtained from your prosthetist or directly from the manufacturer.

If you no longer have warranty coverage, most insurance companies will reimburse for prosthetic repairs and replacements. Coverage is based on medical necessity, such as a change in your medical condition or irreparable wear of the device. Your provider may submit for replacement of the entire prosthesis or for individual prosthetic components (i.e., foot, knee, liners, etc.), depending on the condition of your prosthesis and your functional needs. If the repair or replacement is denied by your insurance, your prosthetist may make you responsible for the cost. It is important to note that damage caused by negligence or improper use of the device is not covered under warranty and likely will not be covered by insurance.

Share of Cost

Generally speaking, your share of cost is dependent on your insurance plan’s prosthetic benefits, which may include a deductible, co-insurance, and/or out-of-pocket maximum. Prosthetic benefits vary widely between payers and are unique to your specific health plan. In general, if your annual health plan deductible has not been satisfied, you will be responsible for that cost. Once the deductible is met, or if you do not have a deductible, then you are only responsible for your co-insurance (a percentage of the remaining billed charges), and the insurance company will pay the remaining amount. Once you hit your annual out-of-pocket maximum, then your insurance will pay 100% of the applicable fee schedule amount in excess of that. Both the deductible and out-of-pocket accumulations reset back to $0 at the beginning of each policy year.

Deductibles and out-of-pocket maximums can vary from hundreds to thousands of dollars, and co-insurances typically range from 0% up to 60% of the total billed charges. As mentioned before, a single prosthesis can cost in excess of $40,000 dollars, which can expose you to significant payments if you have a high deductible and/or co-insurance. Because you will likely use a prosthesis for the rest of your life, it is beneficial to enroll in an insurance plan that provides you with the best prosthetic coverage to reduce your out-of-pocket costs. When choosing a plan, there are several things you can do to try and keep your share of cost at a minimum:

• Compare prosthetic benefits (sometimes this will be grouped in with the DME benefits) and choose the plan with a lower deductible/co-insurance/out-of-pocket maximum. Often, better benefits result in a higher premium, so you will need to take that into consideration as well. But remember that higher monthly premiums more often than not reduce your overall financial exposure to the significant costs associated with some prosthetic devices.
• Medicare beneficiaries have a 20% co-insurance with nomaximum OOP, so it is a good idea to consider purchasing a "Medi-Gap" secondary insurance plan that covers the remaining 20%. Medicare Advantage plans, which have become much more popular over the last decade, are an alternative to Medicare but, as discussed below, come with significant downside for people with limb loss/ difference when compared to the traditional program.
• Make sure your prosthetist is in-network (i.e., contracted) with your health plan. Even if you have out-of-network benefits, your share of cost is often much higher with an out-of-network, or “non-participating,” provider.
• Review your health plan medical policies and benefit documentation. Some insurance plans have policy exclusions for specific prosthetic components, which means they will not pay even if it is proven to be medically necessary. If a prosthetic component is denied based on medical policy or an exclusion from your plan, then you may be responsible for payment.

To help avoid surprise medical bills, it is important to thoroughly understand your prosthetic insurance benefits. Your prosthetist should always verify these benefits and provide you with a quote prior to delivery so you are aware of what you will be required to pay. If you ever have a question about your plan’s benefits and/or coverage, do not hesitate to ask your provider’s office or call your insurance directly.