Embla Medical (EMBLA) Status Update summary

Medicare coverage expansion overview

• Largest Medicare coverage expansion in 25 years took effect September 1, significantly increasing access to advanced prosthetic technology, especially microprocessor knees, for lower activity amputees.

• Medicare now covers microprocessor-controlled knees (MPKs) and, in some cases, advanced prosthetic feet for less-mobile amputees, expanding access to sophisticated devices.

• New functional level (K-level) characteristics clarify patient activity levels, likely shifting some amputees to higher K-levels and increasing their access to advanced devices.

• These changes apply to all lower extremity amputees, not just the less mobile group, affecting a broad segment of the market.

Market and payer landscape

• Bionic prosthetics represent 18-25% of US prosthetics sales, with strong growth even before the coverage expansion.

• Medicare insures about 15% of the US population but covers 30-35% of prosthetic clinic patients, making it a key short-term growth driver.

• Commercial payers cover over half of O&P patients and typically follow Medicare policy with a lag of 1-2 years, creating a medium to long-term growth opportunity.

• Nearly all commercial payors use Medicare's coding and fees as a baseline, amplifying the impact of Medicare's coverage changes.

• Medicare sets the standard for reimbursement codes and fees, but commercial payers often pay 10-30% less.

Functional level (K-level) changes and impact

• New functional level characteristics may shift patients from K2 to K3, increasing access to higher-tech, higher-reimbursing devices.

• K3/K4 patients account for 90% of Medicare revenue in prosthetics, so upward reclassification has significant financial impact.

• The update affects all lower extremity claims, including the 75% of amputees who are below-knee.

• The coverage expansion is expected to drive a "K-level shift," increasing eligibility for advanced devices and supporting mid- to long-term growth.