Embla Medical (EMBLA) Status Update summary

Medicare coverage expansion overview

• Largest Medicare coverage expansion in 25 years, effective September 1, broadening access for lower activity amputees to advanced prosthetic technologies, especially microprocessor knees and feet.

• Medicare now covers microprocessor-controlled knees (MPKs) for less-mobile amputees, expanding access to advanced prosthetic technology.

• Updated requirements allow more lower-extremity amputees to qualify for advanced devices, including sophisticated prosthetic feet.

• New functional level characteristics clarify patient activity levels, likely shifting some amputees to higher functional categories, increasing access to advanced devices and reimbursement opportunities.

• These changes apply to all lower extremity amputees, not just those with above-knee amputations, affecting roughly 75% of the amputee 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 patients in prosthetic clinics, making it a key short-term growth driver.

• Medicare and Medicare Advantage spend about $800 million annually on lower limb prosthetics, with $100 million on MPKs.

• Nearly all commercial payors use Medicare's coding and fees as a baseline, but commercial payers often pay 10-30% less than Medicare rates.

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

Impact and implementation timeline

• Immediate impact expected for Medicare patients in Q4, with broader effects across 2025; commercial payers will phase in changes over several years, with some adopting faster than others.

• Functional level characteristics may be adopted more quickly by commercial payers than specific device coverage.

• No budget cap or ceiling is attached to the Medicare expansion; spend will be monitored over time.

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