That's a pretty outrageous claim; it's possible that in the early medieval period that some people may have had less access to professional physicians than in antiquity but it's just absurd to assert that people simply "forgot" how to set bones. Early medieval scholars actively read and transmitted the corpus of Graeco-Roman medical literature and would have had the same approximate knowledge about the workings of the human body that any educated physician living in the Roman Empire would have had.

One Old Irish manuscript, itself a copy of a possibly much earlier but undiscovered Latin text, with the gripping title "On Wounds" is an example of this transmission of medical knowledge. In its preamble the text explicitly cites Galen and Hippocrates (Ypocraid) as the foundations of medical science, firmly positioning this early Irish text within the tradition of Graeco-Roman scientific knowledge. It's a fairly short text meant to instruct medical practitioners on the proper procedures to undertake when dealing with a variety of physical wounds.

Broken bones were obviously a common problem considering the fact that the entry describing how to examine, treat and set them is only four sentences long, implying that this wasn't a very complicated procedure and that people probably already knew how to deal with them. The text has unfortunately never been translated so I'll provide a short and crappy translation of my own, this is really bad and I've had to omit some words because there aren't a lot of medical terms attested in the corpus of Old Irish (and also because the online Old Irish dictionary died on me halfway through):

Is riagail da mbrister cnaim na righedh gona smir no smir boill oifigigh eigin is inbreitheamnuis in t-othar cum bais no co sunnradach cum testala an baill sin uadha. Nodaighter ann so nach incengailti an ball ar dus co cruaidh innus nach bactur timterecht na spirad cum follamnaighti na cned. Nodaighter ann so da tolltur ball oifigech eigin co roith an smir nach incuir im no methradh ann co nach brena & co nach morgad ni is mo & is incuir ann lin no linedach. Notaighter ann so da ti fuil usgaidhthi madh o brised cnama baill oifigigh is comartha bais.

A rule for fractures of the bone is the stretching (lit., probably meant to mean "setting") of the limb and its marrow. It is necessary to judge the wound/state of illness (maybe severity of the injury?) with the palm of one's hand and especially to test it with the palm. Mark this (the injury) first so that it prevents the governing spirit of the wound from yielding right (?, might mean "mark the position of the bone so that it sets correctly"). Separate this (the wound) in two, holding each with your palms and wheel (lit.) them... so that they are joined..."

So there you have it, early medieval people definitely knew how to set bones and saw it as such a mundane and routine sort of injury that a medical text meant to instruct doctors on how to heal people pretty much just says "check it out with your hand and then take the bone and set it". This doesn't mean that people only had a rough idea of how to set bones, but that medical professionals already probably knew how to do it and that more space could be used on the precious vellum manuscript to instruct on more serious and uncommon sorts of injuries.