OIG: Medicare pays four times cost for standard power wheelchairs

Sunday, September 6, 2009

WASHINGTON - The Office of Inspector General (OIG) continues to scrutinize power wheelchair reimbursement.

Last week, the OIG published a report: "Power Wheelchairs in the Medicare Program: Supplier Acquisition Costs and Services." The agency found that in the first half of 2007, Medicare paid, on average, $4,018 for standard power wheelchairs that cost suppliers $1,048. Medicare and its beneficiaries paid suppliers $2,970 beyond the acquisition cost to perform an average of five services and cover general business costs.

The OIG also found that Medicare, on average, paid $11,507 for complex power wheelchairs that cost suppliers $5,880. Medicare and its beneficiaries paid suppliers $5,627 beyond the supplier's acquisition cost to perform an average of seven services and cover general business costs.

The report follows a 2007 OIG report that found Medicare prices for power wheelchairs were, on average, 45% higher than median Internet prices.

As part of its most recent report, the OIG requested documentation from suppliers that showed what they paid for 375 standard and complex power wheelchairs. It also requested documentation of the services that they performed in conjunction with supplying the power wheelchairs. The OIG did not, however, determine the cost of performing these services or other general supplier business expenses, such as billing, accreditation, staff salaries or facility maintenance.

"They did not quantify those additional costs," said Seth Johnson, vice president of government affairs for Pride Mobility Products. "They only completed one-third of the picture."

The OIG recommends that CMS consider the following: Use information from national competitive bidding to adjust fee schedule amounts; seek legislation to ensure that fee schedule amounts are reasonable and responsive to market changes; and use the results of its report to determine whether an inherent reasonableness review is appropriate.

Industry reaction last week included:

*    AAHomecare: The association called the report "disappointing and extremely misleading." It pointed out that Congress has reduced reimbursement for power wheelchairs by more than 35% in the past five years, including a reimbursement cut of, on average, 27% in 2006. President Tyler Wilson stated: "The association believes that it is inappropriate for the OIG to infer that providers are making significant high profits. We stand ready to work with the OIG to conduct a more thorough and useful analysis of the service-related costs of providing power wheelchairs to Medicare beneficiaries."

*    NCART: The group criticized the OIG for not taking into account service costs and business expenses. It pointed out that an industry study last year found a complex rehab provider's non-product costs include intake qualification and documentation (14%); evaluation, specification and fitting (23%); purchasing, receiving, assembly and delivery (13%); billing and collection (12%); service and repair (11%); sales and marketing (10%); regulatory and compliance (4%); and administration and support (13%). With these costs, complex rehab providers reported business profits of, on average, 5%. "The OIG report is another hole in the complex rehab boat," stated Don Clayback, NCART's executive director.

*    NRRTS: In an alert to registrants, the Executive Director Simon Margolis stated: "We all know the numbers have been manipulated and misrepresented to come out the way the OIG and CMS needed them to. NRRTS will be working to expose this report for what it really is--misuse of government resources to deny access to technology for people with significant disabilities."