Trick or Treat? OIG dishes a trick

Friday, November 30, 2007

WASHINGTON - On Halloween, an old ghost came back to haunt the rehab industry.
After comparing Internet and Medicare prices for power mobility devices, the Office of Inspector General released a report Oct. 31 that questions whether current fee schedule amounts--already cut last year by 27%, on average--are appropriate. The OIG stated that Medicare prices were 45% higher, on average, than median Internet prices for 28 codes. The Medicare price for the most commonly prescribed power wheelchair, the K0823, exceeded the Internet price by 36%.
Comparing Medicare and Internet prices is "completely ridiculous," said Seth Johnson, vice president of government affairs for Pride Mobility Products.
"It's worse than comparing apples and oranges," he said. "Medicare providers, unlike Internet retailers, have to meet certain rules and regulations. They have expensive information to collect and retain. These are two completely different business models and cost structures."
The industry thought this was a demon it had already exorcised. When CMS created new fee schedule amounts for PMDs last year, it compared Medicare prices with Internet and wholesale prices. After an uproar from the industry, however, CMS agreed it wasn't an appropriate comparison, industry sources said.
"It's frustrating to have the OIG look at this when CMS has already abandoned the idea," said Cara Bachenheimer, vice president of government relations for Invacare.
In a move that irked industry sources, CMS "concurred" with the OIG's recommendations.
The OIG stated that it began comparing Medicare and Internet prices for PMDs after hearing from providers that the new fee schedule amounts were too low to cover the costs of acquiring and providing power wheelchairs.
In the report, the OIG also stated that, had CMS used median Internet prices, the agency would have saved $39 million in the first quarter of 2007. Beneficiaries, who often pay a 20% co-pay, would have saved $233.
The OIG plans to "conduct further evaluations to compare Medicare fee schedule amounts to actual prices paid by suppliers."