OIG Recommends Reimbursement Reduction for NPWT

WASHINGTON—HHS’ Office of Inspector General isn’t
happy with what Medicare pays for negative pressure wound therapy
pumps. In a report issued Thursday, the OIG said providers pay an
average of $3,604 for new pumps compared to Medicare’s
purchase price of $17,165–“more than four times the average
price” paid by providers.

Medicare reimburses $1,716 monthly for the pumps for the first
three months. At that rate, the OIG said, providers “recouped
the average cost of a new pump model in about two months. Moreover,
if a beneficiary were to rent the pump for all of the 13 months
allowed by Medicare, the beneficiary’s coinsurance alone
($3,599) would cover almost the entire average cost of a new pump
model.”

Medicare began paying for the pumps in 2001 when there was only
one manufacturer–KCI–in the market. Since then, the OIG said a
number of manufacturers have introduced new pump models and are
charging “substantially less” for them. Aside from its pricing
analysis, the OIG noted that all of the winning bids for the pumps
in the first round of competitive bidding, averaging
about $1,446 a month, were lower than Medicare’s current
reimbursement.

The review also found that providers were not communicating as
required with almost a quarter of beneficiaries’ clinicians,
and without that input, the OIG said, providers “cannot
determine whether there is a continued medical need for a
pump.”

The OIG included NPWT in its workplan for 2009 after a review in
2007 found that 24 percent of claims did not meet Medicare coverage
criteria.

In addition, utilization rates put the category on the OIG
radar. Between 2001 and 2007, Medicare payments for the pumps
increased 583 percent, from $24 million to $164 million. The
industry has argued, however, that use is going up because the
therapy is effective.

Based on its findings, the OIG recommended that CMS should use
its inherent reasonableness authority to reduce the reimbursement
amount for pumps and should also include the pumps in the second
round of competitive bidding.

Earlier this year, CMS said it would review all of the devices
and codes in the NPWT category.

Read the full OIG report here.