OIG Slams PWC Payments, Pushes Competitive Bidding

WASHINGTON — Medicare reimbursed almost four times the
amount providers paid for standard power wheelchairs in 2007,
according to a new report from HHS’ Office of Inspector
General.

“Medicare allowed an average of $4,018 for standard power
wheelchairs that cost suppliers an average of $1,048 in the first
half of 2007,” the report found. “Medicare and its beneficiaries
paid suppliers an average of $2,970 beyond the supplier’s
acquisition cost to perform an average of five services and cover
general business costs.”

That amounts to 383 percent of the average acquisition cost for
PWCs, the OIG calculated.

The report, issued yesterday, also said Medicare paid twice as
much for complex rehab PWC packages (the power wheelchair plus
power options and accessories) as providers paid to buy them:
“Medicare allowed an average of $11,507 for complex rehabilitation
power wheelchair packages that cost suppliers an average of $5,880
in the first half of 2007.”

What’s more, according to the OIG, Medicare could have
significantly lowered its expenditures for PWCs — $688
million during 2007’s first half — under competitive bidding by cutting
its allowable for standard power chairs by nearly $1,000 to an
average $3,073.

The report pointed out the 9.5 percent DME cut enacted after
Congress’
delay of the bidding program to make up for what Medicare would
have saved had it continued. However, the OIG said, even though PWC
reimbursements were reduced, “the 2009 fee schedule amount exceeds
the average competitively bid price by $568.”

As a result of its findings, the OIG recommended that CMS
“determine whether Medicare’s standard and complex rehabilitation
power wheelchair fee schedule amounts should be adjusted by using
information from the Competitive Bidding Acquisition Program,
seeking legislation to ensure that fee schedule amounts are
reasonable and responsive to market changes, or by using its
inherent reasonableness authority.”

CMS concurred with the recommendations.

But that wasn’t the end of the bad news for the HME industry.
Within hours of its release, CNN posted a story on the OIG report
and noted its own July
investigation, which found a Medicare “patient and taxpayers
were billed about $1,200 over four years for a nonmotorized chair,
while a nearly identical chair could be bought from the same
supplier for $349.”

Read the entire OIG study, titled “Power Wheelchairs in the
Medicare Program: Supplier Acquisition Costs and Services,” at
http://www.oig.hhs.gov/oei/reports/oei-04-07-00400.pdf.