Another PWC Slam

Earlier this month, the Office of Inspector General issued another negative report comparing the acquisition cost of power wheelchairs to the Medicare payment levels for these items.

The OIG report, “Power Wheelchairs in the Medicare Program: Supplier Acquisition Costs and Services,” was designed to compare Medicare payments for power wheelchairs with suppliers’ acquisition costs and to determine the number and types of services that suppliers performed in conjunction with providing power wheelchairs to Medicare beneficiaries.

Undoubtedly the report will add to the negative impression that many lawmakers have, since the naked numbers alone lead to the misguided conclusion that Medicare pays too much for PWCs. We know the OIG’s focus on their acquisition costs bears no relationship to the “total delivered costs” that PWC providers incur.

The OIG conclusion, however, that Medicare pays two to four times acquisition costs will reinforce perceptions in Washington that Medicare simply pays too much (and likely that competitive bidding will help solve this problem).

The OIG nods at the service component, stating that its surveys showed suppliers of standard power wheelchairs provide an average five separate services, and suppliers of complex rehab power wheelchairs provide seven discreet services. Unfortunately, the report does not address the cost of services, nor does it make any statement regarding the appropriateness or cost of these services.

We cannot let this OIG report stand without response, and without educating members of Congress and staff. I urge you to use the statements developed by various industry organizations such as the American Association for Homecare and NCART that address the serious shortcomings of this OIG report.

Following are excerpts from the OIG report:

• “Medicare and its beneficiaries paid almost four times the average amount paid by suppliers to acquire standard power wheelchairs during the first half of 2007. Suppliers purchased standard power wheelchairs for an average of $1,048 and reported performing an average of five services in conjunction with supplying them. “Because Medicare allowed an average of $4,018 for standard power wheelchairs, Medicare and its beneficiaries paid suppliers an average of $2,970 beyond their acquisition cost to perform an average of five services and cover general supplier business costs.”
• “Medicare and its beneficiaries paid almost two times the average amount paid by suppliers to acquire complex rehabilitation power wheelchair packages during the first half of 2007.” Relating to complex rehab, the OIG report states: “Suppliers purchased complex rehabilitation power wheelchair packages for an average of $5,880 and reported performing an average of seven services in conjunction with supplying them. Because Medicare allowed an average of $11,507 for complex rehabilitation power wheelchair packages, Medicare and its beneficiaries paid suppliers an average of $5,627 beyond the suppliers’ acquisition cost to perform an average of seven services and cover general supplier business costs.”

• “Medicare’s average allowed amount for standard power wheelchairs in the first half of 2007 ($4,018) was 383 percent of suppliers’ average acquisition cost. In comparison, Medicare’s average payment under the competitive bidding program ($3,073) would have been 293 percent of suppliers’ average acquisition cost. Although Medicare’s fee schedule amount was reduced to $3,641 to offset the competitive bidding program’s delay, the 2009 fee schedule amount exceeds the average competitively bid price by $568.”
• The OIG recommends 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 program, and that CMS should seek legislation to ensure that payment amounts are reasonable and responsive to market changes, or CMS should use its inherent reasonableness authority. CMS agreed with the OIG recommendation.

For a copy of the complete report, go to: http://www.oig.hhs.gov/oei/reports/oei-04-07-00400.pdf.

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A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington, D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her at 440/329-6226 or [email protected].