Signaling another way to cut Medicare spending without affecting care, a federal audit alleges that the government paid nearly four times more for standard power wheelchairs than what equipment suppliers paid for them.
In 2007, 173,300 Medicare beneficiaries received power wheelchairs at a total cost to themselves and the Medicare program totaling $686 million, part of Medicare Part B. However, consumers could have bought those power wheelchairs outside the Medicare program for much less, according to the report from the Office of Inspector General (OIG).
"CMS' power wheelchair payments, and therefore its current methodology for developing power wheelchair fee schedule amounts do not reflect actual acquisition costs," according to the audit, which was signed by Inspector General Daniel R. Levinson.
And while the amounts should be sufficient to cover suppliers' costs, "Medicare and its beneficiaries should not pay amounts that result in suppliers' excess profit."
For example, for standard power wheelchairs, suppliers paid an average of $1,048 in the first half of 2007, but Medicare and its beneficiaries paid $4,018, almost four times that average amount. The beneficiary's 20% copayment of $804 was more than three-fourths of that amount.
Standard wheelchairs represented three-fourths of all wheelchairs provided under the Medicare program.
For more expensive, complex rehabilitation power wheelchair packages, suppliers paid an average of $5,880, but Medicare allowed an average of $11,507, almost twice as much.
The additional amounts were intended to cover wheelchair vendor services, such as assembling and delivering the equipment, and educating the beneficiary on its proper use.
Suppliers said they performed an average of five to seven services for standard and complex wheelchairs prior to, during, and over an average of nine months after delivering the chairs, but most services were prior to and during the wheelchairs' delivery.
"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," the audit said.
The OIG added, "Prior OIG evaluations found that consumers can purchase power wheelchairs at lower prices than Medicare and its beneficiaries. The findings of this evaluation suggest that CMS' (the Centers for Medicare and Medicaid Services') current methodology for developing power wheelchair fee schedule amounts does not reflect actual acquisition costs."
There have been other attempts to reduce this spending, the OIG report explained. In May 2006, CMS proposed a revised methodology that would not rely on manufacturer-suggested retail prices, but would instead be responsive to the general market.
Three years later, the OIG said, "CMS had not finalized this proposal."
CMS planned to use supplier-submitted competitive bids to establish reimbursement amounts for power wheelchairs and other durable medical equipment (DME) beginning in July 2008. That would have decreased by an average of 26% across all included categories of DME, saving up to an estimated $1 billion a year.
"However, Congress delayed the program and exempted complex rehabilitation power wheelchairs from future competitive bidding," according to the report.
To compensate for the savings lost by the delay, amounts were reduced in January 2009 by 9.5%.
The OIG recommended that CMS should determine whether Medicare's fee schedule amounts for standard and complex rehabilitation power wheelchairs should be adjusted, and should consider using the competitive bidding acquisition program to adjust fee schedules.
It also recommended that CMS should "seek legislation to ensure that fee schedule amounts are reasonable and responsive to market changes" and to use the audit results "to determine whether an inherent reasonableness review is appropriate."
Medicare pays for wheelchairs for beneficiaries who are unable to walk and have severe upper body weakness, and are medically necessary for people who cannot effectively perform mobility-related activities of daily living with other devices, such as a cane, manual wheelchair or power scooter.
More than 650 models are covered, but more than three-fourths of all wheelchairs purchased are standard models.