OIG Releases Study on Power Wheelchair Costs

In a study released earlier this week, the Health and Human Services Office of Inspector General (OIG) released an inaccurate and incomplete picture of the costs related to the provision of power wheelchairs and complex rehab products. In the body of the report, the OIG admits that they did not account for costs of services involved or included in the provision or maintenance of power wheelchairs, when formatting their recommendations for adjustments to the specific fee schedules. This 2009 report is based primarily on figures that were found to be inaccurate from a similar OIG report of 2007. Formal comments will be released following our review of the report and our responses will be shared with all.

Power Wheelchairs in the Medicare Program: Supplier Acquisition Costs and Services (OEI-04-07-00400)’

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 the suppliers` acquisition cost to perform an average of five services and cover general supplier business costs. The beneficiary`s average co-payment covered 77 percent of the supplier`s average acquisition cost for a standard power wheelchair. 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. 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.

We collected documentation of the prices suppliers paid to purchase a sample of standard and complex rehabilitation power wheelchairs that Medicare beneficiaries received in the first half of 2007. We also collected documentation of the services performed prior to, during, and over an average of 9 months after delivering the power wheelchairs.

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 Acquisition 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 Acquisition Program`s delay, the 2009 fee schedule amount exceeds the average competitively bid price by $568.

Medicare`s fee schedule amounts include reimbursement for the acquisition cost of the power wheelchair and also for supplier services, such as assembling and delivering the power wheelchair and educating the beneficiary about its use. We found that suppliers performed most services prior to and during, rather than after, the wheelchairs` delivery. Suppliers of complex rehabilitation power wheelchair packages reported performing twice as many services as suppliers of standard power wheelchairs at times other than the day of delivery. Suppliers reported performing required services most of the time, as well as other services as needed.

We recommend 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 our recommendation and, with respect to our suggested methods for determining whether fee schedule amounts should be adjusted, stated that it plans to use information from the Competitive Bidding Acquisition Program and will carefully consider seeking legislation to ensure that fee schedule amounts are reasonable and responsive to market changes. However, CMS noted that it is not likely to use its inherent reasonableness authority until the results of the supplier bids for power wheelchairs under the Competitive Bidding Acquisition Program have been assessed.

To access the full report, click here.