OIG Questions Wheelchair Supplier Payments

In 2007, Medicare reimbursement for power wheelchairs far exceeded durable medical equipment (DME) supplier acquisition costs, according to an Office of Inspector General (OIG) report.

Medicare and its beneficiaries paid almost four times the average amount paid by suppliers to acquire standard power wheelchairs and two times the average amount paid by suppliers to acquire complex rehabilitative wheelchairs, according to the August 2009 report.

On average, suppliers purchased standard power wheelchairs for $1,048 and complex rehabilitative power wheelchairs for $5,880. Medicare, however, allowed an average of $4,018 for standard power wheelchairs and $11,507 for complex rehabilitative power wheelchairs. As a result, Medicare and beneficiaries paid an average of $2,970 more than suppliers paid for standard power wheelchairs and $5,627 more than suppliers paid for complex rehabilitative power wheelchairs.

This discrepancy, the OIG indicates in its report, is due to Medicare basing its fee schedule amounts for power wheelchairs on manufacturer-suggested retail prices.

The Centers for Medicare & Medicaid Services (CMS) had planned to use supplier-submitted competitive bids to establish reimbursement amounts for power wheelchairs and other DME beginning July 2008. This would have saved Medicare and its beneficiaries approximately $1 billion annually, according to the report. Congress, however, delayed the Competitive Bidding Acquisition Program.

To offset the cost savings lost by this delay, DME fee schedule amounts were reduced in January 2009 by 9.5 percent.

The OIG recommended CMS look at whether fee schedule amounts should be further adjusted using the following methods for review:

Using information from the Competitive Bidding Acquisition Program;
Seeking legislation to ensure that fee schedule amounts are reasonable and responsive to market changes; and
Using the results of the OIG evaluation to determine whether an inherent reasonableness review is appropriate.

CMS concurred with all but the last suggestion. “CMS is not likely to consider undertaking a review of the standard and complex rehabilitative power wheelchair fee schedule amounts until the results of the supplier bids … are assessed,” CMS responded.

The Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) competitive Bidding Program Round 1 Rebid is set to begin Jan. 1, 2011.

Read the full report, entitled “Power Wheelchairs in the Medicare Program: Supplier Acquisition Costs and Services.”