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."