PMC Questions Methodology of OIG Report on Power Wheelchair Acquisition Costs; Focus on Acquisition Fails to Account for Cost of Providing Quality Care

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The Department of Health and Human Services (HHS), Office of the Inspector General (OIG) recently released a report, entitled Power Wheelchairs in the Medicare Program: Supplier Acquisition Costs and Services (OEI-04-07-00400) examining acquisition pricing by providers for a sample of standard and complex rehabilitation power wheelchairs available to Medicare beneficiaries. To obtain a more accurate and complete measure of power wheelchair pricing, the PMC suggests the OIG conduct a thorough analysis that examines acquisition costs and mandatory provider outlays necessary to partner with the Medicare program.

Increased Medicare standards and documentation confusion has raised the cost to providers of partnering with the Medicare program. As provider liabilities increase, the acquisition cost of equipment is a shrinking component of the provider's cost structure.

Using flawed methodology and incomplete data, the Department of Health and Human Services (HHS), Office of the Inspector General (OIG) released a report, entitled Power Wheelchairs in the Medicare Program: Supplier Acquisition Costs and Services (OEI-04-07-00400) examining acquisition pricing by providers for a sample of standard and complex rehabilitation power wheelchairs available to Medicare beneficiaries. If readers incorrectly draw conclusions that low acquisition costs equates to high profit margins, then the PMC questions the completeness of the study and its usefulness to policymakers. To obtain a more accurate and complete measure of power wheelchair pricing, the PMC insists that the OIG conduct a thorough analysis that examines both acquisition costs and mandatory provider outlays necessary to partner with the Medicare program.

In their report, the OIG admittedly failed to calculate costs of the services provided as well as overhead expenses, including salaries, fuel, transportation, rents, inventories, home assessment and beneficiary assistance in billing Medicare. Additionally, many providers have aggressively adopted the Centers for Medicare and Medicaid Service's (CMS's) initiatives to fight fraud by earning accreditation and acquiring surety bonds prior to the mandated deadline, which has significantly raised overhead and administrative costs. As PMC Director Eric Sokol explains, "Increased Medicare standards and documentation confusion has raised the cost to providers of partnering with the Medicare program. As provider liabilities increase, the acquisition cost of equipment is a shrinking component of the provider's cost structure."

Moreover, Medicare reimbursement for power wheelchairs has decreased dramatically since 2006. Both CMS and Congress have cut Medicare reimbursement for standard power chairs by over 37% in that time period. Additional cuts are anticipated when CMS implements competitive bidding for certain durable medical equipment, including standard power wheelchairs, in January 2011. For this reason, the PMC agrees with CMS that the agency should not initiate unilateral authority, through inherent reasonableness, to cut the Medicare fee schedule further for standard power wheelchairs until such a time as the competitive bidding program has been correctly implemented.

Access to quality power wheelchairs saves the Medicare program resources by making beneficiaries safe in their environment, allowing them to avoid costly hospitalizations and procedures. Further downward pressure on pricing will force some providers out of the Medicare market, jeopardizing access to this life enhancing medical equipment to eligible beneficiaries.

A complete copy of the OIG report can be found at: http://oig.hhs.gov/oei/reports/oei-04-07-00400.pdf.

The Power Mobility Coalition (PMC) is a nationwide association of manufacturers and suppliers of motorized wheelchairs and power operated vehicles based in Washington, D.C.

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