WASHINGTON--Medicare could save millions on power wheelchairs if the government reimbursed them at the rates available to consumers on the Internet, according to a report from the Department of Health and Human Services Office of Inspector General.
The report--called "A Comparison of Medicare Program and Consumer Internet Prices for Power Wheelchairs"--found that Medicare payments for PWCs were 45 percent higher than median Internet prices for the equipment. For the first three months of 2007, the report said, the government could have saved nearly $40 million if its fees had been the same as those Internet prices, and beneficiaries could have saved $233 in copays for the products.
Issued Tuesday, the OIG report drew immediate fire from a slew of HME stakeholders.
"The whole report is quite ridiculous," said Tim Pederson, CEO of WestMed Rehab in Rapid City, S.D., and chair of the Rehab and Assistive Technology Council for the American Association for Homecare, adding that the report is "not an apples-to-apples comparison."
"CMS' potential for additional savings is completely overstated by the OIG," Pederson said. "It has already been established that the provision of PMDs to Medicare beneficiaries is far more expensive than cash sales to 'drop ship' customers."
Pride Mobility Products' Seth Johnson also termed the report "ridiculous." Vice president of government relations for the Exeter, Pa.-based manufacturer, Johnson said "the comparison is not even apples to oranges. It's completely different. It's more like apples to bicycles or apples to automobiles."
Johnson pointed out that "there is a significant difference in cost between an online retail model and a Medicare provider model.
"A consumer buying through the Internet pays cash and walks away with a power chair," he continued. "An online retailer doesn't have to comply with Medicare standards. There is no requirement for a face-to-face exam, no evaluation, no fitting or customization that goes into providing power wheelchairs for Medicare beneficiaries."
According to a response from Elyria, Ohio-based Invacare, "The Internet company does not incur all the costs associated with being a Medicare supplier, meeting all the Medicare supplier standards, complying with Medicare-required documentation rules (a complex and burdensome process that requires the supplier to obtain detailed medical record information from the prescribing physician), submitting the claim on behalf of the beneficiary ...
"In short, Internet pricing is wholly inapplicable," Invacare said. "In fact, in 2006 when CMS was considering data to use in setting fees for the new power wheelchair codes, it specifically rejected Internet pricing information for these very reasons."
Pederson noted the OIG study "is fatally flawed particularly with respect to Group 3 products. The OIG was only able to find more than two products for sale on the Internet for only three of the 10 Group 3 codes. This completely invalidates the findings for Group 3 complex rehab products. Similarly, the OIG could only find more than four Group 2 products on the Internet for nine of the 15 Group 2 codes," he said. "The data presented for Group 2 products is therefore questionable."
Of 28 codes for which it collected information, the OIG found median Internet prices were less than the Medicare fee schedule amounts for 24. The report also found that Medicare's payment amount for K0823, the most frequently reimbursed code, exceeded the median Internet price by 36 percent, accounting for 68 percent of the total possible savings to the program.
But Pederson noted "the greater risk for providers of these services is the increasing scrutiny of these services by CMS. The results of the TriCenturion widespread probe of the K0823 code indicate that providers assume an abnormally high risk for denied claims just by providing PMDs to Medicare beneficiaries.
"The increased reimbursement through Medicare relative to cash sales is completely offset by the results of the TriCenturion probe, which indicated that 90 percent of these claims were denied. In this case, a provider has no recourse to collect the denied amount from the patient, and it must absorb the loss on those items," Pederson said. (For a report on the K0823 probe review, see HomeCare Monday, Sept. 24.)
Pride's Johnson noted the OIG report is a follow-up to an investigation it conducted in 2004 that showed Medicare paid more for power wheelchairs than other health care payers. At that time, the industry argued vigorously about the differences in Internet pricing and Medicare reimbursement, "and we think CMS understands," Johnson said.
But he added that the effects of the new OIG report remain to be seen.
The OIG report recommended that CMS conduct additional reviews of Medicare's PWC reimbursements to see whether adjustments should be made--and CMS concurred.
"In talking with CMS as recently as a month ago, there were no plans to further revise the PWC feel schedule amounts, so I don't really think it's going to have much of any impact in the short term," Johnson said. "But we know that the government likes to pull up old reports and use those to roll out changes three or four years later, so it wouldn't surprise me that in the future if they want to make some changes, they refer to this report in some form or fashion."
And in July 2008, unless the industry succeeds in getting Congress to exclude complex rehab from Medicare's competitive bidding program, PWC pricing in the first 10 bidding areas will be based on suppliers' bids for those items.
Johnson said AAHomecare's RATC is working to get a meeting with the OIG "just to educate them on the vast differences between the online retailer model and the Medicare provider model."
The RATC also will submit a formal response to Inspector General Daniel Levinson outlining the flaws in the study.
"The only way CMS can use Internet pricing as a basis for reimbursement is to abolish the documentation requirements that providers must follow," WestMed's Pederson said. "If providers could bill CMS in advance with only a prescription and drop ship to patients after payment is received, then Internet pricing is a fair comparison. We all know that this is not going to happen. The OIG needs to come back to the real world."
