HHS OIG Omits Data Essential for Accurate Evaluation of Medicare Program’s Power Wheelchair Costs

September 30, 2009

Misleading OIG Report Could Wrongly Lead to Price Cuts that Put Suppliers Out of Business

NEW BRAUNFELS, Texas, Sept. 30 /PRNewswire-USNewswire/ — The US Department of Health and Human Services (HHS) Inspector General has issued a misleading report regarding the pricing of power mobility equipment, sending Congress and policymakers incomplete and unrealistic data on the actual cost for providers when supplying equipment to improve mobility for Medicare beneficiaries.

The report entitled, Power Wheelchairs in the Medicare Program: Supplier Acquisition Costs and Services, was supposed to thoroughly examine the pricing of standard and complex rehabilitation power wheelchairs. But inexcusably, the Inspector General (OIG) acknowledged that its review did not include extensive costs incurred when servicing Medicare beneficiaries, such as documentation, transportation, home assessments, billing, accreditation and many others.

“The methodology for this report was very troubling,” said Doug Harrison, CEO and Founder of The SCOOTER Store, the nation’s largest supplier of power mobility equipment. “Congress and the Administration rely on the OIG to provide a full and accurate assessment in such cost reports. How can the OIG possibly deliver a credible pricing analysis when also acknowledging in the report that they omitted many of the specific costs associated with the Medicare program? This report is useless without this additional cost information. It is a disservice to the nation’s seniors who rely on these products, as well as the Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program.”

Mr. Harrison noted that the incomplete data in the OIG report could become the foundation for public policies that wrongly slash government pricing for power wheelchairs, a move that would undoubtedly force more suppliers out of business and reduce the availability of power wheelchairs for eligible Medicare beneficiaries. Already, various legislation and regulations enacted over the last five years has reduced power wheelchair pricing by 37 percent, and utilization of the Medicare mobility benefit has been well below CMS estimates.

Moreover, Mr. Harrison said the OIG’s conclusion that the power mobility industry receives a gross profit margin of approximately 75% “is laughable” considering that the actual net profit for much of the industry after taxes is now less than five percent. The discrepancy, he said, is primarily due to the cost of conducting business in the Medicare program, so much so, in fact, that actually acquiring the power wheelchair only accounts for a fraction of the total cost. Completely overlooked by the OIG report are these functions and services directly associated with doing business with Medicare that add substantial costs for suppliers when providing beneficiaries with power wheelchairs:

  • Customer Intake, Education and Interaction

Suppliers spend considerable time working with current and future customers, educating them on insurance qualifications, Medicare coverage criteria, and product information.

  • Documentation Collection and Management

Medicare requirements demand that providers collect substantial medical records and associated documentation. Our employees spend considerable time working with physician offices educating them on the complexities of the power mobility device paperwork requirements.

  • Delivery Set Up, Service, Warehousing, and Training

Medicare requires suppliers to send certified and trained personnel to a prospective beneficiary’s home to assess their ability to operate the mobility equipment and determine its usefulness in the home. These obligations require investments in trained personnel, delivery fleets, fuel, warehouses, logistical management systems, repair parts, travel time, and education programs.

  • Claims Management, Reimbursement and Collections

Suppliers spend considerable time gathering detailed information required to submit proper claims for reimbursements. Countless hours are spent maintaining fee schedules, product codes, beneficiary and physician files, setting up payment plans and working with Medicare and other insurance companies to ensure claims are submitted correctly.

  • Compliance with State and Federal Regulations

Suppliers must adhere to state and federal requirements, such as being accredited by a third party firm, maintaining $300,000 in comprehensive liability for each location it maintains, meeting OSHA requirements, obtaining, as of Oct. 1, a $50,000 surety bond for each of a company’s business locations, and pursuing applicable state licenses.

“The OIG report is a lost opportunity,” Mr. Harrison said. “CMS and the suppliers would have benefited from an accurate cost analysis that we could have evaluated and possibly used to determine legitimate cost savings in providing power wheelchairs. That’s the kind of healthcare reform that the nation needs. A sensible look at costs, and a determination of what services could be curtailed without any disruption to Medicare beneficiaries.”

Mr. Harrison said it is crucial that lawmakers recognize the data flaws that the OIG readily acknowledges in the report, saying, “It would be a travesty if any public policy is ever drawn from this flawed piece of work.”

Contact: Michael Pfister, 830-627-4444


Source: newswire

comments powered by Disqus