The Case of the Expensive Wheelchair

There may be no greater challenge in reforming the health care system than eliminating waste. Federal examiners estimate that at least 10 percent of the $500 billion spent annually on Medicare is wasted—from overblown or fraudulent bills, or payments to misidentified or nonexistent patients, doctors or institutions.

Consider power wheelchairs. As the population has aged, their use—and cost—has soared. Under Medicare, several hundred suppliers across the country buy wheelchairs from manufacturers and then generally lease them to beneficiaries. In 1997, Medicare and Medicare beneficiaries paid just over $100 million to buy or lease power wheelchairs; today they pay more than $1 billion.

The Office of Inspector General (OIG) for the Department of Health and Human Services has examined thousands of vouchers and invoices for wheelchairs and reported that the average annual cost to Medicare in 2007 was $4,018, nearly four times the $1,048 paid by suppliers.

For more elaborate power wheelchairs, the average Medicare allowance was $11,507, almost twice the $5,880 price paid by suppliers.

Efforts to address the excess have been stymied—classic Washington. The medical equipment lobby, which spent $6.3 million in presidential and congressional campaign contributions last year, is as effective as any group of federal lobbyists. The Centers for Medicare & Medicaid Services, in its oversight role, has been slow to act. And Congress has blocked attempts to impose competitive bidding.

Industry leaders complain that servicing the machinery is getting more expensive and that their companies have been hurt by inflation and reduced Medicare rates. Medicare compensation has indeed been scaled back with a 9.5 percent cut in payments. According to the OIG, that brought the average payment down to $3,641 in 2009, still three times the price paid by suppliers.

The problem has been explored intensely over the past five years by the OIG, the Government Accountability Office, the Senate Finance Committee and the FBI, which brought dozens of arrests and convictions from Florida to California.

Medicare officials agreed with most of the OIG’s recent suggestions that the fee structure be reevaluated. But they balked at the conclusion that the payments were “grossly higher” than the suppliers’ cost.

Sen. Chuck Grassley, R-Iowa, has a different perspective: “At a time when every health care dollar counts, it’s infuriating to learn that the government is throwing away money and is still overpaying for power wheelchairs. This translates into hundreds of millions of dollars wasted and cost beneficiaries millions of dollars in copayments. It’s only common sense that you don’t pay more for something than is on the price tag.”

He’s right. The disparity in prices to supplier and to beneficiary defies common sense. The longer this imbalance continues, the greater the threat to Medicare. And the failure to crack down on waste threatens the credibility of the ambitious effort to overhaul the nation’s health care system. Jim Toedtman, Editor – AARP Bulletin http://www.bulletin.aarp.org

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