DEPARTMENT OF HEALTH AND HUMA..N SERVICES 
OFFICE OF INSPECTOR GENERAL 
WASHlNGTON, DC  2020 I 
SEP 0 5 2013 

TO:  Marilyn Tavenner 
Administrator 

Centers for Medicare & Medicaid Services 

FROM:  Stuart Wright 
Deputy Inspector General 
for Evaluation and Inspections 
SUBJECT: 	 Memorandum Report:  Medicaid DMEPOS Costs May Be Exceeding 
Medicare Costs in Competitive Bidding Areas, OEI-06-13-00470 
This memorandum report provides an example of potential Medicaid savings under a 
provision in the President's Federal Fiscal Year (FFY) 2014 budget proposal to limit 
Federal reimbursement for State Medicaid spending on items in the category of durable 
medical equipment, prosthetics, orthotics, and supplies (DMEPOS) to what Medicare 
would have paid.  We compared payment amounts for the Texas Medicaid program and 
the Medicare DMEPOS Competitive Bidding Program by examining the FFY 2011 
fee-for-service payment amounts for 32 DMEPOS items covered by both programs. 1  The 
findings illustrate differences between the two in fee-for-service payment amounts for 
equipment and supplies and potential savings for the Dallas/Fort Worth area. 
SUMMARY 
We found that in FFY 2011, the Texas Medicaid fee-schedule amounts for 30 ofthe 
32 DMEPOS items exceeded the payment amounts under the Medicare DMEPOS 
Competitive Bidding Program.  During this period, Texas Medicaid spent approximately 
$12 million on these 32 items in the Dallas/Fort Worth area.  If it had used the payment 
amounts from the Medicare Competitive Bidding Program, Medicaid could have saved 
approximately $2 million (State and Federal shares combined) in the Dallas/Fort Worth 
area.  In July 2013, the Medicare DMEPOS Competitive Bidding Program expanded to 
cover a total of 100 metropolitan areas nationwide.  If the State Medicaid programs were 
to use the Medicare Competitive Bidding Program amounts-rather than the State 
Medicaid fee-schedule amounts-the States and the Federal Government could achieve 
savmgs. 
1 FFY 2011 began October I, 20 10, and ended September 30, 2011.  Page 2  Marilyn Tavenner 
 
BACKGROUND 
 
Medicaid  
The Medicaid program provides medical assistance to low-income individuals and those 
with disabilities. The Centers for Medicare & Medicaid Services (CMS) and the States  
jointly fund and administer Medicaid.2  Each State administers its Medicaid program in 
accordance with a CMS-approved State plan.3 Medicaid beneficiary participation has 
increased steadily in Texas over the last several years in fee-for-service and managed 
care. From State fiscal years (SFYs)4 2008 to 2011, Texas Medicaid enrollment 
increased by 20 percent, from 4.2 million beneficiaries (3.3 million in fee-for-service, 
2.1 million in managed care) to 5.1 million beneficiaries (3.8 million in fee-for-service, 
2.6 million in managed care).5  
 
This increase in enrollment resulted in a corresponding increase in expenditures for 
DMEPOS.  From SFYs 2008 to 2011, the Medicaid expenditures for DMEPOS in Texas 
increased by 48 percent, from $405 million ($347 million for fee-for-service and 
$58 million for managed care) to $600 million ($499 million for fee-for-service and 
$101 million for managed care).6 In SFY 2011, fee-for-service accounted for 83 percent 
of Texas Medicaid expenditures and managed care accounted for 17 percent.7 However, 
the proportion of services provided through managed care is growing, and on March 1, 
2012, Texas Medicaid began transitioning approximately 880,000 beneficiaries from  
fee-for-service to managed care.8  
 
States establish their Medicaid payment amounts for all servicesincluding DMEPOS 
working within Federal parameters to limit costs while ensuring access.9 The Social 
Security Act requires that States establish payments that are consistent with efficiency, 
economy, and quality of care and are sufficient to enlist enough providers so that care and 
services are available under the plan at least to the extent that such care and services are 
available to the general population in the geographic area.10 The Presidents 
FFY 2014 budget proposal also emphasized cost containment by Medicaid programs, 
proposing limiting Federal reimbursement for a States Medicaid spending on certain 
                                                 
2 The portion of the Medicaid program funded by the Federal government is known as the Federal Medical
  
Assistance  Percentage (FMAP).  The FFY  2011 FMAP  for Texas was  61 percent.   74 Fed. Reg. 
  
6231562317 (Nov. 27, 2009). 

3 Social Security Act (SSA), Title XIX. 

4 In Texas, the SFY differs from  the FFY, running from September 1 to  August  31. 
 
5 Texas Health and Human Services Commission (HHSC), SFY 2008 to  SFY  2012  Texas Medicaid 
 
Eligibility File.  Medicaid beneficiaries may be enrolled in  both  fee-for-service and managed care during 
 
the year. Therefore, the number of beneficiaries in the former plus the number of beneficiaries in the latter 

exceeds the total number of beneficiaries. 

6 Figures provided  on May 2, 2013, by  HHSC Director  of Rate Analysis for  Acute Care Service. 

7 HHSC, SFY 2008 to SFY 2012 Texas Medicaid Eligibility File.   

8 Texas Medicaid Bulletin  No. 239, Medicaid Managed Care Changes Effective March 2012. 

January/February 2012. 

9 CMS, Fee for Service.  Accessed at http://www.medicaid.gov/ on August 21, 2012. 

10  SSA  1902(a)(30)(A). 
 
Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 3  Marilyn Tavenner 
 
DME services to what Medicare would have paid in the same State for the same  
services.11    
 
The Texas Health and Human Services Commission (HHSC) administers Texass 
Medicaid program and sets Statewide fee-for-service payment amounts for DMEPOS.  
HHSC policy indicates that it sets amounts for covered DMEPOS items equal to or a 
percentage of the Medicare reimbursement rate for the procedure code on the Medicare 
fee schedule specific to Texas.12  For items not covered under Medicare and for items  
where the Medicare rate is deemed insufficient, HHSC uses other sources to determine 
Medicaid payment amounts.  These sources can include reimbursement amounts for 
similar items within Texas, reimbursement amounts for the same or similar items in other 
States, and the costs shown on manufacturers invoices.  Every 2 years, HHSC reviews 
Texas Medicaid payment amounts for DMEPOS to ensure that these amounts reflect 
established payment methodologies.  To complete these reviews, HHSC conducts public 
hearings, solicits comments regarding the proposed payment amounts, and then publishes 
the final payment amounts.13  Once established, these payment rates apply statewide.  
  
Medicare DMEPOS Competitive Bidding 
On January 1, 2011, CMS implemented the first phase of the Medicare DMEPOS 
Competitive Bidding Programknown as the Round 1 Rebidwith the goals of 
reducing both program and beneficiary costs while ensuring access to items and 
services.14  The initial phase included selected DMEPOS items within nine competitive 
bidding areas (CBA). Each CBA includes a metropolitan area and the ZIP Codes 
surrounding it.15, 16  
 
On August 19, 2011, CMS announced that the program would be expanded to an 
additional 91 CBAs under Round 2, with new prices going into effect July 1, 2013.17 At 
the same time, CMS will expand the Competitive Bidding Program for mail-order 
                                                 
11 To date, this proposal has not been enacted into law. CMS, Department  of  Health and Human Services 

Fiscal Year  2014 Justification  of Estimates for Appropriations Committees, p.  151.   Accessed at 
 
http://www.cms.gov/ on  April 25, 2013.  See also CMS, Fiscal Year 2013  DHHS Legislative Proposal, 

CMS-2013-17, p. 27. 

12 Texas Administrative Code, Title 1, Part 15,  355.8021. 

13 HHSC Rate Analysis Department, Proposed Medicaid Payment Rates for Durable Medical Equipment,
  
Prosthetics, Orthotics and Supplies for: 1) Hospital Beds and Accessories (2) Incontinence Supplies 

(3) Miscellaneous Equipment and Supplies (4) Mobility Aids (5) Nutrition  (Enteral  and Parenteral)  
(6) Wheelchairs and Accessories. February  15, 2012.  Accessed at  http://www.hhsc.state.tx.us/  on June 19, 

2013. 

14 CMS, Medicare Claims Processing Manual, ch. 36,  10. 

15 CMS, Facts about the DMEPOS Competitive Bidding Program Round 1 Rebid Competitive Bidding 
 
Areas (CBA). Accessed at http://www.dmecompetitivebid.com/ on August 21, 2012. 
 
16 The nine CBAs are:  Charlotte, Gastonia, Concord (North Carolina and South Carolina); Cincinnati, 

Middletown (Indiana, Ohio, and Kentucky);  Cleveland, Elyria, Mentor (Ohio); Dallas, Fort  Worth,
  
Arlington  (Texas); Kansas City (Kansas and  Missouri); Miami, Fort Lauderdale, Pompano Beach (Florida); 
 
Orlando, Kissimmee (Florida); Pittsburgh (Pennsylvania); and Riverside, San Bernardino, Ontario 

(California). 

17 CMS, Medicare To Save Taxpayers and  Beneficiaries $28 Billion With an Expanded Competitive 

Bidding Program. August 19, 2011.  Accessed at http://www.cms.gov/ on May 6, 2013. 

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 4  Marilyn Tavenner 
 
diabetic supplies to include all ZIP Codes in all parts of the United States.18 CMS 
estimates that over 10 years, the program will save Medicare $25.8 billion and will save 
Medicare beneficiaries $17.2 billion.19    
 
Using the bids submitted by selected suppliers, CMS sets a single payment amount for 
each DMEPOS item in each CBA that replaces the prior Medicare fee-schedule amount.20   
The DMEPOS items included in the Competitive Bidding Program are generally 
high-cost or high-volume products.21  DMEPOS items are grouped into product 
categories, with each product category consisting of multiple related items (see Table 1).  
Round 2 of the Competitive Bidding Program  made several changes to the original 
product categories, such as expanding the standard mobility device category to include 
more items, adding a category for negative-pressure wound therapy pumps and related 
supplies and accessories, and eliminating the category of complex rehabilitative power 
wheelchairs.22  
 
Table 1: Medicare DMEPOS Competitive Bidding Product Categories  
Round 1 Rebid Product Categories  Round 2 Product Categories  
   Oxygen, oxygen  equipment, and supplies     Oxygen supplies and equipment  
   Standard power wheelchairs, scooters, and related     Standard (power and manual) wheelchairs, scooters, 
accessories   and related accessories 
   Complex  rehabilitative power  wheelchairs and related     Enteral nutrients, equipment and supplies 
accessories (Group 2 only)      Continuous positive airway pressure, respiratory  
   Mail-order diabetic supplies  assist devices, and related supplies and accessories  
   Enteral nutrients, equipment, and supplies     Hospital beds and related accessories 
   Continuous Positive Airway Pressure devices and     Walkers and related accessories 
Respiratory Assist Devices, and related supplies and     Support surfaces (Group 2 mattresses and overlays) 
accessories      Negative pressure wound therapy pumps and related 
   Hospital beds and related accessories  supplies and accessories 
   Walkers and related accessories 
   Support surfaces (Group 2 mattresses and overlays in 
Miami CBA only). 
Sources:  CMS, DMEPOS Competitive BiddingRound 1 Rebid Product Categories and HCPCS Codes; accessed at 
http://www.dmecompetitivebid.com/ on August 21, 2012.  Also see, CMS,  Round 2 Items & Services; accessed at 
http://www.dmecompetitivebid.com/ on July 31, 2012. 
 
 
Previous OIG Work 
In previous reports, OIG found opportunities for savings by lowering payments for 
DMEPOS. A 2012 OIG report estimated that the Ohio Medicaid program could have 
achieved savings of approximately $8 million during SFY 2011 by establishing a 
competitive bidding program or through the use of manufacturer rebates for one type of 
                                                 
18 CMS, Competitive Bidding Areas (CBAs).   Accessed at http://www.dmecompetitivebid.com/ on 
        
July 31, 2012. 

19 CMS, Department  of  Health and Human  Services Fiscal Year  2014 Justification  of Estimates for 

Appropriations Committees. Accessed at http://www.cms.gov/ on April 25, 2013. (p. 151) 

20  SSA  1847(b)(5); 42  CFR  414.416. 

21 CMS, General Overview of the Final Rule for Competitive Acquisition for Certain  Durable Medical 

Equipment, Prosthetics, Orthotics, and Supplies. April 10, 2007.  Accessed at https://www.cms.gov/ on 
 
August 21, 2012.  See also 72 Fed.  Reg. 17992, 18021 (Apr. 10, 2007). 

22 CMS, Round 2 Items &  Services.  June 2012.  Accessed at http://www.dmecompetitivebid.com/ on 
   
July 31, 2012. 

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 5  Marilyn Tavenner 
 
DMEPOS product, home blood glucose test strips.23  The report estimated a potential cost 
reduction of 50 percent per unit of diabetes testing strips.  A 2013 OIG report found that 
the New Jersey Medicaid program could have achieved savings of approximately  
$1.8 million to $2.7 million during the period January 1, 2011, through December 31, 
2011, by reducing reimbursement rates for testing strips to retail rates or by establishing a 
competitive bidding program for testing strips.24  
 
METHODOLOGY 
 
We compared Texas Medicaid fee-for-service payment amounts for DMEPOS to 
Medicare payment amounts for the same items in the Dallas/Fort Worth CBA.25 Using 
CMSs Durable Medical Equipment Standard Analytic File, we identified the first  
6 months of 2011 Medicare claims for items covered under Round 1 Rebid of the 
Medicare DMEPOS Competitive Bidding Program in the Dallas/Fort Worth CBAi.e., 
claims for 211 Healthcare Common Procedure Coding System (HCPCS)26 codes.27 To 
focus our review on those items likely to have the greatest impact on program  
expenditures, we identified the covered items with the greatest amount in Medicare 
reimbursement that were also covered by Texas Medicaid.28  We selected items with total 
Medicare reimbursement amounts greater than $190,000 per HCPCS code during the 
6-month period, which resulted in 26 covered items.  We also identified the Medicare 
fee-schedule amounts for these items. 
 
Six of the twenty-six items are represented twice because there is one HCPCS code for 
the purchase of the item and another for its rental, and the two codes are reimbursed at 
different amounts.29  We added together the 26 single items and the 6 items represented 
                                                 
23 OIG,  Ohio Medicaid Costs for Home Blood-Glucose Test Strips Could Be Reduced by Approximately  

50 Percent, A-05-11-00098, March 2012. 

24 OIG,  New Jersey Medicaid Program Could Achieve Savings  by Reducing Home Blood-Glucose Test 

Strip Prices, A-02-12-01010, forthcoming. 

25  We  did not analyze DMEPOS provided under managed care arrangements.  

26  HCPCS Level 1 numerical codes (e.g., 70405) are identical to CPT codes and are used by CMS 
when services  and procedures involve Medicare beneficiaries.  The five character codes and 
descriptions included in this report are obtained from Current Procedural Terminology (CPT), 
copyright 2011 by the American Medical Association (AMA).  CPT is developed by  the AMA as  a 
listing of descriptive terms and five character identifying codes and modifiers for reporting medical 
services and procedures.  Any use of CPT  outside of this report should refer to the most current 
version of the Current Procedural Terminology available from AMA.  Applicable FARS/DFARS 
apply. 
27  We excluded items in the complex rehabilitative power wheelchairs category because this category will 
not  be included in Round 2 of the Medicare DMEPOS Competitive Bidding  Program.  We also excluded 
support surfaces because they are covered only in the Miami CBA. 
28 The HCPCS codes for blood  glucose test strips (A4253) and lancets (A4259) are covered only  under the 
Medicare DMEPOS Competitive Bidding Program when they are provided  via mail order.  However, 
Medicaid rules do  not  require  States to  distinguish  when these items are delivered via mail order or  picked  
up in a retail store.   We decided to keep these codes in  our analysis. 
29 The following items are represented twice:  enteral nutrition infusion pump (B9002); walker (E0143); 
humidifier,  heated (E0562); power  wheelchair (K0822); power wheelchair (K0823); and power wheelchair 
(K0825).   Texas Medicaid uses the type-of-service codes 9 (other/DME purchase), J (purchase), and L 
(rental) to determine pricing for DMEPOS items.   
Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 6  Marilyn Tavenner 
 
twice to arrive at 32 individual items to include in our final analysis.  (See Appendix A 
for a list of the 32 items.) 
 
We used the Medicaid Management Information System (MMIS) to (1) identify the  
FFY 2011 Texas Medicaid fee-for-service claims and (2) determine the volume of claims  
for the 32 selected DMEPOS items.  We included claims only for Medicaid beneficiaries 
who lived in the Dallas/Fort Worth CBA, using the beneficiary ZIP Code information 
stored in the FFY 2011 Medicaid Statistical Information System (MSIS) Eligibility File. 
 
To determine whether one programs payment amount exceeded that of the other, we 
calculated the difference in payment amounts for each of the 32 items between Texas 
Medicaid and the Medicare DMEPOS Competitive Bidding Program.  For each item for 
which the Texas Medicaid fee-schedule amount exceeded the Medicare payment amount, 
we used the Medicaid claims volume to estimate the potential savings that could have 
been achieved using the Medicare payment amount instead.  We then calculated the 
overall potential savings by summing the potential savings per item. 
 
Limitations  
The study has three significant scope limitations.  We reviewed only a subset of 
DMEPOS items (32 items).  Also, we examined only one metropolitan area.  As prior 
OIG reports have noted, timely comprehensive Medicaid claims data for all States have 
not been readily available from CMS.30  Therefore, we studied a single CBA, obtaining 
FFY 2011 DMEPOS claims data directly from HHSC.  We restricted the review to 
Dallas/Fort Worth, the only CBA entirely located in Texas.  We do not project our 
findings beyond this study scope. Finally, we did not examine how the Presidents 
budget proposal, if implemented, would potentially affect the profit margins for 
DMEPOS suppliers or beneficiaries access to DMEPOS supplies.  
 
Standards 
This study was  conducted in accordance with the Quality Standards for Inspection and 
Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 
 
RESULTS  
 
Texas Medicaid fee-schedule amounts exceeded the Medicare DMEPOS 
Competitive Bidding Program payment amounts on almost all items  
The FFY 2011 Texas Medicaid fee schedule amounts for 30 of the 32 items exceeded the 
Medicare payment amounts.  In FFY 2011, Texas Medicaid spent approximately  
$12 million on the 32 items in the Dallas/Fort Worth CBA.  If it had used the Medicare 
payment amounts, Texas Medicaid could have saved approximately $2 million (State and 
Federal shares combined) on these items in this CBA.  For the remaining 2 of 32 items, 
the Texas Medicaid fee-schedule amounts did not exceed the Medicare payment amounts.  
Appendix B lists each of the 32 items, along with the associated payment amounts and 
potential savings. 
 
                                                 
30 OIG,  MSIS Data Usefulness for Detecting Fraud,  Waste, and Abuse, OEI-04-07-00240, August 2009. 
Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 7  Marilyn Tavenner 
 
Of the 32 items, 6 items had Texas Medicaid fee-schedule amounts exceeding the 
Medicare payment amounts by more than 200 percent, with the greatest difference being 
360 percent.  Table 2 lists these items; combined, they account for 8 percent ($163,432) 
of the total potential savings. 
 
Table 2: Items with the greatest differences between the payment amount from the 
Texas Medicaid fee schedule and the Medicare DMEPOS Competitive Bidding Program  
Medicare  Texas Medicaid  Percent of 
HCPCS  HCPCS Description   Payment  Fee Schedule  Medicare 
Amount  Amount  Payment 
Enteral formula, nutritionally complete, for special 
B4154   $0.87  $3.13   360%  
metabolic needs (purchase)  
Enteral formula, nutritionally complete, hydrolyzed  
B4153   $1.45  $4.74   327%  
proteins (purchase) 
A4259   Lancets, per box of 100 (purchase)   $4.43   $11.10   251%  
Enteral formula, nutritionally complete, calorically  
B4152   $0.41  $1.03   251%  
dense with intact nutrients (purchase) 
Enteral formula, nutritionally complete with intact 
B4150   $0.48  $1.16   242%  
nutrients (purchase) 
Walker, folding, wheeled, adjustable or fixed height 
E0143   $6.51  $14.62   225%  
(rental)  
Source:  OIG analysis of  the work in Dallas/Fort Worth Medicare DMEPOS Competitive Bidding Program payment amounts and  the FFY  2011 
Texas Medicaid fee schedule. 
 
Seventy-five percent of the potential savings ($1.5 million) came from five items.   
Table 3 lists these items associated with the highest potential savings.  Over half of this 
$1.5 million in savings resulted from a single item:  monthly rental of oxygen 
concentrators (E1390), with potential savings of $883,483.  Texas Medicaid paid $38.05 
per month more than Medicare for this item.  Oxygen concentrators also had the highest 
Medicaid claims volume of the 32 items reviewed. 
 
Table 3: Items associated with the highest potential savings if Texas Medicaid were to use the 
Medicare DMEPOS Competitive Bidding Program payment amounts in Dallas/Fort Worth (DFW)  
Texas  DFW 
Medicare 
Medicaid   Medicaid   Potential 
HCPCS  HCPCS Description   Payment 
Fee-Schedule  Claims  Savings  
Amount 
Amount  Volume  
E1390   Oxygen concentrator, single delivery port (rental)   $123.00   $161.05   23,219   $883,483  
Blood glucose test or reagent strips for home blood 
A4253   $14.25  $28.28   13,307   $186,697  
glucose monitor (purchase)  
Power wheelchair, group 2 standard, captains chair, 
K0823   patient weight capacity up to and including 300  $2,448.20  $2,703.93   598  $152,927  
pounds (purchase)  
A4259   Lancets, per box of 100 (purchase)   $4.43   $11.10   22,510   $150,142  
Hospital bed, semi-electric, with any type side rails, 
E0260   $79.33  $111.87   4,374   $142,330  
with mattress (rental) 
Total potential savings from top 5 items   $1,515,578  
Source:  OIG analysis of  the Dallas/Fort Worth Medicare  DMEPOS Competitive Bidding Program payment amounts, the FFY 2011 Texas Medicaid  
fee schedule, and the FFY 2011 MMIS claims data. 
 
 
 
 
Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 8  Marilyn Tavenner 
 
CONCLUSION 
 
State Medicaid programs are required to establish payments that are consistent with 
efficiency, economy, and quality of care, and the Presidents FFY 2014 budget proposes 
to limit Federal reimbursement for State Medicaid spending on DMEPOS items to what 
Medicare would have paid.  Through competitive bidding, the Medicare program has 
demonstrated that DMEPOS can be accessible to beneficiaries at lower costs to the 
program.  Our findings provide a tangible example of potential State and Federal savings 
for Medicaid programs if the programs were to use the Medicare Competitive Bidding  
payment amounts for DMEPOS items.  Access to more timely Medicaid claims data 
would allow further analysis to better understand the full potential of the proposal to limit 
Federal reimbursement for State Medicaid spending on DMEPOS items to Medicare 
payment rates.   
 
This report is being issued directly in final form because it contains no recommendations.  
If you have comments or questions about this report, please provide them within 60 days.  
Please refer to report number OEI-06-13-00470 in all correspondence. 
 
Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 9  Marilyn Tavenner 
 
APPENDIX A 
 
 
Table A-1: Items Covered Under Both the Medicare DMEPOS Competitive Bidding Program and 
the Texas Medicaid Program  
Medicare Type 
HCPCS  HCPCS Description  
of Service  
A4253   Blood glucose test or reagent strips for home blood glucose monitor, per 50 strips  Purchase 
A4259   Lancets, per box of 100   Purchase 
A7030   Full face mask used with positive airway pressure device, each  Purchase 
A7032   Cushion for use on nasal mask interface, replacement only, each   Purchase 
A7034   Nasal interface used with positive airway pressure device, with or without head strap   Purchase 
A7035   Headgear used with positive airway pressure device  Purchase 
A7037   Tubing used with positive airway pressure device  Purchase 
B4034   Enteral feeding supply kit; syringe fed  Purchase 
B4035   Enteral feeding supply kit; pump fed  Purchase 
Enteral formula, nutritionally complete with intact nutrients, administered through an enteral 
B4150   Purchase 
feeding tube  
Enteral formula, nutritionally complete, calorically  dense, administered through an enteral feeding 
B4152   Purchase 
tube 
Enteral formula, nutritionally complete, hydrolyzed proteins, administered through an enteral 
B4153   Purchase 
feeding tube  
Enteral formula, nutritionally complete, for special metabolic needs, administered through an 
B4154   Purchase 
enteral feeding tube 
Purchase 
B9002   Enteral nutrition infusion pump - with alarm 
Rental 
Purchase 
E0143   Walker, folding, wheeled, adjustable or fixed height 
Rental 
E0260   Hospital bed, semi-electric, with any type side rails, with mattress  Rental 
E0431   Portable gaseous oxygen system   Rental 
E0439   Stationary liquid oxygen system   Rental 
E0470   Respiratory assist device, bi-level pressure capability,  without backup rate feature   Rental 
E0471   Respiratory assist device, bi-level pressure capability,  with backup rate feature   Rental 
Purchase 
E0562   Humidifier, heated, used with positive airway pressure device 
Rental 
E0601   Continuous airway pressure device  Rental 
E1390  Oxygen  concentrator, single delivery port   Rental 
Power wheelchair, group 2 standard, sling/solid seat/back, patient weight capacity up to and  Purchase 
K0822  
including 300 pounds  Rental 
Power wheelchair, group 2 standard, captains chair, patient weight capacity up to and including  Purchase 
K0823  
300 pounds   Rental 
Power wheelchair, group 2 heavy duty, captains chair, patient weight capacity  301 to   Purchase 
K0825  
450 pounds   Rental 
Source:  OIG analysis of  the Medicare DMEPOS Competitive Bidding Program payment amounts and the FFY 2011 Texas Medicaid fee schedule. 
 
 
 
 
 
Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)  Page 10  Marilyn Tavenner 
 
APPENDIX B  
 
Table B-1: Potential Texas Medicaid Program Cost Savings If Medicare DMEPOS Competitive Bidding Payment 
Amounts Had Been Used in the Dallas/Fort Worth (DFW) Competitive Bidding Area During FFY 2011  
Texas  Difference 
DFW 
Medicaid   Medicare  Medicaid   between  Percentage 
Medicaid   Potential 
HCPCS  HCPCS Description   Type of  Payment  Fee  Medicare  of Medicare 
Claims  Savings  
Service   Amount  Schedule  and  Payment 
Volume  
Amount  Medicaid  
Blood glucose test or reagent strips for 
A4253   Purchase  $14.25   $28.28   $14.03   13,307  $186,697   198%  
home blood glucose monitor, per 50 strips 
A4259   Lancets, per box of 100   Purchase  $4.43   $11.10   $6.67   22,510   $150,142   251%  
Full face mask used with positive airway  
A7030   Purchase  $119.51   $157.06   $37.55   77  $2,891   131%  
pressure device, each 
Cushion for use on nasal mask interface, 
A7032   Purchase  $25.67   $33.75   $8.08   51  $412   131%  
replacement only, each 
Nasal interface used with positive airway  
A7034   Purchase  $73.12   $48.97   -$24.15   89  No savings  67%  
pressure device, with or  without head strap  
Headgear used with positive airway  
A7035   Purchase  $21.61   $24.84   $3.23   114  $368   115%  
pressure device 
Tubing used with positive airway  pressure 
A7037   Purchase  $18.15   $15.96   -$2.19   157  No savings  88%  
device  
B4034   Enteral feeding supply kit; syringe fed  Purchase  $3.83   $5.76   $1.93   2,472   $4,771   150%  
B4035   Enteral feeding supply kit; pump fed  Purchase  $7.35   $10.74   $3.39   13,465   $45,646   146%  
Enteral formula, nutritionally complete with 
B4150   intact nutrients, administered through an  Purchase  $0.48   $1.16   $0.68   4,306   $2,928   242%  
enteral feeding tube 
Enteral formula, nutritionally complete, 
B4152   calorically dense, administered through an  Purchase  $0.41   $1.03   $0.62   3,315   $2,055   251%  
enteral feeding tube 
Enteral formula, nutritionally complete, 
B4153   hydrolyzed proteins administered through  Purchase  $1.45   $4.74   $3.29   654  $2,152   327%  
an enteral feeding tube  
Enteral formula, nutritionally complete, for 
B4154   special metabolic needs, administered  Purchase  $0.87   $3.13   $2.26   2,634   $5,953   360%  
through an enteral feeding tube  
Purchase  $850.53   $1,208.44   $357.91   88  $31,496   142%  
B9002   Enteral nutrition infusion pump - with alarm 
Rental  $85.05   $117.04   $31.99   3,022   $96,674   138%  
Walker, folding, wheeled, adjustable or  Purchase  $65.12   $92.22   $27.10   1,087   $29,458   142%  
E0143  
fixed height   Rental  $6.51   $14.62   $8.11   25  $202.75   225%  
Hospital bed, semi-electric, with any type 
E0260   Rental  $79.33   $111.87   $32.54   4,374   $142,330   141%  
side rails, with mattress 
E0431   Portable gaseous oxygen system   Rental  $21.00   $26.47   $5.47   14,175   $77,537   126%  
E0439   Stationary liquid oxygen system   Rental  $123.00   $159.32   $36.32   754  $27,385   130%  
Respiratory assist device, bi-level pressure 
E0470   Rental  $150.00   $213.64   $63.64   560  $35,638   142%  
capability,  without backup rate feature  
Respiratory assist device, bi-level pressure 
E0471   Rental  $342.51   $363.60   $21.09   555  $11,705   106%  
capability,  with backup rate feature 
Humidifier, heated, used with positive  Purchase  $179.92   $250.79   $70.87   199  $14,103   139%  
E0562  
airway pressure device   Rental  $17.99   $25.07   $7.08   1,183   $8,376   139%  
E0601   Continuous airway pressure device  Rental  $59.90   $85.58   $25.68   1,998   $51,309   143%  
E1390   Oxygen concentrator, single delivery port  Rental  $123.00   $161.05   $38.05   23,219   $883,483   131%  
Power wheelchair, group 2 standard,  Purchase  $2,448.11   $2,715.89   $267.78   30  $8,034   111%  
K0822   sling/solid seat/back, patient weight 
capacity up to and including 300 pounds  Rental  $244.81   $282.17   $37.36   7  $262   115%  
Power wheelchair, group 2 standard,  Purchase  $2,448.20   $2,703.93   $255.73   598  $152,927   110%  
K0823   captains chair, patient weight capacity up  
to and including 300 pounds   Rental  $244.82   $272.85   $28.03   70  $1,963   111%  
Power wheelchair, group 2 heavy duty,   Purchase  $2,900.00   $3,343.50   $443.50   85  $37,698   115%  
K0825   captains chair, patient weight capacity  
301 to 450 pounds  Rental  $290.00   $365.82   $75.82   2  $152   126%  
 
Totals             115,182  $2,014,745    
Source:  OIG analysis of  the Medicare DMEPOS Competitive Bidding Program payment amounts, the FFY 2011 Medicaid fee schedule, and the   
FFY 2011 MMIS claims data.  
 
Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)