Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
A C P
OMPARISON OF  RICES FOR 
P W
OWER  HEELCHAIRS IN THE 
M P
EDICARE  ROGRAM 
Inspector General 
April 2004 
OEI-03-03-00460  Office of Inspector General

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services (HHS) 
programs, as well as the health and welfare of beneficiaries served by those programs. This 
statutory mission is carried out through a nationwide network of audits, investigations, and 
inspections conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors in 
carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management and 
program evaluations (called inspections) that focus on issues of concern to the department, 
the Congress, and the public. The findings and recommendations contained in the 
inspections reports generate rapid, accurate, and up-to-date information on the efficiency, 
vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 
unjust enrichment by providers. The investigative efforts of OI lead to criminal convictions, 
administrative sanctions, or civil monetary penalties. The OI also oversees state Medicaid 
fraud control units, which investigate and prosecute fraud and patient abuse in the Medicaid 
program. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to OIG, 
rendering advice and opinions on HHS programs and operations and providing all legal 
support in OIG's internal operations. The OCIG imposes program exclusions and civil 
monetary penalties on health care providers and litigates those actions within the 
department. The OCIG also represents OIG in the global settlement of cases arising under 
the Civil False Claims Act, develops and monitors corporate integrity agreements, develops 
model compliance plans, renders advisory opinions on OIG sanctions to the health care 
community, and issues fraud alerts and other industry guidance.  E X E C U T I V E   S U M M A R Y

OBJECTIVE 
To compare the Medicare reimbursement amount for K0011 power 
wheelchairs to purchase prices available to consumers and 
suppliers. 
BACKGROUND 
Medicare beneficiaries are eligible to receive power wheelchairs 
under Medicare Part B coverage of durable medical equipment. 
Physicians order K0011 power wheelchairs for Medicare 
beneficiaries who qualify for them. Medicare beneficiaries receive 
their K0011 power wheelchairs from suppliers that bill the 
Medicare program for reimbursement. Suppliers purchase power 
wheelchairs from wholesalers and directly from power wheelchair 
manufacturers. 
The K0011 power wheelchair is described as a standard-weight 
frame motorized/power wheelchair with programmable control 
parameters for speed adjustment, tremor dampening, acceleration 
control, and braking. A wide variety of models of power 
wheelchairs are reimbursed under the K0011 procedure code. 
However, the Medicare program does not collect information on the 
model of power wheelchair actually provided to each beneficiary. 
In 2002, Medicare and its beneficiaries paid $856 million for all 
power wheelchairs. Payments for the K0011 power wheelchair 
accounted for 97 percent of this total, or $829 million. In 2003, the 
median reimbursement for a purchased K0011 power wheelchair 
was $5,297. 
We collected prices for 96 models of K0011 power wheelchairs. We 
identified these wheelchairs from the Statistical Analysis Durable 
Medical Equipment Regional Carriers product classification list. 
We also identified the power wheelchair models that were provided 
to Medicare beneficiaries. We then obtained prices of K0011 power 
wheelchairs from three sources: the Web sites of power wheelchair 
suppliers, two national wholesalers, and suppliers who negotiated 
directly with manufacturers and distributors of K0011 power 
wheelchairs. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  i  EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY  
FINDING 
Medicare and its beneficiaries pay considerably more than 
consumers or suppliers for K0011 power wheelchairs.  The 
median purchase prices for both consumers and suppliers were 
lower than the CY 2003 Medicare reimbursement amount for 
K0011 power wheelchairs. Compared to the Medicare 
reimbursement amount of $5,297, consumers were able to purchase 
K0011 power wheelchairs for a median price of $3,863, suppliers 
were able to purchase K0011 power wheelchairs from two 
wholesalers for a median price of $2,363, and suppliers who 
negotiated directly with distributors and manufacturers were able 
to obtain K0011 power wheelchairs for a median price of $1,550. 
For the models of K0011 power wheelchairs actually supplied to 
Medicare beneficiaries, we found that the median prices to 
consumers and suppliers were below the Medicare reimbursement 
amount of $5,297. The median prices for these power wheelchairs 
were very close to the median prices obtained for all the power 
wheelchairs, with the median prices ranging from $1,699 to $3,888. 
If the Medicare reimbursement amount was set at the prices 
available to consumers and suppliers, Medicare and its 
beneficiaries could have saved over $224 million. If the Medicare 
program based its reimbursement amount on the median price 
offered by wholesalers or the median price negotiated by suppliers 
with manufacturers and distributors, the program could have saved 
more than $459 million in 2002. The actual savings to the program 
could be less than these amounts, since any potential supplier 
administrative costs related to furnishing K0011 power wheelchairs 
to Medicare beneficiaries were not included in the prices reviewed. 
RECOMMENDATION 
We found that both consumers and suppliers could purchase K0011 
power wheelchairs at prices lower than the Medicare 
reimbursement amount. Consequently, the program and its 
beneficiaries could have realized substantial savings if the 
Medicare reimbursement amount for K0011 power wheelchairs 
more closely resembled the costs to consumers and suppliers. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  ii  E X E C U T I V E   S U M M A R Y  
We recommend that the Centers for Medicare & Medicaid Services: 
(1)	 Create a new coding system for K0011 power wheelchairs that 
accounts for the variety in models and prices for power 
wheelchairs. 
(2)	 Use the pricing information obtained as part of this review to 
determine whether an inherent reasonableness review for 
K0011 power wheelchairs is appropriate. 
Agency Comments 
CMS believes our recommendation regarding coding warrants 
further consideration. CMS is currently reviewing whether the 
need for an overall change in the coding structure for power 
wheelchairs is necessary. CMS noted that our report does not fully 
explain why additional codes are necessary, other than the fact that 
there is a wide variation in prices for the different models of K0011 
power wheelchairs. 
CMS agreed with our recommendation that it consider using its 
inherent reasonableness authority to reduce the reimbursement 
amount for K0011 power wheelchairs. 
The full text of CMSs comments is presented in Appendix C. 
OIG Response 
In our study, we found that consumers were able to purchase 
K0011 power wheelchairs from supplier Web sites for a wide range 
of prices. The lowest priced wheelchair available to consumers was 
$1,600, while the highest priced wheelchair was $16,995. The 
median price to consumers for models of K0011 power wheelchairs 
actually provided to Medicare beneficiaries was $3,888, with prices 
ranging from a low of $2,000 to a high of $5,995.  In 2003, the 
median reimbursement for a purchased K0011 power wheelchair 
was $5,297. We believe that the wide range of K0011 power 
wheelchairs available and the finding that beneficiaries tend to 
receive lower priced power wheelchairs supports the need for a new 
coding system. The goal of this coding system would be to create a 
number of reimbursement levels for the wide range of power 
wheelchairs now included under the K0011 procedure code. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  iii  T A B L E   O F   C O N T E N T S

E X E C U T I V E   S U M M A R Y  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .  i

I N T R O D U C T I O N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .   1

F I N D I N G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .   8

Medicare pays more............................................................................. 8

R E C O M M E N D A T I O N S .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .   12

A P P E N D I C E S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .  14

A.  Comparison of Prices for Individual Models...................................14

B.  Calculation of Potential Savings ....................................................15

C.  Centers for Medicare & Medicaid Servicess Comments .................16

A C K N O W L E D G M E N T S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .   18

OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  iv
 I N T R O D U C T I O N

OBJECTIVE 
To compare the Medicare reimbursement amount for K0011 power 
wheelchairs to purchase prices available to consumers and 
suppliers. 
BACKGROUND 
Medicare Coverage of K0011 Power Wheelchairs 
Medicare beneficiaries are eligible to receive power wheelchairs 
under Medicare Part B coverage of durable medical equipment.  A 
beneficiary who requires a power wheelchair usually is totally non -
ambulatory and has severe weakness of the upper extremities due 
to a neurological or muscular disease. A K0011 power wheelchair is 
covered when all of the following criteria are met: 
1.	 the beneficiarys condition is such that without the use of a 
wheelchair the beneficiary would otherwise be bed or chair 
confined; 
2.	 the beneficiarys condition is such that a wheelchair is 
medically necessary and the beneficiary is unable to operate 
a manual wheelchair; and 
3.	 the beneficiary is capable of safely operating the controls of a 
power wheelchair. 
Power wheelchairs are identified by the Healthcare Common 
Procedure Coding System codes (procedure codes) K0010, K0011, 
K0012, and K0014 for reimbursement purposes. The K0011 power 
wheelchair is described as a standard-weight frame 
motorized/power wheelchair with programmable control 
parameters for speed adjustment, tremor dampening, acceleration 
control, and braking. A wide variety of models of power 
wheelchairs are reimbursed under the K0011 procedure code. The 
Medicare program does not collect information on the 
manufacturer, model name, or serial number of individual power 
wheelchairs reimbursed under the K0011 procedure code. 
Therefore, the program is unable to determine what model of 
K0011 power wheelchair is provided to Medicare beneficiaries. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  1  I N T R O D U C T I O N  
Medicare Reimbursement of K0011 Power Wheelchairs 
Medicare Part B classifies certain items of durable medical 
equipment, such as power wheelchairs, as capped rental items. 
Medicare pays for the rental of these items for a period of 
continuous use not to exceed 15 months. Beneficiaries also have 
the option of purchasing a power wheelchair within the first month 
of use. In 2001, 99 percent of all expenditures for K0011 were for 
first-month purchases. 
In 2002, Medicare and its beneficiaries paid $856 million for all 
power wheelchairs. Payments for the K0011 power wheelchair 
accounted for 97 percent of this total, or $829 million. According to 
the Centers for Medicare & Medicaid Services (CMS), the K0011 
code ranked fourth among the top 200 procedure codes ranked by 
Medicare payments in calendar year (CY) 2002. Spending for 
motorized wheelchairs has increased at least 33 percent each year 
since 1999. In contrast, total Medicare benefit payments rose only 
11 percent during that same period. Also, the number of Medicare 
beneficiaries with at least one claim for a motorized wheelchair rose 
from just over 55,000 in 1999 to almost 159,000 in 2002, an 
increase of 189 percent. During the same time period, the overall 
Medicare population rose only 1 percent per year. 
Part B claims for power wheelchairs are processed and paid by four 
durable medical equipment regional carriers. Medicares payment 
for K0011 power wheelchairs is 80 percent of the lower of either the 
actual charge for the item or the Medicare fee schedule amount 
calculated for the item. The beneficiary is responsible for the 
remaining 20 percent as part of his/her Medicare copayment. 
Medicare Fee Schedule Amount for K0011 Power Wheelchairs 
Federal statute requires fee schedule amounts for K0011 power 
wheelchairs and other capped rental items to be calculated for each 
State using average Medicare payments from 1986 as a base year. 
These base year payment amounts are adjusted annually by the 
change in the Consumer Price Index for all urban consumers (CPI 
U). Since procedure code K0011 was added to the list of procedure 
codes in 1994, payment data from 1986 was not available for K0011 
power wheelchairs. As a result, the base fee schedule amounts for 
the K0011 power wheelchair code were determined using retail 
prices. Retail prices in effect for periods subsequent to the 1986 fee 
schedule base period were deflated to 1986 by the percentage 
change in the CPI-U. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  2  I N T R O D U C T I O N  
The fee schedule amounts for the K0011 power wheelchair are 
limited by national ceilings and floors. The fee schedule ceiling is 
equal to the median of the statewide fee schedule amounts and the 
fee schedule floor is equal to 85 percent of that median.  In 2003, 
the ceiling amount for a purchased K0011 power wheelchair was 
$5,297, and the floor amount was $4,502. 
Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 
On November 22, 2003, Congress passed the Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003. Section 
302(c)(2) of the Act states that payments for certain items and 
supplies furnished in 2005 
shall be reduced by the percentage difference 
between the amount of payment otherwise 
determined for the specified item or supply under 
this subsection for 2002, and the amount of 
payment for the specified item or supply under 
chapter 89 of title 5, United States Code . . . 
The payment amount under Chapter 89 of Title 5, United States 
Code, is identified as the median Federal Employee Health Plan 
price, which was obtained from the Inspector Generals June 12, 
2002 testimony before the Senate Committee on Appropriations. 
The Inspector General reported that the median Federal Employee 
Health Plan price for K0011 power wheelchairs was $5,097. 
Supplying K0011 Power Wheelchairs to Medicare Beneficiaries 
Physicians order K0011 power wheelchairs for Medicare 
beneficiaries who qualify for them. Medicare beneficiaries receive 
their K0011 power wheelchairs from suppliers that bill the 
Medicare program for reimbursement. If the beneficiary chooses to 
purchase the power wheelchair at that time, the supplier receives a 
lump-sum payment. 
Suppliers purchase power wheelchairs from wholesalers and 
directly from power wheelchair manufacturers. Wholesalers 
purchase large quantities of medical equipment and supplies at 
discounted rates from manufacturers and sell these products to 
suppliers. Wholesalers and manufacturers may offer rebates or 
other discounts to suppliers. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  3  I N T R O D U C T I O N  
CMS Creates Power Wheelchair Workgroup 
In April 2003, CMS created a workgroup to examine the rapid 
growth in power wheelchair payments, identify its causes, and 
propose solutions. 
The workgroup found that Medicare had little comparative data to 
use in determining the appropriateness of the fee schedule amounts 
for power wheelchairs. However, the workgroup did conclude that 
large suppliers could obtain pricing discounts from power 
wheelchair manufacturers. As a result, CMS is investigating long-
term options that may address problems with the fee schedule. 
One of these options includes analyzing K0011 power wheelchairs 
for a potential inherent reasonableness payment adjustment. CMS 
may use its inherent reasonableness authority to deviate from 
standard payment methodologies, if their application results in a 
payment amount that is determined to be grossly excessive or 
deficient. 
CMS and OIG Efforts to Stop K0011 Fraud and Abuse 
On September 9, 2003, CMS and the Office of Inspector General 
(OIG) issued a joint press release detailing new efforts to stop abuse 
of the power wheelchair benefit. As part of this joint press release, 
CMS announced a 10-point initiative to substantially curb abuse of 
the Medicare program by unscrupulous providers of power 
wheelchairs and other power mobility products who prey on 
Medicare beneficiaries. 
The 10-point initiative includes developing inherent reasonableness 
review guidelines so Medicare can be assured that it is paying 
appropriately for power wheelchairs.  Power wheelchairs will be 
the first item analyzed for potential inherent reasonableness 
payment adjustments. 
At the same time, OIG will be investigating the proliferation of 
durable medical equipment fraud cases involving inflated billings to 
Medicare, charges for equipment and supplies not delivered, and 
the falsification of documents to qualify beneficiaries for 
wheelchairs and other equipment that they often did not need. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  4  III NNN TTT RRR OOO DDD UUU CCC TTT III OOO NNN  
METHODOLOGY 
Models of K0011 Power Wheelchairs 
Since there are a wide variety of power wheelchairs on the market, 
we used the Statistical Analysis Durable Medical Equipment 
Regional Carriers (statistical analysis carrier) product 
classification list for wheelchairs to determine which models of 
power wheelchairs are coded as K0011.  Some K0011 power 
wheelchair models have additional features (such as semi-reclining 
back mechanisms, anti-tipping devices, safety belts) that have 
separate procedure codes. In order to obtain prices for base units 
only, we compiled a list of power wheelchair models that were coded 
solely as K0011. This list consisted of 96 models of K0011 power 
wheelchairs. 
We also wanted to specifically review pricing for models of K0011 
power wheelchairs that were actually provided to Medicare 
beneficiaries. Since Medicare claims do not identify the model of 
K0011 power wheelchair supplied, we used information from 
related OIG work to determine what models of K0011 power 
wheelchairs were actually supplied to Medicare beneficiaries. As 
part of this work, we selected a random sample of 300 K0011 power 
wheelchair claims paid in 2001. We contacted the suppliers who 
submitted the sample claims and requested that they provide the 
manufacturer, model, and serial number of the K0011 power 
wheelchair provided to the beneficiary. We identified 33 models of 
K0011 power wheelchairs that were provided to Medicare 
beneficiaries in our sample and were also included on the statistical 
analysis carriers product classification list. 
Sources of Prices for K0011 Power Wheelchairs 
Supplier Web Site Prices 
In order to determine the prices charged to consumers for K0011 
power wheelchairs, we collected prices of K0011 power wheelchairs 
from the Web sites of power wheelchair suppliers in June 2003 and 
July 2003. We performed an Internet search for power wheelchair 
suppliers who provide power wheelchairs directly to consumers. 
Consumers are able to purchase power wheelchairs either by 
placing an order on the Internet or by phone. We obtained prices 
from 41 suppliers located in the United States. These suppliers 
may or may not participate in the Medicare program. Some of the 
suppliers had storefront operations as well. We collected 379 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  5  I N T R O D U C T I O N  
individual prices for K0011 power wheelchair models from the 41 
suppliers.  We obtained prices for 54 models of K0011 power 
wheelchairs that were identified on the statistical analysis carriers 
product classification list. 
Medicare allows suppliers to bill for batteries separately from the 
power wheelchair itself. Some suppliers included batteries in the 
price of the K0011 power wheelchair. In cases where we were able 
to identify the battery price, we subtracted the battery price from 
the power wheelchair price. This was done so that we could 
determine a price for the base unit. 
National Wholesaler Prices 
We also obtained the prices of K0011 power wheelchairs to 
suppliers from two national wholesalers. The wholesalers are two 
of the largest distributors of medical and surgical products in the 
United States. From one of the wholesalers, we obtained prices 
quoted to the wholesaler from three power wheelchair 
manufacturers. The prices from the manufacturers were quoted in 
October 2001, October 2002, and September 2003. We obtained the 
August 2002 home health care products catalog from the other 
wholesaler, which included prices for power wheelchairs from one 
manufacturer. We collected 22 individual prices from the two 
wholesalers for 18 models of K0011 power wheelchairs. 
Manufacturer and Distributor Prices 
We obtained documentation on suppliers prices negotiated directly 
with manufacturers and distributors of K0011 power wheelchairs. 
We collected documentation from eight suppliers. A review of the 
documentation, which included invoices and purchase orders from 
1999 to 2003, yielded 36 individual prices for 12 models of K0011 
power wheelchairs. 
Comparison of Medicare Reimbursement Amount to Median Prices 
We determined the percentages that the Medicare reimbursement 
amount exceeded the median prices of the three sources reviewed. 
In order to accomplish this, we first calculated the median price 
from the prices collected from each of the three sources reviewed. 
We then determined the percentage difference in prices for each 
source by subtracting the median prices of K0011 power 
wheelchairs from the Medicare reimbursement amount and then 
dividing this number by the median price. We used Medicares CY 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  6  III NNN TTT RRR OOO DDD UUU CCC TTT III OOO NNN  
2003 fee schedules median of $5,297 as the Medicare 
reimbursement amount. 
Calculating Potential Medicare Savings 
We calculated how much Medicare and its beneficiaries would save 
if the reimbursement amount for K0011 power wheelchairs was set 
at the median price of the sources reviewed. We first determined 
the percentage difference in prices for each source by subtracting 
the median prices of K0011 power wheelchairs from the CY 2003 
Medicare reimbursement amount ($5,297) and then dividing this 
number by the Medicare reimbursement amount. We then 
multiplied these percentage differences by the total Medicare 
payments for K0011 power wheelchairs in 2002 ($828,887,761) in 
order to determine potential program savings. Medicare payments 
were obtained from CMSs Part B Extract and Summary System. 
The data used to calculate potential Medicare and beneficiary 
savings are presented in Appendix B. 
Limitations of Pricing Data 
In regard to the prices available to suppliers, we did not collect data 
to determine if suppliers had any administrative costs related to 
furnishing K0011 power wheelchairs to Medicare beneficiaries. 
Therefore, the median prices available to suppliers do not include 
any potential associated supplier costs. The estimates of potential 
program savings presented in the findings of this report would be 
lower if median prices had included any supplier administrative 
costs. 
We would assume that the prices collected from Web sites of 
suppliers include profit margins and any costs related to billing 
other insurers. We do not know if the costs associated with billing 
the Medicare program would be significantly different from the 
costs of billing other insurers. 
OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  7  F I N D I N G S  
  
Medicare and its beneficiaries pay considerably  The median purchase prices for 
more than consumers or suppliers for K0011  both consumers and suppliers were 
lower than the Medicare 
power wheelchairs. 
reimbursement amount for K0011 
power wheelchairs.  Our comparison of prices for the K0011 power 
wheelchair to Medicares reimbursement amount and our estimates 
of potential savings are presented in Table 1 below.  The Medicare 
reimbursement amount for K0011 power wheelchairs exceeded the 
median prices from the three sources by 37, 124, and 242 percent.  
Of the three sources reviewed, the median price negotiated by 
suppliers with manufacturers and distributors was the lowest.  
Prices obtained for K0011 power wheelchair models varied widely, 
from a low of $999 to a high of $16,995.  Ninety-four percent of the 
prices reviewed were below the Medicare reimbursement amount.    
Table 1:  Comparison of Consumer and Supplier Prices to Medicare Reimbursement Amount 
Percentage by 
which Medicare 
Reimbursement  Potential Medicare 
Amount Exceeds  and Beneficiary 
Source:  Median Price  Range of Prices  Median Price  Savings 
Medicare1  $5,297  $4,502 to $5,297  NA  NA 
Supplier Web Sites  $3,863  $1,600 to $16,995  37%  $224,395,894 
Wholesalers  $2,363  $1,713 to $3,141  124%  $459,119,632 
Supplier Prices Negotiated with 
$1,550  $999 to $2,161  242%  $586,339,898 
Manufacturers and Distributors 
1This is Medicares reimbursement amount for CY 2003.  The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 lowered the 
reimbursement amount to approximately $5,100 for K0011 power wheelchairs furnished in 2005.  
Source: Office of Evaluation and Inspections, 2003 
Note:  All figures in the table have been rounded 
 
 
 
 
 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  8 
  F  I N D I N G S  
The median price to consumers for a K0011 power wheelchair was 
$3,863. 
According to supplier Web sites, consumers are able to purchase 
K0011 power wheelchairs for a median price of $3,863.  Only 28 of 
the 379 prices offered by suppliers to consumers exceeded the 
Medicare reimbursement amount for K0011.  
The prices available to consumers ranged from a low of $1,600 to a 
high of $16,995.  The most expensive K0011 power wheelchair 
available for purchase was the Levo Mobil LCM Comfort, 
manufactured by Levo USA, Inc.  This wheelchair was $4,000 more 
than the second most expensive wheelchair.  The wheelchair is able 
to transfer the patient to a standing position.  Those who are 
unable to stand on their own, such as people with spina bifida or 
cerebral palsy, and need a maneuverable indoor power wheelchair 
utilize this power wheelchair.   
The majority of the suppliers offered free shipping to consumers 
who purchased power wheelchairs from their Web sites.  Some 
suppliers also offered free maintenance of the power wheelchair for 
1 year after the date of purchase.   
Since the Medicare program does not collect information on the 
manufacturer or model of the K0011 power wheelchair being 
provided to beneficiaries, it is unable to determine whether most 
beneficiaries are using lower-priced or higher-priced models.  
However, we found that the median price to consumers for models 
of K0011 power wheelchairs that were actually provided to 
Medicare beneficiaries in 2001 was $3,888.  The prices for this 
subset of K0011 power wheelchairs ranged from a low of $2,000 to a 
high of $5,995.  Out of the 247 prices we collected, there were only 4 
instances where the cost to the consumer was greater than the 
Medicare reimbursement amount. 
Wholesalers offered K0011 power wheelchairs to suppliers for a 
median price of $2,363.  
The prices offered by the two wholesalers ranged from a low of 
$1,713 to a high of $3,141, with a median of $2,363.  Data collected 
from related OIG work was used to determine the models of K0011 
power wheelchairs actually being supplied to Medicare beneficiaries 
in 2001.  We found that the median price offered to suppliers for 
these models of K0011 power wheelchairs was $2,494 with prices 
ranging from $1,785 to $3,141.   
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  9 
  FF II NN DD II NN GG SS   
Suppliers were able to obtain K0011 power wheelchairs from 
manufacturers and distributors for a median price of $1,550. 
We reviewed invoices and purchase orders received from suppliers 
who negotiated prices of K0011 power wheelchairs with 
manufacturers and distributors.  Based on our review of 36 
individual prices from 8 suppliers, we determined that suppliers 
were able to purchase K0011 power wheelchairs for a median price 
of $1,550.  The prices ranged from a low of $999 to a high of $2,161.  
We also analyzed prices for models of K0011 wheelchairs that were 
supplied to Medicare beneficiaries in 2001.  The median price 
negotiated by suppliers for the subset models of K0011 power 
wheelchairs provided to Medicare beneficiaries was $1,699, with 
prices ranging from $1,150 to $2,161.   
As part of our analysis, we grouped the prices into two categories.  
One group included prices negotiated with manufacturers, the 
other group included prices negotiated with distributors.  The 
median price offered by manufacturers for K0011 power 
wheelchairs was $1,392, while the median price offered by 
distributors was $1,699.   
The median price negotiated by suppliers with manufacturers and 
distributors was the lowest among the three sources reviewed.  
Similarly, when we analyzed prices for individual models of K0011 
power wheelchairs across all three sources, the prices negotiated by 
suppliers with manufacturers and distributors were the lowest.  
Appendix A shows prices obtained from all three sources for three 
models of K0011 power wheelchairs provided to Medicare 
beneficiaries.  These three models alone accounted for 13 percent of 
K0011 power wheelchairs provided to Medicare beneficiaries in our 
sample.   
If the Medicare reimbursement amount was set at the prices available 
to consumers and suppliers, Medicare and its beneficiaries could have 
saved over $224 million. 
If the Medicare reimbursement amount for K0011 power 
wheelchairs were set at the median price available to consumers, 
the Medicare program and its beneficiaries would have saved    
$224 million in 2002.  Medicare beneficiaries alone would have 
saved $45 million in copayments.  An individual Medicare 
beneficiary could have saved $287, if the Medicare reimbursement 
amount for K0011 power wheelchairs were set at the median price 
available to consumers.   
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  10 
  FF II NN DD II NN GG SS   
Of the three sources reviewed, the median price negotiated by 
suppliers with manufacturers and distributors was the lowest.  If 
the Medicare program based its K0011 reimbursement amount on 
this price, the program and its beneficiaries could have saved $586 
million in 2002.  The actual savings to the program could be less 
than these amounts, since any potential supplier administrative 
costs related to furnishing K0011 power wheelchairs to Medicare 
beneficiaries were not included in the prices reviewed.  Our 
calculations of potential savings estimates are presented in 
Appendix B. 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  11 
  R E C O M M E N D A T I O N S  
We found that both consumers and suppliers could purchase K0011 
power wheelchairs at prices lower than the Medicare 
reimbursement amount.   Consequently, the program and its 
beneficiaries could have realized substantial savings if the 
Medicare reimbursement amount for K0011 power wheelchairs 
more closely resembled the costs to consumers and suppliers.   
We recommend that CMS: 
(1)  Create a new coding system for K0011 power wheelchairs that 
accounts for the variety in models and prices for power 
wheelchairs.   
(2)  Use the pricing information obtained as part of this review to 
determine whether an inherent reasonableness review for 
K0011 power wheelchairs is appropriate. 
Agency Comments 
CMS believes our recommendation regarding coding warrants 
further consideration.  CMS is currently reviewing whether the 
need for an overall change in the coding structure for power 
wheelchairs is necessary.  CMS noted that our report does not fully 
explain why additional codes are necessary, other than the fact that 
there is a wide variation in prices for the different models of K0011 
power wheelchairs. 
CMS agreed with our recommendation that it consider using their 
inherent reasonableness authority to reduce the reimbursement 
amount for K0011 power wheelchairs.  
The full text of CMSs comments is presented in Appendix C. 
OIG Response 
In our study we found that consumers were able to purchase K0011 
power wheelchairs from supplier Web sites for a wide range of 
prices.  The lowest priced wheelchair available to consumers was 
$1,600, while the highest priced wheelchair was $16,995.  The 
median price to consumers for models of K0011 power wheelchairs 
actually provided to Medicare beneficiaries was $3,888, with prices 
ranging from a low of $2,000 to a high of $5,995.  In 2003, the 
median reimbursement for a purchased K0011 power wheelchair 
was $5,297.  We believe that the wide range of K0011 power 
wheelchairs available and the finding that beneficiaries tend to 
receive lower priced power wheelchairs supports the need for a new 
coding system. The goal of this coding system would be to create a 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  12 
  number of reimbursement levels for the wide range of power 
wheelchairs now included under the K0011 procedure code.  
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  13 
  A P P E N D I X ~ A  
 
Comparison of Consumer and Supplier Prices for Individual Models  
 
The following table shows prices obtained from all three sources for three models of K0011 power 
wheelchairs provided to Medicare beneficiaries.   
Comparison of Consumer and Supplier Prices for Individual Models 
Calendar Year 2003  Supplier Price 
Medicare Median  Negotiated with 
Individual K0011 Power  Reimbursement  Supplier Web Site   Wholesaler  Manufacturers and 
Wheelchair Model  Amount  Price1   Price1  Distributors1 
Model A  $5,297  $3,747  $2,661  $2,000 
Model B  $5,297  $2,974  $2,051  $1,775 
Model C  $5,297  $3,634  $1,785  $1,699 
1Median price is provided when more than one price was collected from source. 
Source: Office of Evaluation and Inspections, 2003 
 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  14 
  AA PP PP EE NN DD II XX  ~ B  
 
Calculation of Potential Savings for K0011 Power Wheelchairs 
 
In order to calculate potential savings, we first calculated percentage differences between the prices to 
consumers and suppliers for K0011 power wheelchairs and Medicares reimbursement amount.  We did 
this by subtracting the median price from each source from the Medicare reimbursement amount.  We 
then divided this number by the Medicare reimbursement amount.  We used Medicares calendar year 
2003 fee schedules median of $5,297 as the Medicare reimbursement amount.  We then multiplied 
total Medicare payments ($828,887,761) for K0011 power wheelchairs in 2002 by the percentage 
differences. 
 
 
Calculation of Potential Savings for K0011 Power Wheelchairs 
Calendar Year  Median Price 
2003 Medicare  Compared to  Potential 
Median  Medicare  2002 Payments  Medicare and 
Median  Reimbursement  Reimbursement  for K0011 Power  Beneficiary 
Source:  Price  Amount  Amount  Wheelchairs  Savings 
Supplier Web Sites   $3,863  $5,297  27% lower  $828,887,761  $224,395,894 
Wholesalers  $2,363  $5,297  55% lower  $828,887,761  $459,119,632 
Supplier Prices Negotiated with 
$1,550  $5,297  71% lower  $828,887,761  $586,339,898 
Manufacturers and Distributors 
Source: Office of Evaluation and Inspections, 2003 
Note:  All figures in the table have been rounded 
 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  15 
  0 A P P E N D I X   ~   C  
 
Centers for Medicare & Medicaid Services Comments 
 
 
 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  16 
  A P P E N D I X ~ C  
 
 
 
 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  17 
  A C K N O W L E D G M E N T S  
This report was prepared under the direction of Robert A. Vito, 
Regional Inspector General for Evaluation and Inspections in  
the Philadelphia Regional Office, and Linda M. Ragone, Deputy 
Regional Inspector General. Other principal Office of Evaluation 
and Inspections staff who contributed include:    
Tanaz Dutia, Project Leader 
Stephanie Lattin London, Program Specialist  
 
  OEI-03-03-00460  A COMPARISON OF PRICES FOR WHEELCHAIRS  18