Testimony of 
Janet Rehnquist 
Inspector General 
Good morning, Mr. Chairman and Members of the Subcommittee. I am Janet Rehnquist, Inspector 
General of the Department of Health and Human Services. I appreciate this opportunity to appear 
before you today to discuss some of the issues we have encountered with fraud, waste and abuse 
related to Medicare reimbursement for medical equipment and supplies. 
We continue to find that Medicare and its beneficiaries pay too much for medical equipment and 
supplies. You have specifically asked us to compare the price Medicare pays for certain medical 
equipment and supplies with that of other payers, including the Department of Veterans Affairs 
(VA), Medicaid, Federal Employee Health Benefit (FEHB) plans, and retail suppliers.  Our price 
comparison demonstrates that Medicare overpays for some medical equipment and supplies. 
The problems that we are discussing today are not new. We have done numerous reviews over the 
years documenting excessive reimbursement for medical equipment and supplies. The Centers for 
Medicare & Medicaid Services (CMS), the General Accounting Office (GAO) and Members of 
Congress such as yourself, Mr. Chairman, have done much to improve Medicares reimbursement 
for medical equipment and supplies. Improvements include creating supplier standards, centralizing 
claims processing into four regional carriers, and reducing oxygen reimbursement by 30 percent. In 
addition, inherent reasonableness authority and competitive bidding demonstrations have been 
promising approaches to reduce excessive reimbursement. We believe that even more has to be 
done, and my testimony today will outline some specific steps to reduce or eliminate problems that 
continue today. 
BACKGROUND 
Medicare Part B expenditures for all medical equipment and supplies totaled more than $6.8 billion 
in 2000, of which beneficiaries paid more than $1.3 billion out of their own pockets. Medicare 
covers certain medical equipment and supplies, which include several categories of items.  Durable 
medical equipment (DME) are items that can withstand repeated use and include oxygen equipment, 
hospital beds, wheelchairs, and other equipment that physicians prescribe for home use. Medicare 
Part B also covers certain drugs necessary for the effective use of DME, including albuterol for use 
with a nebulizer.  Prosthetic devices replace all or part of a body organ. Medicare covers enteral and 
parenteral nutrition therapy under this benefit. Medical supplies include catheter, ostomy, 
incontinence, and wound care supplies.  Medicare also covers braces and artificial limbs. 
RECENT OIG WORK 
We have conducted numerous studies in recent years, all showing that Medicare pays too much for 
certain medical equipment and supplies. 
Maintenance Payments for Capped Rental Equipment - In a report we are releasing today 
entitled Medicare Maintenance Payments for Capped Rental Equipment, we reviewed Medicares 
maintenance payments that are made under the capped rental payment category. We found that 
Medicare paid substantially more for maintenance on rented equipment than repairs on purchased 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 1  equipment.  Medicare pays for maintenance even if the supplier does not service the equipment. 
Furthermore, our additional analysis of supplier documentation found only 9 percent of the capped 
rental equipment actually received any maintenance and servicing.  We estimated that Medicare 
could save approximately $100 million per year by eliminating maintenance payments and, instead, 
pay only for repairs when needed. CMS concurred with our recommendation to eliminate 
maintenance payments and will seek legislation to eliminate the purchase option under the capped 
rental category. 
Respiratory Assist Devices - In June 2001, we issued a report entitled Respiratory Assist Devices 
With Back-up Rate.  We concluded that the current Medicare payment method used for bi-level 
respiratory assist devices with back-up rate is inappropriate. Medicare could save $11.5 million 
annually if this item were classified as a capped rental item rather than an item needing frequent 
and substantial service. CMS is currently in the process of making this change. 
Prescription Drugs Used with Medical Equipment - In March 2002, we released a report entitled 
Excessive Medicare Reimbursement for Albuterol.  We found that Medicare and its beneficiaries 
would save $264 million a year if albuterol were reimbursed at the median VA price and between 
$226 million and $245 million if reimbursed at prices available to suppliers. A separate March 2002 
report entitled Excessive Medicare Reimbursement for Ipratropium Bromide found that Medicare 
and its beneficiaries would save $279 million a year if ipratropium bromide were reimbursed at the 
median VA prices and between $223 million and $262 million a year if reimbursed at prices 
available to suppliers. 
Blood Glucose Test Strips - In a June 2000 report entitled Blood Glucose Test Strips: 
Inappropriate Medicare Payments, OEI-03-98-00230, we found that Medicare allowed $79 million 
for blood glucose test strip claims with missing or flawed documentation. Orders for 25 percent of 
the sampled claims failed to establish beneficiaries' eligibility for the supplies.  Another 21 percent 
of claims had incomplete orders. We found that suppliers submit claims for test strips at irregular 
intervals, making it difficult to identify overlapping claims, claims without correct supporting 
documentation, and claims for excessive numbers of test strips. We recommended that CMS take 
several steps to promote compliance with Medicare guidelines for blood glucose test strips. 
We have performed numerous other reviews which consistently found that Medicare pays too much 
for certain items of medical equipment and supplies because Medicare reimbursement rates are 
based on charges submitted to the program in 1987. As a result, Medicare payments can bear little 
resemblance to prices available in the marketplace or to the actual cost of manufacturing and 
distributing the equipment. 
PRICE COMPARISONS FOR 16 MEDICAL EQUIPMENT AND SUPPLY ITEMS 
The price comparisons that you requested confirm once again that Medicare pays more than other 
payers for certain medical equipment and supplies. We compared Medicare payment rates for 
medical equipment and supplies to the rates of other payers, and provided an estimate of potential 
savings if the Medicare program were to adopt the rates of these payers. 
Our analysis shows that health care consumers, Federal health insurance plans, State Medicaid 
agencies, and the VA pay less than Medicare for some of the medical equipment and supplies we 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 2  reviewed. However, this analysis was not designed to follow the same process for rate setting 
purposes that CMS will need to employ using the inherent reasonableness authority authorized in 
Section 4316 of the Balanced Budget Act of 1997. In order for CMS to affect a payment reduction 
for items in our analysis, they would have to conduct a separate inherent reasonableness 
determination in accordance with procedures set forth in regulations. As discussed later in my 
testimony, revised standards have to be promulgated before this authority can be utilized. 
Also, unlike Medicare, which is a payer of services and not a provider of services, the VA generally 
obtains medical equipment and supplies by direct acquisition from manufacturers and wholesalers. 
The prices that the VA pays for medical equipment and supplies provide a rough estimate of the 
wholesale prices available to large purchasers. These prices do not take into account the Medicare 
supplier costs associated with getting an item to a Medicare beneficiary. 
For our analysis, we compared the median Medicare price for 16 medical equipment and supply 
items with the median prices from the VA, State Medicaid agencies, fee-for-service FEHB plans, 
and retail suppliers. Twelve of these items were researched by the Chairmans staff in 1996. The 
remaining four items had very large total Medicare payments in 2000. The 16 items we reviewed 
represent more than $1.7 billion (26 percent) of $6.8 billion in total allowed charges for medical 
equipment and supplies in 2000. 
The table below provides a description for each of the 16 codes reviewed. The methodology is 
provided as an appendix to this testimony. 
Medicare Code  Description 
A4253  Blood glucose test or reagent strips for home blood glucose monitor, per 50 strips 
A4259  Lancets, per box of 100 
A4323  Sterile saline irrigation solution, 1000 ml 
B4035  Enteral feeding supply kit; pump fed, per day 
E0135  Walker, folding (pickup), adjustable or fixed height 
E0163  Commode chair, stationary, with fixed arms 
E0178  Gel or gel-like pressure pad or cushion, nonpositioning 
E0180  Pressure pad, alternating with pump 
E0181  Pressure pad, alternating with pump, heavy duty 
E0260  Hospital bed, semi-electric (head and foot adjustment), with any type side rails, with 
mattress 
E0277  Powered pressure-reducing air mattress 
E0570  Nebulizer, with compressor 
E0730  TENS (transcutaneous and/or neuromuscular electrical nerve stimulators), four lead, 
larger area/multiple nerve stimulation 
E0776  IV pole 
K0001  Standard wheelchair 
K0011  Standard-weight frame motorized/power wheelchair with programmable control 
parameters for speed adjustment, tremor dampening, acceleration control and braking 
The results of our review are presented in the following table: 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 3  SUMMARY OF MEDICARE PRICES COMPARED TO VA, MEDICAID, RETAIL, AND FEHP PRICES FOR 16 ITEMS 
Percentage 
Difference  Percentage 
Between  Difference  Percentage  Percentage  Percentage 
Median  Medicare  Median  Between  Difference  Difference  Difference 
Median  VA Price  and VA  VA Price  Medicare and  Median  Between  Median  Between  Median  Between 
Medicare  Medicare  without  without  with 67%  VA with 67%  Medicaid  Medicare and  Retail  Medicare  FEHP  Medicare 
Code  Price  Markup  Markup  Markup  Markup  Price  Medicaid  Price  and Retail  Price  and FEHP 
A4253  $38.32  $19.50  49.11%  $32.57  15.01%  $35.81  6.55%  $42.42  -10.70%  $36.75  4.10% 
A4259  $12.68  $8.69  31.47%  $14.51  -14.43%  $10.95  13.64%  $7.40  41.64%  $12.00  5.36% 
A4323  $8.68  $1.02  88.25%  $1.70  80.41%  $7.33  15.55%  $6.25  28.00%  $7.95  8.41% 
B4035  $10.67  $2.40  77.51%  $4.01  62.42%  $10.67  0.00%  $9.05  15.18%  $11.30  -5.90% 
E0135  $83.43  $39.36  52.82%  $65.73  21.22%  $69.57  16.61%  $95.60  -14.59%  $73.42  12.00% 
E0163  $109.74  $32.30  70.57%  $53.94  50.85%  $89.16  18.75%  $112.50  -2.52%  $100.00  8.88% 
E0178  $120.74  N/A  N/A  N/A  N/A  $101.87  15.63%  $118.31  2.01%  $111.90  7.32% 
E0180  $227.01  $94.20  58.50%  $157.31  30.70%  $222.17  2.13%  $287.50  -26.65%  $210.20  7.40% 
E0181  $251.58  $71.00  71.78%  $118.57  52.87%  $230.40  8.42%  $242.05  3.79%  $231.65  7.92% 
$1,397.6 
E0260  $1,754.55  $762.10  56.56%  $1,272.71  27.46%  $1,359.10  22.54%  $1,608.91  8.30%  5  20.34% 
E0277  $7,933.91  $5,297.50  33.23%  $8,846.83  -11.51%  $6,341.10  20.08%  $3,912.50  50.69%  $7,000.0  11.77% 
E0570  $206.22  $32.24  84.37%  $53.84  73.89%  $158.51  23.14%  $182.00  11.74%  $160.29  22.27% 
E0730  $365.76  $165.00  54.89%  $275.55  24.66%  $353.45  3.37%  $645.00  -76.35%  $334.39  8.58% 
E0776  $142.45  $50.25  64.72%  $83.92  41.09%  $108.62  23.75%  $39.10  72.55%  $116.71  18.07% 
K0001  $570.68  $127.72  77.62%  $213.29  62.63%  $456.12  20.07%  $533.50  6.52%  $530.00  7.13% 
$5,097.4 
K0011  $5,270.30  $2,767.64  47.49%  $4,621.96  12.30%  $4,912.16  6.80%  $5,347.83  -1.47%  0  3.28% 
Sources: Centers for Medicare & Medicaid Services, Medicare Fee Schedules, January 2002; Department of Veterans Affairs (VA), Pharmacy Benefit 
Management, Drug & Pharmaceutical Prices, March 25, 2002; VA, National Acquisition Center, Federal Supply Schedule Contracts, March 2002; Office of 
Inspector General (OIG), Survey of State Medicaid Agencies, March 2002; OIG Survey of Medical Equipment Suppliers, March 2002; OIG Survey of 
Federal Employee Health Plans (FEHPs), March 2002  Findings 
For some of the items in our analysis, Medicare consistently paid more than the other payers we 
reviewed. For example, median prices from all four sources (VA, Medicaid agencies, FEHB Plans, 
and retail suppliers) were more than 10 percent lower than Medicare rates for 3 of the 16 items. 
These items were powered pressure-reducing air mattress, nebulizer with compressor, and IV pole. 
Additionally, three of the four sources had prices that were at least 10 percent less than Medicare for 
another four items.  These items were lancets, sterile saline irrigation solution, walker, and semi-
electric hospital bed. A more detailed discussion of the price comparisons follows: 
Department of Veterans Affairs 
Medicares reimbursement amount was greater than the VA median price for 15 of the 16 items 
reviewed. We could not find a VA price for the remaining item. The VA median prices ranged 
from 31 to 88 percent less than the Medicare prices. Maximum potential total savings would be 
$958 million per year if Medicare were to adopt these median VA prices.  In addition to comparing 
the Medicare price to the median VA price without a markup, we have compared it to the median 
VA price with a 67 percent markup. In the August 13, 1999 Federal Register, when CMS compared 
Medicare prices to median VA prices, they added a 67 percent markup to the VA prices. We used 
CMS 67 percent figure since it was the only available data concerning a potential markup 
percentage. We did not verify or update the CMS markup percentage, nor do we advocate this as the 
appropriate markup to VA prices. We have presented the 67 percent markup price comparison 
solely to provide an example of possible savings, which take into account the distinction between 
Medicare as a payer and the VA as a purchaser of medical equipment and supplies.  A mark up of 67 
percent would result in potential savings of $440 million. 
Medicaid Prices 
The Medicare reimbursement was more than the Medicaid reimbursement for 15 of the16 items 
reviewed. Medicare reimbursed the same as Medicaid for the remaining item. Median Medicaid 
prices ranged from 0 to 24 percent less than Medicare prices. If Medicare had used the median 
Medicaid prices for reimbursement on these items, the program could have saved $193 million. 
Federal Employee Health Plan Prices 
Medicare reimbursed more than the FEHB Plans median price for all but one of the items reviewed. 
The FEHB Plans prices ranged from 3 to 22 percent lower for the 15 items with reimbursement rates 
lower than Medicare. If Medicare were to reimburse based on FEHB Plan median prices, the 
program could save $118 million. 
Retail Prices 
Medicare prices were more than the median retail price for 10 of the 16 items.  These median prices 
ranged from to 2 to 73 percent less than the Medicare price for the item. Potential Medicare savings 
would reach $84 million if Medicare used median retail prices for reimbursement on these 16 items. 
Competitive Bidding Demonstration Prices 
I would also like to note that four of the items in our analysis (saline solution, enteral feeding supply 
kits, semi-electric hospital beds, and standard wheelchairs) have been, or are currently, in 
Medicares competitive bidding demonstrations for DME, prosthetics, orthotics, and supplies. 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 5  Competitive bid prices were 8 to 33 percent less than Medicare reimbursement rates for these four 
items. 
INHERENT REASONABLENESS 
CMS has certain authorities to control unreasonably high or low payment levels for medical 
equipment and supplies. Using the inherent reasonableness process, CMS is permitted to use other 
payment methodologies to align payment amounts with current market prices. Congress gave CMS 
added flexibility in making inherent reasonableness adjustments in the Balanced Budget Act of 
1997. The law allows CMS to make inherent reasonableness adjustments, without formal 
rulemaking, as long as the annual adjustments are 15 percent or less. For these adjustments, CMS is 
required to describe in regulation the factors to be used in determining when payment amounts are 
not inherently reasonable and those factors to be considered when establishing reasonable payment 
amounts. 
In 1998, CMS published an interim final rule revising the inherent reasonableness regulations. The 
DMERCs then surveyed retail prices for products they believed might have excessive Medicare 
payment rates. The DMERCs notified suppliers that they proposed to adjust Medicare payments for 
eight products and solicited public comments. The medical equipment and supplies industry raised 
concerns about the proposed reductions, and CMS suspended them. 
The CMS also attempted to use the inherent reasonableness process in August 1999 by issuing a 
proposed notice to replace current fee schedules and implement special payment limits for five items 
of DME and one prosthetic device. The CMS determined that Medicare reimbursement for the six 
items was grossly excessive relative to the amount paid by the VA, and therefore not inherently 
reasonable. The CMS increased the median VA wholesale prices by a mark up of 67 percent to 
make a valid comparison between Medicare and VA prices. 
Because of concerns associated with the inherent reasonableness process, the Congress passed 
legislation in November 1999 prohibiting CMS from using its inherent reasonableness authority 
until a GAO report on the subject was issued, and a final rule has been published that responded to 
the GAO report and to public comments.  The GAO report, issued in July 2000, found that there was 
sufficient evidence to indicate that Medicare overpays for most of the items identified by the 
DMERCs in 1998, and that the use of the inherent reasonableness process for some items was 
justified. For other items, GAO questioned the rigor that carriers used in their collection of pricing 
data. The GAO recommended that CMS define what grossly excessive or deficient prices were in 
the final rule on the inherent reasonableness process. It also recommended that CMS develop and 
implement a more structured and consistent data collection sampling and survey methodology for 
inherent reasonableness reviews.  In addition, GAO recommended that CMS monitor patient access 
to products with reduced payments. To date, the final rule for inherent reasonableness has not been 
promulgated. 
COMPETITIVE BIDDING 
The Balanced Budget Act of 1997 authorizes CMS to enter into competitive bidding demonstrations 
for some categories of DME, prosthetics, orthotics and supplies.  Using this authority, CMS has 
conducted multiple competitive bidding demonstrations with promising results. 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 6  In the first demonstration, CMS selected five categories of DME, prosthetics, orthotics and supplies 
for competitive bidding in Polk County, Florida.  Payments under the first demonstration began on 
October 1, 1999 and were in effect through September 30, 2001. Medicare implemented a second 
round of competitive bidding in Polk County in October 2001 for four product categories.  Payments 
under this demonstration will remain in effect through September 30, 2002. The CMS estimates 
savings for Medicare and Polk County beneficiaries of 17 percent  ($1.3 million) annually as 
compared to payments that would have been incurred under the year 2000 Medicare fee schedules. 
Medicare implemented an additional competitive bidding demonstration in San Antonio, Texas from 
February 1, 2001 through December 31, 2002 for five product categories.  The CMS estimates 22 
percent savings with this round of competitive bidding. 
INVESTIGATIVE CASES 
In addition to our audits and evaluations, the OIG has aggressively investigated individuals and 
entities that have defrauded our programs in this area. Between 1996 and 2001, our investigations 
led to 88 successful criminal prosecutions of DME suppliers.  During this same period, there were 
82 civil settlements or judgments imposed. Together, these criminal convictions and civil 
adjudications resulted in more than $277 million in restitution, fines and penalties being ordered by 
the courts. Also, during this time period, 166 exclusions were imposed on DME companies or their 
owners and employees. 
I would like to highlight two of these cases for you today.  The first case involved the misbranding 
of a SureStep glucose meter. The company submitted documents to the Food and Drug 
Administration (FDA) and marketed the SureStep glucose meter without disclosing two defects that 
led some users to become medically compromised. In this case, the equipment manufacturer was 
willing to risk the death of beneficiaries from the use of defective equipment because it could make 
so much money selling glucose monitoring strips for use with the meter. This company plead guilty 
to the misbranding allegation and paid a $30 million criminal fine in addition to a $30 million civil 
penalty. The second case involved one of the nations largest suppliers of respiratory services. 
Allegations included submission of forged and falsified documents, self-qualifying of oxygen tests, 
double billing, claims for undelivered items, claims for deceased patients and inflated claims.  A 
random sample of filed from one of the companys subsidiaries revealed a 95 percent error rate.  The 
company agreed to pay the government $17 million to resolve its liability under the False Claims 
Act for these allegations. 
CONCLUSION 
Mr. Chairman, over the years you have expressed concern that Medicare payments for many medical 
supplies remain excessive when compared to those of other payers. I know that you have worked 
diligently to safeguard taxpayer dollars and protect the Medicare program and its beneficiaries from 
fraud and abuse. We greatly appreciate your efforts.  CMS also has made significant improvements 
over the years to this important benefit including consolidating claims processing, establishing 
supplier standards and requiring supplier applications. Competitive bidding also has shown 
promising initial results. 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 7  Our work on the 16 items, as well as our prior work, documents that Medicare pays too much for 
some medical equipment and supplies. We believe that fundamental reform is needed to ensure that 
Medicare and its beneficiaries pay a fair price. Fortunately, two promising reforms which we have 
long supported are already available for use. In fact, it is noteworthy that for nine items in our 
review, CMS has proposed reducing prices through the inherent reasonableness process or has used 
competitive bidding to actually lower prices. However, CMS needs to complete its inherent 
reasonableness regulation, and the Administration and the Congress need to work together to expand 
the competitive bidding provision beyond the demonstration phase. 
Thank you for the opportunity to discuss these important issues. I will be happy to answer your 
questions. 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 8  Appendix A 
PRICE COMPARISONS FOR 16 MEDICAL EQUIPMENT AND SUPPLY ITEMS 
Methodology 
For the items reviewed, we calculated the median price from each source (VA, Medicaid agencies,

FEHB Plans, and retailers) and compared it to Medicares median price. We then calculated the

percentage difference between the Medicare price and the median prices of each of the four sources

(i.e., we found the difference between the Medicare price and the other sources lower price, and

divided the difference by the Medicare price). For those items where the Medicare price was higher

than the sources price, we multiplied this percentage by the total Medicare payments for the item in

2000 to get an estimated annual dollar savings. We used the January 2002 Medicare fee schedules

to determine the Medicare purchase prices for the 16 Medicare codes in our sample. Since fee

schedule rates for the same codes differ among States, we calculated the median rate from the fee

schedule rates for all 50 States, Puerto Rico, and the Virgin Islands. 

For the seven codes in the capped rental payment category, we used the Medicare formula to

calculate how much these items would cost if beneficiaries chose to own them.  For all but one of

the items, the least expensive purchase price is equal to 13 months of rental, and for the remaining

item (motorized wheelchair) it is equal to 10 months of rental. Six codes in our sample are items

that may be purchased new or used. In these cases, we used the fee schedule purchase price for new

items.  The remaining three codes in our sample are supplies that cannot be re-used and there is only

one possible purchase price for these items in the fee schedule. 

We also gathered information from past and current CMS competitive bidding demonstration

projects in Polk County, Florida and San Antonio, Texas. We reviewed the list of items included in

the demonstrations to determine if any of the 16 items we reviewed had competitive bid prices.

We sent a request to the VAs National Acquisition Center to provide us with current Federal Supply

Schedule prices for equipment and supplies that matched the description of our 16 Medicare codes. 

The National Acquisition Center handles the largest combined contracting activity within the VA. 

The National Acquisition Center determined which vendor contracts might contain products that

matched the descriptions for 14 of the codes, and sent us the contract containing prices. For the two

remaining codes (A4253 - blood glucose test strips and A4259 - lancets), we obtained Federal

Supply Schedule prices from the VAs Pharmacy Benefit 

Management website. From the available VA data, we identified items that we believed matched the

descriptions of our Medicare codes. 

We sent requests to 52 State Medicaid agencies and 58 fee-for-service FEHB Plans to provide

current reimbursement prices for items matching the description of the 16 Medicare codes. We

received responses from 40 Medicaid agencies and 30 FEHB Plans. Not all of the respondents could

provide rates for every item.

Finally, for each of the 16 codes, we identified Medicare suppliers that received the highest

payments for that particular code in 2000.  For each code we obtained retail prices from 10

suppliers. We asked suppliers how much it would cost to buy the item, in cash, including tax and

delivery charges. For three of the 16 items  blood glucose test strips for home blood glucose

monitors, lancets, and enteral feeding supply kits for use with pumps  we requested more than one

Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 9  price.  Generally, blood glucose test strips are made to fit specific brands of equipment. Therefore, 
prior to calling suppliers, we identified two commonly-used brands of test strips.  We then requested 
the prices of these two brands of test strips from suppliers. Blood glucose test strips and lancets are 
often sold through mail order which may result in different prices than retail prices.  Therefore, we 
asked for the mail order as well as the retail price. For enteral feeding supply kits, we identified two 
supply kits billed under code B4035, and then we asked suppliers for the prices of both supply kits. 
In addition, the enteral feeding supply kits are covered by Medicare on a per day basis, while the 
prices we were quoted were per unit. In our analysis, we compared the per-unit price to Medicares 
per-day price. 
Senate Committee on Appropriations 
Subcommittee on Labor, HHS, and Education 
Hearing: June 12, 2002  Page 10