Department of Health and Human Services
OFFICE OF 
   
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
POWER   WHEELCHAIRS IN THE 
 
M P :
EDICARE  ROGRAM           
 
 
S A C
UPPLIER  CQUISITION  OSTS 
 
  S  
AND  ERVICES
 
 
 
 
Daniel R. Levinson  
Inspector General 
 
August 2009 
OEI-04-07-00400   
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 Office of Audit Services (OAS) provides 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.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
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 for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.   
   
 
 E X E C U T I V E   S U M M A R Y  
OBJECTIVES 
(1)  To compare Medicare payments for power wheelchairs with 
suppliers acquisition costs. 
(2)  To determine the number and types of services that suppliers 
performed in conjunction with providing power wheelchairs to 
Medicare beneficiaries. 
BACKGROUND 
Medicare beneficiaries are eligible to receive power wheelchairs under 
Medicare Part B coverage of durable medical equipment.  Qualified 
Medicare beneficiaries receive power wheelchairs from suppliers that 
bill the Medicare program for reimbursement.  In 2007, approximately 
173,300 Medicare beneficiaries received power wheelchairs, at a total 
cost of $686 million.   
Medicares fee schedule amounts are based on manufacturer-suggested 
retail prices.  They include reimbursement for the power wheelchair 
acquisition cost and services performed in conjunction with providing 
the wheelchair, such as assembling and delivering it and educating the 
beneficiary about its use.  Prior Office of Inspector General (OIG) 
reviews have found that consumers can buy power wheelchairs for lower 
prices than Medicare and its beneficiaries.  In May 2006, the Centers for 
Medicare & Medicaid Services (CMS) proposed a revised methodology 
for setting new fee schedule amounts that would not rely upon 
manufacturer-suggested retail prices and is responsive to the market.  
As of May 2009, CMS had not finalized this proposal.   
CMS planned to use supplier-submitted competitive bids to establish 
reimbursement amounts for power wheelchairs and other durable 
medical equipment (DME), beginning in July 2008.  Medicare and 
beneficiary payments under the Competitive Bidding Acquisition 
Program would have decreased by an average of 26 percent across all 
included categories of DME, saving up to an estimated $1 billion 
annually.  However, Congress delayed the program and exempted 
complex rehabilitation power wheelchairs from future competitive 
bidding.  To offset the cost savings lost by this delay, fee schedule 
amounts were reduced in January 2009 by 9.5 percent.   
We requested documentation of the amounts that suppliers paid to 
purchase a nationally representative sample of 375 standard and 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  i   
   
 
E X E C U T I V E   S U M M A R Y  
complex rehabilitation power wheelchairs supplied to Medicare 
beneficiaries in the first half of 2007.  We also requested documentation 
of the services that suppliers performed in conjunction with providing 
the power wheelchairs.  We did not determine the cost of performing 
these services or other general supplier business expenses, such as 
billing, accreditation, staff salaries, or facility maintenance.   
FINDINGS 
Medicare allowed an average of $4,018 for standard power 
wheelchairs that cost suppliers an average of $1,048 in the first half 
of 2007.  Medicare and its beneficiaries paid almost four times the 
average amount paid by suppliers to acquire standard power 
wheelchairs during the first half of 2007.  The beneficiarys copayment 
($804) covered 77 percent of suppliers average acquisition cost.  
Medicares average payment under the Competitive Bidding Acquisition 
Program ($3,073) would have been almost three times the average 
acquisition cost.  Although Medicares fee schedule amount was reduced 
from $4,024 to $3,641 to offset the Competitive Bidding Acquisition 
Programs delay, the 2009 fee schedule amount exceeds the average 
competitively bid price by $568.   
Medicare allowed an average of $11,507 for complex rehabilitation 
power wheelchair packages that cost suppliers an average of  
$5,880 in the first half of 2007.  Medicare and its beneficiaries paid 
almost two times the average amount paid by suppliers to acquire complex 
rehabilitation power wheelchair packages during the first half of 2007.  We 
define a complex rehabilitation power wheelchair package as the power 
wheelchair plus its power options and accessories.  Medicare allowed an 
average of $5,354 for complex rehabilitation power wheelchairs that cost 
suppliers an average of $2,565.  Medicare allowed an average of $6,153 for 
the power options and accessories supplied with complex rehabilitation 
power wheelchairs that cost suppliers an average of $3,316.  
Suppliers of standard power wheelchairs reported performing an 
average of five services per chair, while suppliers of complex 
rehabilitation power wheelchair packages reported performing an 
average of seven services.  Suppliers of standard power wheelchairs 
and complex rehabilitation power wheelchair packages reported 
performing respective averages of five and seven services prior to, during, 
and over an average of 9 months after delivering the chairs.  Suppliers 
reported performing most services prior to and during the wheelchairs 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  ii   
   
E X E C U T I V E   S U M M A R Y  
 
delivery.  However, suppliers of complex rehabilitation power wheelchairs 
reported performing twice as many services as suppliers of standard 
chairs at times other than the day of delivery.  Suppliers reported 
performing required services most of the time and additional services as 
needed.   
RECOMMENDATION 
Prior OIG evaluations found that consumers can purchase power 
wheelchairs at lower prices than Medicare and its beneficiaries.  The 
findings of this evaluation suggest that CMSs current methodology for 
developing power wheelchair fee schedule amounts does not reflect 
actual acquisition costs.   
Based on manufacturer invoices and other documentation that we 
collected from suppliers, we found that Medicare and its beneficiaries 
paid almost four times the average amount paid by suppliers to acquire 
standard power wheelchairs during the first half of 2007.  Medicare and 
its beneficiaries paid suppliers an average of $2,970 beyond the 
suppliers acquisition cost to perform an average of five services and 
cover general business costs.   
Medicares average allowed amount in the first half of 2007 ($4,018) was 
383 percent of suppliers average acquisition cost for standard power 
wheelchairs.  In comparison, the Competitive Bidding Acquisition 
Program, which would have reduced the average Medicare payment for 
standard power wheelchairs to $3,073, would have been 293 percent of 
suppliers average acquisition cost.  Although Medicares fee schedule 
amount was reduced to $3,641 to offset the Competitive Bidding 
Acquisition Programs delay, the 2009 fee schedule amount exceeds the 
average competitively bid price by $568.  
Medicare and its beneficiaries paid almost two times the average 
amount paid by suppliers to acquire complex rehabilitation power 
wheelchair packages during the first half of 2007.  Medicare and its 
beneficiaries paid suppliers an average of $5,627 beyond the suppliers 
acquisition cost to perform an average of seven services and cover 
general business costs.   
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  iii  EXECUTIVE SUMMARY
Based on these findings, we recommend that CMS:
Determinewhether Medicare's fee schedule amounts for standard
and complex rehabilitation powerwheelchairs should be adjusted.
CMS should considerthe following methods for reviewingfee schedule
amounts:
 Use information from the Competitive BiddingAcquisition
Program to adjustfee schedule amounts.
 Seeklegislation to ensure that fee schedule amounts are
reasonable and responsive to market changes.
 Use the results ofthis evaluation to determine whether an
inherent reasonableness review is appropriate.
When setting fee schedule amounts, CMS should considerthat supplier
acquisition costs and services differby powerwheelchairtype.
AGENCY COMMENTSAND OFFICE OF INSPECTOR GENERAL
RESPONSE
CMS concurred withourrecommendation and noted that the report
providesvaluable insight on suppliers' average acquisition costs for
standard and complex rehabilitation powerwheelchairs. It also noted
thatit has worked on a number ofimportantregulatory and
administrative initiatives related to the coding, payment, and coverage
ofpowerwheelchairs in response to the significant growth in
expenditures for these items under the Medicare program.
CMS also provided comments about each suggested method for
determiningwhether Medicare's fee schedule amounts for standard and
complexrehabilitationpowerwheelchairs should be adjusted. CMS
concurred thatit has the authority to use the payment amounts
determined under the Competitive BiddingAcquisition Program to
adjust the existingMedicare fee schedule amounts for DME items in
areas not included in a competitive biddingprogram. CMS willconduct
rulemaking to implement a detailed methodology and process for
applying this authority. CMS also stated thatitwill carefully consider
seekinglegislation to ensure that fee schedule amounts are reasonable
and responsive to market changes. Itnoted that, althoughit is
consideringtaking steps to revise the administrative process for gap'
filling fee schedule amounts for new DME items, new legislation may
not be required to make these revisions. Further, CMS did not concur
oEI040700400 POWER WHEELCHAIRS IN THE MEDICARE PROGRAM: SUPPLIER ACQUISITION COSTS AND SERVICES iv EXECUTIVE S LJ M MAR Y
with using the results ofthis evaluation to determine whether an
inherent reasonableness review is appropriate. CMS noted that itis not
likely to considerundertaking a review ofthe standard and complex
rehabilitation powerwheelchair fee schedule amounts until the results
ofthe supplierbids under the Competitive BiddingAcquisition Program'
have been assessed. Lastly, CMS stated that itwillconsider that
supplierpurchase prices and services differ by powerwheelchairtype
when setting fee schedule amounts.
We support CMS's efforts to address these issues and encourage itto
continue to make progress inthese areas.
OEI040700400 POWER WHEELCHAIRS IN THE MEDICARE PROGRAM: SUPPLIER ACQUISITION COSTS ANO SERVICES v  
 T A B L E   O F   C O N T E N T S  
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
 
I N T RO DUC T IO N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 
 
F I N D IN G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 
  Medicare allowed an average of $4,018 for standard power 
wheelchairs that cost suppliers an average of $1,048 in  
  the first half of 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 
  Medicare allowed an average of $11,507 for complex 
  rehabilitation power wheelchair packages that cost  
  suppliers an average of $5,880 in the fist half  
  of 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 
  Suppliers of standard power wheelchairs reported 
  performing an average of five services per chair, while 
  suppliers of complex rehabilitation power wheelchair 
   packages reported performing an average of seven 
  services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 
   
R E C O MMEN D A T ION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 
  Agency Comments and Office of Inspector General Response . . . 25 
 
APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 
  A:  Population and Sample Sizes, by Category . . . . . . . . . . . . . . . 27 
  B:  Complex Rehabilitation Power Options and  
        Accessories, From Sample . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 
  C:  Estimates and Confidence Intervals. . . . . . . . . . . . . . . . . . . . . 29 
  D:  Supplier Service Categories and Descriptions. . . . . . . . . . . . . 35 
  E:  Median Supplier Acquisition Costs and  
Confidence Intervals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36  
  F:  Average Numbers and Frequencies of Supplier Services. . . . . 37  
G:  Agency Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 
 
A C K NO WL E D G M E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 
   
   
 
 I N T R O D U C T I O N  
OBJECTIVES 
(1)  To compare Medicare payments for power wheelchairs with 
suppliers acquisition costs. 
(2)  To determine the number and types of services that suppliers 
performed in conjunction with providing power wheelchairs to 
Medicare beneficiaries. 
BACKGROUND 
Between 1999 and 2003, Medicare payments for power wheelchairs 
increased approximately 350 percent, from $259 million to $1.2 billion, 
while overall Medicare program expenditures rose 28 percent.1  During 
2005 and 2006, the Centers for Medicare & Medicaid Services (CMS) 
revised Medicares policies for power wheelchair coverage, coding, and 
pricing to better support accurate payment and coverage decisions.2 3  
In 2007, approximately 173,300 Medicare beneficiaries received power 
wheelchairs, at a total cost of $686 million.4 
Medicare Coverage Criteria for Power Wheelchairs 
Medicare beneficiaries are eligible to receive power wheelchairs under 
Medicare Part B coverage of durable medical equipment (DME).  Items 
provided under Medicare Part B, including power wheelchairs, must be 
reasonable and necessary for the diagnosis or treatment of illness or 
injury or to improve the functioning of a malformed body member.5 
Most beneficiaries who require power wheelchairs are unable to walk 
and have severe upper body weakness.6  Power wheelchairs are 
medically necessary for beneficiaries who cannot effectively perform 
mobility-related activities of daily living using other mobility-assistive 
 
1 71 Fed. Reg. 17021, 17022 (Apr. 5, 2006).  
2 CMS, Pub. No. 11272P, 2006 Fee Schedule Amounts for Power Mobility Devices Have 
Been Refined, November 2006. 
3 In November 2006, Medicare revised its power wheelchair fee schedule, increasing the 
number of procedure codes from 4 to 42. 
4 Office of Inspector General (OIG) analysis of CMSs claims data, July 2008. 
5 Social Security Act,  1862(a)(1)(A). 
6 CMSs Medicare Learning Network, Medicare Coverage of Power Mobility Devices:  
Power Wheelchairs and Power Operated Vehicles, April 2006. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  1   
   
 
I N T R O D U C T I O N  
equipment, such as a cane, manual wheelchair, or power-operated 
scooter.7 8     
Medicare beneficiaries receive power wheelchairs from suppliers that 
bill the Medicare program for reimbursement.9   The prescribing 
physician provides the supplier with documentation from the 
beneficiarys medical record to support the medical necessity of the 
power wheelchair, along with the power wheelchair prescription.10  
Based on the physicians prescription, the supplier recommends a 
specific power wheelchair for the beneficiary.  The physician must then 
review and approve the suppliers recommendation.   
Medicare Reimbursement for Power Wheelchairs 
Suppliers submit claims to Medicare for power wheelchairs using 
Healthcare Common Procedure Coding System codes (procedure 
codes).  Medicare determines the highest dollar amount it will allow 
(fee schedule amount) for each procedure code.  Medicare reimburses 
the supplier 80 percent of the allowed amount and the beneficiary is 
responsible for the remaining 20 percent.   
Medicares fee schedule amounts include reimbursement for the 
suppliers power wheelchair acquisition cost and also for supplier 
services, such as assembling and delivering the power wheelchair and 
educating the beneficiary about its use.11  Medicare reimburses 
suppliers under separate procedure codes for wheelchair options and 
 
7 CMS Medicare National Coverage Determinations Manual, Pub. No. 100-03, ch.1,         
 280.3.  Last modified in August 2005.  Available online at 
http://www.cms.hhs.gov/manuals/downloads/ncd103c1_Part4.pdf.  Accessed on March 17, 
2009. 
8 Mobility-related activities of daily living include toileting, feeding, dressing, grooming, 
and bathing in customary locations within the home.   
9 Medicare covers power wheelchairs under a capped rental arrangement.  The 
beneficiary may choose to rent or purchase the power wheelchair.  However, Medicare 
beneficiaries typically choose to purchase power wheelchairs.  In the first half of 2007, new 
purchases accounted for 95 percent of all Medicare power wheelchair expenditures.    
10 Local coverage determinations issued by Medicare contractors require a physician or 
other treating practitioner to conduct a beneficiary examination to assess the beneficiarys 
need for a power wheelchair before prescribing it.  The supplier must also conduct an 
assessment of the beneficiarys home to determine whether it is conducive to power 
wheelchair usage.  Beneficiaries who receive a complex rehabilitation power wheelchair 
must have an additional specialty evaluation.   
11 Local Coverage Determination for Power Mobility Devices by Durable Medical 
Equipment Medicare Administrative Contractors for Jurisdictions A, B, C, and D,         
Non-Medical Necessity Coverage and Payment Rules.   
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II NN TT RR OO DD UU CC TT II OO NN   
accessories, such as specialty controllers, power-operated tilt and recline 
systems, armrests, and batteries.   
CMSs current fee-setting methodology.  The current power wheelchair fee 
schedule amounts are based on manufacturer-suggested retail prices 
(MSRP).12   Manufacturers submit the MSRP for a power wheelchair 
model to Medicare as part of the models coding review.13  Medicare does 
not receive information on suppliers acquisition costs and other costs 
and discounts associated with acquiring power wheelchairs.     
Competitive Bidding Acquisition Program.  Under the Competitive Bidding 
Acquisition Program, CMS uses supplier-submitted bids to establish 
reimbursement amounts for power wheelchairs and other included 
DME, prosthetics, orthotics, and supplies (DMEPOS).  The programs 
primary goals include reducing the amount Medicare and its 
beneficiaries pay for these items and creating a payment structure that 
is more reflective of a competitive market.  Two weeks after CMS 
implemented the Competitive Bidding Acquisition Program in July 
2008, Congress passed the Medicare Improvements for Patients and 
Providers Act of 2008, delaying and reforming the program.14  
Medicare and beneficiary payments under the original round of bidding 
would have decreased by an average of 26 percent across all included 
DME categories, saving up to an estimated $1 billion annually upon 
expansion to 80 metropolitan areas.15 16  To offset the cost savings lost 
by the Competitive Bidding Acquisition Programs delay, Congress 
 
12 CMS Pub. No. 11272P, 2006 Fee Schedule Amounts for Power Mobility Devices Have 
Been Refined, November 2006. 
13 Medicare deflates MSRPs to the base year of the fee schedule (1986) and reinflates 
them using the Consumer Price Index for All Urban Consumers.  
14 DMEPOS Competitive Bidding:  Announcements and Communications.  Available 
online at 
http://www.cms.hhs.gov/DMEPOSCompetitiveBid/04_Announcements_and_Communication
s.asp.  Accessed on August 1, 2008. 
15 DMEPOS Competitive Bidding - Round One - Weighted Average Savings.  Available 
online at www.dmecompetitivebid.com.  Accessed on May 6, 2008.   
16 CMS Says Medicare Competitive Bidding Program for Durable Medical Equipment 
Might Save $1B in 2009, May 21, 2008.  Available online at 
http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=51092.  Accessed on 
November 6, 2008. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  3   
   
 
I N T R O D U C T I O N  
reduced existing fee schedule amounts for power wheelchairs and other 
types of DME by 9.5 percent, effective January 1, 2009.17 18 19 
After a public comment period, CMS will begin a new round of 
competitive bidding in October 2009.  Although these amounts will 
apply only to the metropolitan areas included in the Competitive 
Bidding Acquisition Program, CMS has the authority to use information 
from the bidding process to adjust payment rates in other localities.20 21  
As of August 2009, CMS had not finalized the details of a methodology 
for adjusting payment rates in other localities.   
Proposed rule to revise fee-setting methodology.  In May 2006, CMS 
proposed regulations through notice and comment rulemaking that 
would revise its methodology for setting fee schedule amounts for new 
DMEPOS items.22 23  Because CMS cannot ensure that MSRPs reflect 
the cost of supplying an item, the proposed methodology does not rely 
upon them.  Instead, CMS proposed using functional technology 
assessments to (1) help substantiate when new items are comparable to 
items with established fee schedule amounts; or (2) in the event that 
new items are not comparable to items with established fee schedule 
amounts, determine an amount based on a comparative cost analysis of 
similar products on the market.  As of August 2009, CMS had not 
finalized this proposal. 
Inherent reasonableness authority.  CMS may use its inherent 
reasonableness authority to deviate from standard payment 
methodologies if they result in payment amounts that are determined to 
 
17 The Medicare Improvements for Patients and Providers Act of 2008:  Delay and 
Reform of the Medicare DMEPOS Competitive Bidding Program.  Available online at 
http://www.lifescienceslegalupdate.com/2008/07/articles/health-care/medicare-medicaid/the-
medicare-improvements-for-patients-and-providers-act-of-2008-delay-and-reform-of-the-
medicare-dmepos-competitive-bidding-program/.  Accessed on August 1, 2008. 
18 After 2009, the fee schedule amounts will be adjusted according to annual increases in 
the Consumer Price Index for All Urban Consumers. 
19 Congress excluded complex rehabilitation power wheelchairs in HCPCS               
K0848K0864 from future competitive bidding.  
20 Social Security Act,  1834(a)(1)(F)(ii), Medicare Improvements for Patients and 
Providers Act of 2008,  154(a)(3 and 4). 
21 CMS must consider variations in the costs of services and items when adjusting 
payment rates in localities outside the Competitive Bidding Acquisition Program.  
22 71 Fed. Reg. 25654, 25688 (May 1, 2006). 
23 According to the proposed rule, the revised methodology would apply even to those 
items in the Competitive Bidding Acquisition Program, until bids for those items are 
available. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  4   
   
 
I N T R O D U C T I O N  
be grossly excessive or deficient.24  For example, CMS may use its 
inherent reasonableness authority when payments are grossly higher 
or lower than acquisition or production costs for the category of items or 
services.25  However, CMS must show that special payment limits 
established under its inherent reasonableness authority are realistic 
and equitable. 
Supplier Acquisition Costs for Power Wheelchairs 
Suppliers incur costs to purchase power wheelchairs and perform 
services in conjunction with providing them to Medicare beneficiaries.  
Suppliers also incur general business costs, such as staff salaries and 
facility maintenance.   
Medicares 2007 fee schedule amounts were criticized by some power 
wheelchair suppliers.  They claimed that the amounts do not cover the 
costs of purchasing and providing the power wheelchairs while allowing 
them to earn a reasonable profit.26   
Acquisition costs.  Suppliers purchase power wheelchairs from 
manufacturers or distributors.  The manufacturer or distributor may 
offer volume or prompt pay discounts, rebates, and other incentives that 
decrease the suppliers acquisition costs.  Suppliers may also pay for the 
cost of shipping the power wheelchair to their facilities and other 
charges, such as a fuel surcharge, which increase the acquisition costs.   
Supplier services.  Medicare coverage policy requires that a supplier 
perform a home assessment to verify that the beneficiary can maneuver 
the power wheelchair in the home, ensure delivery of the power 
wheelchair, and educate the beneficiary on how to use it safely and 
effectively.27 28  In addition, as needed, suppliers should answer 
questions from the beneficiary about the power wheelchair and repair or 
replace the power wheelchair according to its warranty.29  Medicare 
 
24 42 CFR  405.502(g). 
25 Ibid. 
26 Power Wheelchair Industry Lines Up 44 House Members Opposing Medicare Fee 
Cut, November 3, 2006.  Available online at 
http://www.seniorjournal.com/NEWS/Medicare/6-11-03-PowerWheelchair.htm.  Accessed 
on April 16, 2007. 
27 Local Coverage Determination for Power Mobility Devices by DME Medicare 
Administrative Contractors for Jurisdictions A, B, C, and D, Documentation 
Requirements.   
28 42 CFR  424.57(c)(12). 
29 42 CFR  424.57(c)(6) and (13). 
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I N T R O D U C T I O N  
requires that a supplier maintain documentation to support performing 
the home assessment, the power wheelchairs delivery, and educating 
the beneficiary, but not other required services.    
In addition, to obtain Medicare billing privileges, suppliers must meet 
certain quality standards.30  For example, suppliers are required to  
provide the beneficiary with appropriate equipment for trial and 
simulation, when necessary; verify that seating, positioning and 
specialty assistive technology have been evaluated and documented in 
the beneficiarys record; and provide follow-up services to the 
beneficiary and/or caregiver(s), consistent with the type(s) of equipment 
provided, and recommendations from the prescribing physician.31 32  
Power Wheelchair Types 
Medicare covers more than 650 power wheelchair models.33  Medicare 
conducts coding reviews of model information submitted by 
manufacturers and assigns each model to 1 of Medicares 42 power 
wheelchair procedure codes (K0813K0864).34  The procedure code 
assignment is based on the models performance, patient weight 
capacity, seat type, portability, and power seating system capability.35   
Two types of power wheelchairs, standard and complex rehabilitation, 
accounted for over 80 percent of all Medicare power wheelchair 
expenditures in the first half of 2007.  These are covered by Medicare 
under 27 procedure codes, which include 395 power wheelchair models. 
Standard power wheelchairs.  The most frequently reimbursed procedure 
code, K0823, accounted for nearly three-quarters of Medicares power 
 
30 The Medicare Improvements for Patients and Providers Act of 2008 requires all 
DMEPOS suppliers to meet quality standards for Medicare accreditation by September 30, 
2009. 
31 DMEPOS Supplier Quality Standards.  Available online at 
http://www.cms.hhs.gov/MedicareProviderSupEnroll/Downloads/DMEPOSAccreditationSta
ndards.pdf.  Accessed on December 5, 2008. 
32 The requirement pertaining to equipment trials applies only to suppliers of complex 
rehabilitation power wheelchairs.   
33 Medicare Pricing, Data Analysis, and Coding (PDAC) contractor, Motorized 
Wheelchair Product Classification List, July 16, 2009.   
34 Medicare has not assigned power wheelchairs to procedure codes K0817K0819, 
K0832K0834, and K0844K0847. 
35  Statistical Analysis DME Regional Carrier, Power Mobility Device Coding 
Guidelines, August 3, 2006.  
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I N T R O D U C T I O N  
wheelchair claims and expenditures in the first half of 2007.36    
Medicare covers 98 power wheelchair models under procedure code 
K0823.37  We refer to K0823 power wheelchairs as standard power 
wheelchairs in this report. 
Standard power wheelchairs are designed for daily use to provide basic 
mobility for persons weighing less than 300 pounds and feature an 
automotive-style seat.  Accessories, such as armrests and oxygen tank 
carriers, may be added to standard power wheelchairs.  However, 
standard power wheelchairs cannot be upgraded with power options 
(e.g., a powered seating system) or many other electronic features (e.g., 
a device to allow the user to control their chair by sipping and puffing 
through a straw).38  In the first half of 2007, standard power 
wheelchairs were supplied with an average of two accessories.39  
Medicares average allowed amount for a standard power wheelchair 
accessory was $234.     
Medicares fee schedule amount for standard power wheelchairs during 
the first half of 2007 was $4,024.  The average reimbursement amounts 
for standard power wheelchairs under the original round of the 
Competitive Bidding Acquisition Program was $3,073, 24 percent lower 
than the 2007 fee schedule amount.40  In January 2009, to offset the 
costs savings lost by the delay of the Competitive Bidding Acquisition 
Program, the fee schedule amount for standard power wheelchairs was 
reduced by 9.5 percent, to $3,641.  
Complex rehabilitation power wheelchairs.  Complex rehabilitation power 
wheelchairs accounted for less than 7 percent of Medicare power 
 
36 OIG analysis of claims from the National Claims History file submitted under 
procedure code K0823 with dates of service from January 1 to June 30, 2007, processed as of 
June 30, 2007.   
37 Medicare PDAC contractor, Motorized Wheelchair Product Classification List, July 16, 
2009.   
38 Local Coverage Determination for Power Mobility Devices by DME Medicare 
Administrative Contractors for Jurisdictions A, B, C, and D, Code Specific Requirements 
and Definitions.  
39 OIG analysis of claims from National Claims History file associated with claims 
submitted under procedure code K0823 with dates of service from January 1 to June 30, 
2007, processed as of June 30, 2007. 
40 OIG analysis of Competitive Bidding Acquisition Program prices.  The price represents 
the average of prices for all 10 Metropolitan Statistical Areas.   
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  7   
   
 
I N T R O D U C T I O N  
wheelchair claims and expenditures in the first half of 2007.41  Medicare 
covers 297 complex rehabilitation power wheelchair models under       
26 procedure codes.42 43 
To receive a complex rehabilitation power wheelchair, a beneficiary 
must meet criteria beyond those required to receive a standard power 
wheelchair.  For example, the beneficiarys mobility limitation must be 
because of a neurological condition, muscle disease, or skeletal 
deformity.   
Accessories, such as armrests and oxygen tank carriers, may be added 
to complex rehabilitation power wheelchairs.  These wheelchairs can be 
upgraded with power options and other electronic features (referred to 
together as power options) to accommodate beneficiaries specific 
mobility needs.44  In the first half of 2007, complex rehabilitation power 
wheelchairs were supplied with an average of five power options and/or 
accessories.45  Medicares average allowed amount for a power option or 
an accessory supplied with a complex rehabilitation power wheelchair 
was $995.  
The fee schedule amounts for complex rehabilitation power wheelchair 
procedure codes ranged from $4,132 to $11,965 in 2007.  
Reimbursement amounts for complex rehabilitation power wheelchairs, 
power options, and accessories under the original round of the 
Competitive Bidding Acquisition Program were an average of 15 percent 
lower than the 2007 fee schedule amounts.46  In January 2009, to offset 
the cost savings lost by the delay of the Competitive Bidding Acquisition 
 
41 OIG analysis of claims from National Claims History file submitted under procedure 
codes K0835K0864 with dates of service from January 1 to June 30, 2007, processed as of 
June 30, 2007.   
42 DME, Prosthetics, Orthotics, and Supplies Supplier Quality Standards, August 2007, 
page 11.  Complex rehabilitation procedure codes are K0835 through K0843 and K0848 
through K0864. 
43 Medicare PDAC contractor, Motorized Wheelchair Product Classification List, July 16, 
2009.   
44 Local Coverage Determination for Power Mobility Devices by DME Medicare 
Administrative Contractors for Jurisdictions A, B, C, and D, Code Specific Requirements. 
45 OIG analysis of claims from National Claims History file associated with claims 
submitted under procedure codes K0835K0864 with dates of service from January 1 to 
June 30, 2007, processed as of June 30, 2007. 
46 DMEPOS Competitive Bidding-Round One-Weighted Average Savings.  Available 
online at www.dmecompetitivebid.com.  Accessed May 6, 2008. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  8   
   
I N T R O D U C T I O N  
 
Program, complex rehabilitation power wheelchair fee schedule 
amounts were reduced by 9.5 percent, to between $3,739 and $10,828.   
Prior Office of Inspector General Work 
Prior OIG reviews have found that consumers and suppliers can buy 
power wheelchairs for less than Medicare and its beneficiaries.  OIG 
found that the Medicare fee schedule amounts for power wheelchairs 
exceeded median prices available to consumers over the Internet by a 
median of 45 percent during the first quarter of 2007.47  Standard power 
wheelchairs were available on the Internet for a median price of $2,959, 
which Medicares fee schedule amount of $4,024 exceeded by 36 percent.  
Another OIG report found that Medicares 2003 fee schedule amount for 
the most frequently reimbursed power wheelchair procedure code at the 
time (K0011) exceeded prices negotiated by suppliers with 
manufacturers and distributors by 242 percent.48  OIG recommended 
that CMS use the pricing information obtained as part of the review to 
determine whether an inherent reasonableness review for K0011 power 
wheelchairs was appropriate.   
METHODOLOGY 
Scope 
We reviewed the acquisition costs of power wheelchairs supplied to 
Medicare beneficiaries in the first half of 2007.  In addition, we 
reviewed the services that suppliers reported performing in conjunction 
with providing these power wheelchairs.  We did not determine the cost 
of performing these services or other general supplier business 
expenses, such as billing, accreditation, staff salaries, or facility 
maintenance.     
This evaluation focuses on standard and complex rehabilitation power 
wheelchairs.  We also reviewed the acquisition costs of certain power 
options and accessories supplied with complex rehabilitation power 
wheelchairs.  We did not include in our analysis the acquisition cost of 
accessories supplied with standard power wheelchairs because 
 
47 Department of Health and Human Services, OIG, A Comparison of Medicare Program 
and Consumer Internet Prices for Power Wheelchairs, OEI-04-07-00160, October 2007. 
48 Department of Health and Human Services, OIG, A Comparison of Prices for Power 
Wheelchairs in the Medicare Program, OEI-03-03-00460, April 2004. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  9   
   
 
I N T R O D U C T I O N  
beneficiaries who received standard power wheelchairs needed fewer, 
less expensive accessories.   
Sample Selection 
Our population consisted of new, nonrental standard and complex 
rehabilitation power wheelchair claims from CMSs National Claims 
History DME Standard Analytical File with dates of service during the 
first half of 2007.49  We removed all claims submitted by suppliers that 
were not actively enrolled in Medicare.50  We also removed claims 
associated with suppliers or prescribing providers under investigation 
by OIG. 51  After removing these claims, the population from which we 
sampled included 93 percent of standard and 91 percent of complex 
rehabilitation power wheelchair claims.   
We grouped the resulting population into three strata:52   
1.  standard power wheelchair claims submitted by low-volume 
suppliers (those that submitted fewer than 10 standard power 
wheelchair claims in the first half of 2007),  
2.  standard power wheelchair claims submitted by high-volume 
suppliers (those that submitted 10 or more standard power 
wheelchair claims in the first half of 2007), and  
3.  complex rehabilitation power wheelchair claims. 
 
49 The final date to submit claims with dates of service during the first half of 2007 was 
June 30, 2008.  We analyzed claims CMS had processed, as of June 30, 2007.  Therefore, the 
population of claims from which we sampled does not include all claims with dates of 
service during the first half of 2007.  Suppliers had submitted 79 percent of claims at the 
time we selected our sample.   
50 Pursuant to 42 CFR  424.520(a), to maintain Medicare billing privileges after initial 
enrollment, suppliers must comply with Medicare regulations and relevant Federal and 
State requirements.  Pursuant to 42 CFR  424.535, Medicare may revoke a suppliers 
billing privileges because of a felony, noncompliance with enrollment requirements, etc.  
Pursuant to 42 CFR  424.540, Medicare also may deactivate a suppliers billing privileges 
when the supplier does not submit a claim for a full year or when the supplier fails to report 
a change to the information provided on the enrollment application.   
51 We removed 3,430 standard and 301 complex rehabilitation power wheelchair claims 
because of suppliers Medicare enrollment status or an ongoing investigation.  After 
removing these, our population consisted of 43,133 standard and 3,001 complex 
rehabilitation power wheelchair claims.     
52 We chose to divide the standard power wheelchair population at a supplier volume of           
10 claims during the first half of 2007 based on the distribution of suppliers and claims.  
Twenty-five percent of suppliers had 10 or more claims and these accounted for 83 percent of 
all standard power wheelchair claims. 
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I N T R O D U C T I O N  
We selected 375 total claims by selecting simple random samples of    
125 claims from each stratum.  Appendix A provides the number of 
claims; suppliers; and Medicare-allowed amounts for the population and 
sample, by category.   
Data Collection 
We requested from suppliers documentation to support their acquisition 
costs (i.e., the manufacturers invoice) and the services that they 
reported performing in conjunction with providing these power 
wheelchairs.53  Before mailing the requests, we solicited feedback on our 
documentation request from three power wheelchair suppliers.  
Representatives of these companies reviewed our documentation 
request to ensure the language was clear to suppliers.    
We obtained suppliers addresses from the National Supplier 
Clearinghouse.  We mailed up to three requests to the suppliers of 
power wheelchairs in our sample and telephoned nonresponding 
suppliers to ensure that they had received the requests.  Suppliers 
submitted documentation for 364 sample claims.  We will forward a list 
of nonresponding suppliers to CMS.   
We removed six claims for which the suppliers did not submit the 
manufacturers invoices.  We also removed 14 claims for power 
wheelchairs that the manufacturer supplied directly to the beneficiaries 
because no invoices existed for our review.  Finally, we removed           
42 claims because we could not confirm that they were coded correctly.54  
We discovered miscoded claims because the model listed on the invoice 
was not one of the Medicare-approved models for the claims procedure 
code.  We will forward information about these miscoded claims to CMS.  
After removing these claims, our sample consisted of 302 claims.       
Documentation of supplier acquisition costs.  We requested that suppliers 
provide the power wheelchair invoices so that we could determine the 
prices they paid for the power wheelchairs.  We requested 
documentation to support all discounts, rebates, or other price 
 
53 The invoice is the itemized bill from the manufacturer or distributor, containing 
individual prices, the total charge, and the terms. 
54 Forty-five claims were miscoded, and five were potentially miscoded.  However, we did 
not remove eight claims for complex rehabilitation power wheelchairs that should have 
been submitted under other complex rehabilitation power wheelchair procedure codes 
because, although they were miscoded, they were still within the scope of this report.    
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I N  T R O D U C T I O N  
reductions that were not included in the invoice prices, as well as 
additional charges paid by the suppliers.   
In addition, we requested invoices for many of the power options and 
accessories supplied with complex rehabilitation power wheelchairs in 
our sample.  We included in our evaluation power options or accessories 
that (1) were supplied with more complex rehabilitation power 
wheelchairs than standard power wheelchairs in the first half of      
2007 and (2) accounted for over 0.1 percent of the total expenditures for 
all complex rehabilitation power options and accessories during that 
time.  These power options and accessories accounted for 91 percent of 
expenditures for all complex rehabilitation power options and 
accessories.  Appendix B provides the number of complex rehabilitation 
power wheelchairs in our sample supplied with each power option or 
accessory, the items descriptions, and the items fee schedule amounts.   
Documentation of supplier services.  We asked suppliers to provide 
documentation to support the services they performed in conjunction 
with providing the power wheelchairs in our sample.  To capture 
services performed over a range of time, we asked suppliers to report 
services that they performed before December 31, 2007.  We accepted 
services performed at any time before the power wheelchairs delivery, 
during its delivery, and after its delivery (until December 31, 2007).   
We asked suppliers about the following types of services: 
  service(s) performed as part of the initial evaluation for the 
wheelchair and/or home assessment; 
  service(s) required to assemble the wheelchair; 
  the wheelchairs delivery; 
  service(s) performed during the wheelchairs delivery (e.g., 
beneficiary or caregiver education and minor adjustments);  
  service(s) performed as part of equipment repair and/or 
maintenance;  
 
  follow-up seating, positioning, or programming adjustment(s); and 
 
  response(s) to beneficiary or caregiver questions.  
We also provided suppliers the opportunity to report services other than 
those listed in our documentation request and services for which they 
were unable to provide documentation.   
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  12   
   
 
I N T R O D U C T I O N  
Data Analysis 
We analyzed the data that suppliers submitted for these power 
wheelchairs and projected the results.55  Appendix C provides the 
confidence intervals for all estimates.   
Supplier acquisition costs.  Starting with the price on the invoice, we 
added any supplier-reported costs to ship the power wheelchair from the 
manufacturer or distributor to the suppliers facility (if not included in 
the invoice price) and subtracted any discounts, rebates, or other 
incentives.  The final calculated price represents the suppliers 
acquisition cost for the power wheelchair.   
Using the same method, we determined the acquisition costs for 
complex rehabilitation power options and accessories.56  Then, we 
determined the acquisition cost for each complex rehabilitation 
package (the power wheelchair plus its power options and accessories).   
We determined the range of supplier acquisition costs from the sample 
data.  We projected mean acquisition costs based on sample data.57  We 
also determined Medicares average allowed amounts using population 
data.   
Supplier services.  We analyzed a total of 1,622 supplier services.  In 
addition to services that suppliers were able to document, this total 
includes 356 services that suppliers reported but did not support with 
documentation.  We also included 40 services that suppliers did not 
report but that were evident in our review of the documents submitted.  
We did not include 178 services associated with power wheelchairs that 
we identified as miscoded.58  We also did not include 100 reported 
services, including billing activities outside the scope of our review and 
services for which the suppliers were reimbursed separately.     
 
55 We used SAS and SUDAAN survey data analysis software to project our sample 
results nationally. 
56 We did not receive invoices for 18 of the 364 options and accessories supplied with 
complex rehabilitation power wheelchairs in our sample.  For these 18 items, we 
substituted the maximum acquisition cost from other invoices for the same type of item.  
When no other invoices were available, we substituted the fee schedule amount.  Therefore, 
we produced estimates that would likely be higher than the actual acquisition costs.    
57 All means are reported as averages in this report. 
58 Because our analysis does not include miscoded claims, services associated with these 
claims do not affect the average numbers of services suppliers reported performing.   
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  13   
   
 
I N T R O D U C T I O N  
We grouped the services into four categories, based on the service types 
indicated by the supplier:   
1.  Services performed prior to delivery (predelivery services).  We 
allowed suppliers to report services performed at any time before 
the power wheelchairs delivery.   
2.  Services performed on the day the power wheelchair was 
delivered (during-delivery services). 
3.  Services performed over an average of 9 months after delivery 
(follow-up services).59   
4.  Services not referenced in our request, supplier responses to 
beneficiary questions, and home assessments with insufficient 
documentation to categorize them as pre- or during-delivery 
services (other services).  Suppliers may have performed these 
services at any phase of supplying the power wheelchairs.   
See Appendix D for descriptions of the service types and the categories 
to which services were assigned.  
We analyzed the reported services to determine:  the average number of 
services that suppliers reported performing for power wheelchairs, by 
service category and in total; the frequency with which suppliers 
reported performing each service; and services in each category, as a 
percentage of all services that suppliers reported performing.  We 
compared the results of each of these analyses by supplier volume and 
by standard versus complex rehabilitation power wheelchairs.   
Limitations 
The acquisition costs for 38 percent of power wheelchairs in our sample 
included batteries.  The invoices did not list battery costs separately; 
therefore, we were unable to subtract their cost from the power 
wheelchair acquisition costs.  Medicare reimburses batteries separately, 
allowing between $60 and $372 per wheelchair for batteries.60 61   
 
59 The minimum time after the power wheelchairs delivery and until December 31, 2007, 
was 6 months and the maximum was 1 year. 
60 Power wheelchairs require two batteries for operation.  Power wheelchair batteries are 
reimbursed by Medicare under procedure codes K0733, E2360E2365, E2371, and E2372.   
However, Medicare coverage policy states that Medicare will deny nonsealed batteries 
(procedure codes E2360, E2362, E2364, and E2372) as not medically necessary.    
61 DMEPOS 2007 Fee Schedule.   
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I N T R O D U C T I O N  
We provided suppliers the opportunity to explain if they were unable to 
provide documentation to support services they performed in 
conjunction with providing the power wheelchair.  We included in our 
analysis all undocumented services that suppliers reported.  However, 
suppliers may not have reported all services for which they were unable 
to provide documentation.  We did not independently verify that 
suppliers performed the services they reported.      
Many supplier services are performed on an as-needed basis; therefore, 
a service rate of less than 100 percent does not imply supplier neglect.   
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspections approved by the Council of the Inspectors General on 
Integrity and Efficiency. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  15   
   
 
 F I N D I N G S  
Medicare and its beneficiaries paid 
Medicare allowed an average of $4,018 for 
almost four times the average amount 
standard power wheelchairs that cost suppliers  paid by suppliers to acquire standard 
an average of $1,048 in the first half of 2007    power wheelchairs during the first half 
of 2007.  Medicare and its beneficiaries 
paid an average of $4,018 for standard power wheelchairs, which 
accounted for nearly three-quarters of Medicares power wheelchair 
claims and expenditures in the first half of 2007.  Based on the 
manufacturer invoices, suppliers paid between $608 and $2,821 to 
purchase standard power wheelchairs that they supplied to Medicare 
beneficiaries.  The average supplier acquisition cost was $1,048.62  The 
beneficiarys copayment covered 77 percent of the average acquisition 
cost.63   
Table 1 compares suppliers average acquisition cost for standard power 
wheelchairs with Medicare and beneficiary payments under the       
2007 and 2009 fee schedules and the Competitive Bidding Acquisition 
Program.  Acquisition costs do not include suppliers indirect costs, such 
as the cost of performing services or other supplier business expenses. 
   
Table 1.  Standard Power Wheelchair Price Comparison 
 
Average 
 
Supplier  Medicares  Medicares Average  Medicares 2009 
  Acquisition  Average Allowed  Competitive Bidding  Fee Schedule 
Pricing Information  Cost* (2007)  Amount (2007)  Price** (2008)  Amount  
 
 
Average price  $1,048  $4,018  $3,073  $3,641 
 
Comparison price, as a 
 
percentage of supplier  NA  383%  293%  347% 
acqu isition cost 
 
* OIG analysis of supplier acquisition costs, 2008.   
** Average of10  Competitive Bidding Area single payment amounts for standard power wheelchairs under the Competitive Bidding 
Acquisition Programs cancelled Round 1. 
 
Medicares average allowed amount in the first half of 2007 ($4,018) was 
383 percent of suppliers average acquisition cost for standard power 
wheelchairs.  In comparison, Medicares average payment under the 
Competitive Bidding Acquisition Program ($3,073) would have been  
 
62 See Appendix E for median supplier acquisition costs and confidence intervals.  
63 The average beneficiary copayment for standard power wheelchairs was $804 during 
the first half of 2007. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  16   
   
 
F I N D I N G S  
293 percent of suppliers average acquisition cost.64  Although 
Medicares fee schedule amount was reduced to $3,641 to offset the 
Competitive Bidding Acquisition Programs delay, the 2009 fee schedule 
amount exceeds the average competitively bid price by $568.  Medicares       
2009 fee schedule amount is 347 percent of suppliers average 
acquisition cost.65  
Low-volume suppliers paid more than high-volume suppliers for standard 
power wheelchairs  
Table 2 illustrates the differences in acquisition costs that high- and      
low-volume suppliers paid. 
 
Table 2:  Price  Comparisons for Standard Power Wheelchairs 
 
Medicares Average 
  Medicares  Average  Allowed Amount as a 
Average  Supplier   Percentage of 
 
Volume of Standard  Allowed  Acquisition  Range of Supplier   Suppliers Average 
Power Wheelcha ir Sales  Amount  Cost  Acquisition Costs*  Acquisition Cost 
High-volume sup pliers  $4,020  $1,006  $608-$1,733  400% 
 
Low-volume suppliers  $4,008  $1,249  $770-$2,821  321% 
 
All suppliers  $4,018  $1,048  $608-$2,821  383% 
* Figures are from sample results and are not projected nationally. 
 
Source:  OIG analysis of supplier acquisition costs, 2008. 
High-volume suppliers paid between $608 and $1,733 for standard 
power wheelchairs in the first half of 2007, or an average of $1,006.      
Low-volume suppliers paid between $770 and $2,821, or an average of 
$1,249.66   
 
Medicare and its beneficiaries paid almost 
Medicare allowed an average of $11,507 for 
two times the average amount paid by 
complex rehabilitation power wheelchair 
suppliers to acquire complex rehabilitation 
packages that cost suppliers an average of 
power wheelchair packages during the first 
$5,880 in the first half of 2007   
half of 2007.  Medicare and its 
 
64 Single payment amounts for standard power wheelchairs based on selected bids under 
the Competitive Bidding Acquisition Programs cancelled Round 1 ranged from $2,756 to 
$3,601. 
65 These estimates do not account for changes in supplier acquisition costs since the first 
half of 2007. 
66 The difference between high- and low-volume suppliers average acquisition costs for 
standard power wheelchairs is statistically significantly at the 95-percent confidence level.  
See Appendix C for the difference estimate, confidence intervals, and p-values.   
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  17   
   
 
F I N D I N G S  
beneficiaries paid an average of $11,507 for complex rehabilitation 
power wheelchair packages, which include the wheelchair and its power 
options and accessories.  Suppliers acquisition costs ranged between 
$1,921 and $14,698 per package.  The average supplier acquisition cost 
was $5,880.67  Beneficiaries copayments covered 39 percent of the 
suppliers acquisition cost for the package, on average.68       
Table 3 compares Medicare-allowed amounts and supplier acquisition 
costs for complex rehabilitation power wheelchair packages.  Medicares 
average allowed amount was 196 percent of suppliers average 
acquisition cost during the first half of 2007.  After the 9.5-percent fee 
schedule reduction in January 2009, Medicares average allowed 
amount is 177 percent of suppliers average acquisition cost.69 70   
 
Table 3:  Price Comparisons for Complex Rehabilitation Power Wheelchair Packages  
 
Medicares  Average  Medicares Average 
  Average  Supplier   Range of  Supplier   Allowed Amount as a 
Allowed  Acquisition  Acquisition  Percentage of Suppliers 
Item(s)    Amount  Cost**  Costs***  Average Acquisition Cost 
Power wheelcha ir*  $5,354  $2,565  $1,049-$5,495  209% 
Power options and 
accessories    $6,153  $3,316  $75-$10,235  186% 
Package total  $11,507  $5,880  $1,921-$14,698  196% 
 
* Includes only those complex rehabilitation power wheelchairs supplied as part of a package.     
 
** Column does not sum because of rounding. 
*** Figures are from sample results and are not projected nationally. 
Source:  OIG analysis  of supplier acquisition costs, 2008. 
 
Medicare allowed an average of $5,354 for complex rehabilitation power 
wheelchairs that cost suppliers an average of $2,565  
Medicare and its beneficiaries paid over two times, or 209 percent of, 
the average amount paid by suppliers to acquire complex rehabilitation 
power wheelchairs that were supplied with power options and 
accessories during the first half of 2007.  Suppliers acquisition costs 
 
67 The range values are from the sample and are not projected nationally. 
68 The average beneficiary copayment for complex rehabilitation power wheelchair 
packages was $2,301 during the first half of 2007. 
69 This estimate does not account for any changes in supplier acquisition costs since the 
first half of 2007. 
70 The estimated, average allowed amount is $10,414.  This estimate assumes that 
Medicare beneficiaries received the same distribution of complex rehabilitation procedure 
codes after January 2009 as in the first half of 2007. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  18   
   
F I   N D I N G S  
ranged between $1,049 and $5,495 per chair, and the average 
acquisition cost was $2,565.71  Medicares complex rehabilitation fee 
schedule amounts ranged from $4,132 to $11,965 in the first half of 
2007.  Medicare and its beneficiaries paid an average of $5,354 for these 
power wheelchairs.   
Medicare allowed an average of $6,153 for the power options and 
accessories supplied with complex rehabilitation power wheelchairs that 
cost suppliers an average of $3,316  
Medicare and its beneficiaries paid 186 percent of the average amount 
paid by suppliers to acquire complex rehabilitation power options and 
accessories during the first half of 2007.  Power options and accessories 
included powered tilt and recline systems, headrests, and electronic 
connections between power options and the wheelchair controllers.   
Suppliers acquisition costs ranged between $75 and $10,235, and the 
average acquisition cost was $3,316.72  Medicare and its beneficiaries 
paid an average of $6,153.   
 
Suppliers reported performing an 
Suppliers of standard power wheelchairs reported  average of five services prior to, 
performing an average of five services per chair,  during, and within an average of         
while suppliers of complex rehabilitation power  9 months after delivering standard 
power wheelchairs to Medicare 
wheelchair packages reported performing an 
beneficiaries.  Suppliers reported 
average of seven services 
performing an average of seven 
services in conjunction with providing 
complex rehabilitation power wheelchair packages.  However, suppliers 
reported performing an average of five services for complex 
rehabilitation power wheelchairs for which the beneficiaries received no 
power options or accessories.73  Appendix F presents the average 
number of services reported, by wheelchair type and service category. 
 
 
 
71 The range values are from the sample and are not projected nationally. 
72 Ibid. 
73 This estimates sample size consists of 30 claims.  See Appendix C for the confidence 
intervals. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  19   
   
 
F I N D I N G S  
Suppliers reported performing most services prior to and during the power 
wheelchairs delivery  
Predelivery and during-delivery services accounted for 91 percent of 
services suppliers reported performing in conjunction with providing 
standard power wheelchairs and 82 percent of services they reported 
performing for complex rehabilitation power wheelchair packages, as 
shown in Figure 1.   
 
Complex Rehabilitation Power 
Figure 1.  S tandard Power Wheelchairs Wheelchair Packages 
Service Categories 
as a P ercentage of  Follow-up  Follow-up 
services   services  
 All Services   
5%  11% 
 Reported, by  Other services  Other services
Wheelchair Type   4%   Predelivery  Predelivery 
  services   6%
services  
27%
  37% 
 
 
  During-delivery 
services   During-delivery 
 
 
64% services
 
45%
 
Source:  OIG analysis of supplier services, 2008. 
Note:  Percentages may not sum to 100 percent because of rounding. 
 
Services that suppliers reported performing prior to delivery.  Predelivery 
services accounted for 27 percent of services reported for standard 
power wheelchairs.  The most common predelivery service suppliers 
reported performing when providing standard power wheelchairs was 
assembling them.74  Suppliers of 64 percent of standard power 
wheelchairs reported assembling the wheelchairs.   
Predelivery services accounted for 37 percent of services reported for 
complex rehabilitation packages.  Suppliers of 75 percent of complex 
rehabilitation power wheelchair packages reported performing or 
participating in evaluations of the beneficiaries.    
Services that suppliers reported performing during delivery.  During-delivery 
services accounted for 64 percent of services reported for standard 
 
74 The difference is statistically different from other predelivery services at the              
95-percent confidence level in a multiple comparison test using a Bonferroni threshold of 
0.0167.   
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  20   
   
F I N D I N G SS   
 
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aanndd  ccoommpplleexx  rreehhaabbiilliittaattiioonn  ppoowweerr  wwhheeeellcchhaaiirrss,,  ootthheerr  tthhaann  tthhee  ddeelliivveerryy  
iittsseellff,,  wwaass  eedduuccaattiioonn  ooff  tthhee  bbeenneeffiicciiaarriieess  oorr  ccaarreeggiivveerrss  oonn  tthhee  ppoowweerr  
wwhheeeellcchhaaiirrss  uussee  oorr  mmaaiinntteennaannccee..7755    SSuupppplliieerrss  rreeppoorrtteedd  eedduuccaattiinngg  tthhee  
bbeenneeffiicciiaarriieess  oorr  ccaarreeggiivveerrss  ooff  ssttaannddaarrdd  aanndd  ccoommpplleexx  rreehhaabbiilliittaattiioonn  ppoowweerr  
wwhheeeellcchhaaiirrss  aatt  lleeaasstt  9900  ppeerrcceenntt  ooff  tthhee  ttiimmee..          
SSuupppplliieerrss  rreeppoorrtteedd  ppeerrffoorrmmiinngg  ffeeww  ffoollllooww--uupp  oorr  ootthheerr  ttyyppeess  ooff  sseerrvviicceess  
FFoollllooww--uupp  aanndd  aallll  ootthheerr  sseerrvviicceess  aaccccoouunntteedd  ffoorr  99  ppeerrcceenntt  ooff  sseerrvviicceess  
rreeppoorrtteedd  ffoorr  ssttaannddaarrdd  ppoowweerr  wwhheeeellcchhaaiirrss..7766    SSuupppplliieerrss  rreeppoorrtteedd  
ppeerrffoorrmmiinngg  mmaaiinntteennaannccee  oorr  rreeppaaiirrss  ffoorr  1111  ppeerrcceenntt  ooff  ssttaannddaarrdd  ppoowweerr  
wwhheeeellcchhaaiirrss..    TThheeyy  rreeppoorrtteedd  aaddjjuussttiinngg  55  ppeerrcceenntt  ooff  ssttaannddaarrdd  ppoowweerr  
wwhheeeellcchhaaiirrss  iinn  tthhee  mmoonntthhss  ffoolllloowwiinngg  ddeelliivveerryy..  
FFoollllooww--uupp  aanndd  aallll  ootthheerr  sseerrvviicceess  aaccccoouunntteedd  ffoorr  1177  ppeerrcceenntt  ooff  sseerrvviicceess  
rreeppoorrtteedd  ffoorr  ccoommpplleexx  rreehhaabbiilliittaattiioonn  ppoowweerr  wwhheeeellcchhaaiirr  ppaacckkaaggeess..7777    
SSuupppplliieerrss  rreeppoorrtteedd  ppeerrffoorrmmiinngg  mmaaiinntteennaannccee  oorr  rreeppaaiirrss  oonn  3311  ppeerrcceenntt  ooff  
ccoommpplleexx  rreehhaabbiilliittaattiioonn  ppoowweerr  wwhheeeellcchhaaiirrss  ssuupppplliieedd  aass  ppaarrtt  ooff  ppaacckkaaggeess..    
TThheeyy  rreeppoorrtteedd  aaddjjuussttiinngg  2277  ppeerrcceenntt  ooff  tthheessee  wwhheeeellcchhaaiirrss..      
CCoommpplleexx  rreehhaabbiilliittaattiioonn  ppoowweerr  wwhheeeellcchhaaiirr  ssuupppplliieerrss  rreeppoorrtteedd  ppeerrffoorrmmiinngg  
ttwwiiccee  aass  mmaannyy  sseerrvviicceess  aass  ssttaannddaarrdd  ppoowweerr  wwhheeeellcchhaaiirr  ssuupppplliieerrss  aatt  ttiimmeess  
ootthheerr  tthhaann  tthhee  ddaayy  ooff  ddeelliivveerryy  
SSuupppplliieerrss  rreeppoorrtteedd  ppeerrffoorrmmiinngg  aann  aavveerraaggee  ooff  ttwwoo  pprreeddeelliivveerryy,,  ffoollllooww--uupp,,  
aanndd  ootthheerr  sseerrvviicceess  ffoorr  ssttaannddaarrdd  ppoowweerr  wwhheeeellcchhaaiirrss..    TThheeyy  rreeppoorrtteedd  
ppeerrffoorrmmiinngg  aann  aavveerraaggee  ooff  ffoouurr  ooff  tthheessee  sseerrvviicceess  iinn  ccoonnjjuunnccttiioonn  wwiitthh  
pprroovviiddiinngg  ccoommpplleexx  rreehhaabbiilliittaattiioonn  ppoowweerr  wwhheeeellcchhaaiirrss  tthhaatt  wweerree  ppaarrtt  ooff  aa  
ppaacckkaaggee,,  ttwwiiccee  tthhee  nnuummbbeerr  tthhaatt  ssuupppplliieerrss  ooff  ssttaannddaarrdd  ppoowweerr  
wwhheeeellcchhaaiirrss  rreeppoorrtteedd..            
SSuupppplliieerrss  ooff  ccoommpplleexx  rreehhaabbiilliittaattiioonn  ppoowweerr  wwhheeeellcchhaaiirr  ppaacckkaaggeess  wweerree  
mmoorree  lliikkeellyy  ttoo  rreeppoorrtt  ppeerrffoorrmmiinngg  oorr  ppaarrttiicciippaattiinngg  iinn  bbeenneeffiicciiaarryy  
eevvaalluuaattiioonnss,,  pprroovviiddiinngg  eeqquuiippmmeenntt  ttrriiaallss  ffoorr  tthhee  bbeenneeffiicciiaarriieess,,  aanndd  
ccoonndduuccttiinngg  hhoommee  aasssseessssmmeennttss  pprriioorr  ttoo  ddeelliivveerriinngg  tthhee  wwhheeeellcchhaaiirrss..    
  
7755  TThhee  ddiiffffeerreenncceess  aarree  ssttaattiissttiiccaallllyy  ddiiffffeerreenntt  ffrroomm  ootthheerr  dduurriinngg--ddeelliivveerryy  sseerrvviicceess  aatt  tthhee      
95-percent confidence level in a multiple comparison test using a Bonferroni threshold of 
0.0125.   
76 We collected data on follow-up services performed during a minimum of 6 months and 
an average of 9 months after the wheelchairs delivery. 
77 Ibid. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  21   
   
 
F I N D I N G S  
Suppliers were also more likely to report performing repairs and 
maintenance and making follow-up adjustments for complex 
rehabilitation power wheelchair packages than for standard power 
wheelchairs.78 79  Appendix F compares the frequency with which 
suppliers reported performing each type of service, by wheelchair type.   
Suppliers reported performing required services most of the time, as well as 
other services that were performed as needed 
Suppliers reported performing three required servicesdelivering the 
power wheelchairs, providing education, and assessing the homes of 
beneficiariesmost of the time.  Suppliers provided proof of delivery for 
100 percent of power wheelchairs.  Suppliers of both power wheelchair 
types also reported educating over 90 percent of beneficiaries or 
caregivers on the use or maintenance of their power wheelchairs.  
Suppliers of 89 percent of standard power wheelchairs and 80 percent of 
complex rehabilitation power wheelchairs reported conducting home 
assessments to verify that the beneficiaries could adequately maneuver 
the power wheelchairs.   
In addition, suppliers reported performing other services that Medicare 
requires on an as-needed basis.  For example, suppliers of 
approximately one-tenth of standard power wheelchairs and one-third 
of complex rehabilitation power wheelchairs reported performing 
repairs and maintenance on the power wheelchairs.      
 
78 The differences are statistically significant at the 95-percent confidence level using a 
Bonferroni threshold of 0.0036.  See Appendix C for difference estimates, confidence 
intervals, and p-values.   
79 Suppliers were more likely to report performing home assessments during delivery of 
standard power wheelchairs than during delivery of complex rehabilitation power 
wheelchairs. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  22   
   
 
 RR EE CC OO MM MM EE NN DD AA TT II OO NN S   
Prior OIG evaluations found that consumers can purchase power 
wheelchairs at lower prices than Medicare and its beneficiaries.  The 
findings of this evaluation suggest that CMSs power wheelchair 
payments and, therefore, its current methodology for developing power 
wheelchair fee schedule amounts do not reflect actual acquisition costs.  
Medicares fee schedule amounts should be sufficient to cover costs that 
suppliers incur to purchase and supply power wheelchairs to 
beneficiaries.  However, Medicare and its beneficiaries should not pay 
amounts that result in suppliers excess profit.   
Based on manufacturer invoices and other documentation we collected 
from suppliers, we found that Medicare and its beneficiaries paid almost 
four times the average amount paid by suppliers to acquire standard 
power wheelchairs during the first half of 2007.  Suppliers purchased 
standard power wheelchairs for an average of $1,048 and reported 
performing an average of five services in conjunction with providing 
them in the first half of 2007.  Because Medicare allowed an average of 
$4,018 for standard power wheelchairs, Medicare and its beneficiaries 
paid suppliers an average of $2,970 beyond the suppliers acquisition 
cost to perform an average of five services and cover general business 
costs.   
Medicares average allowed amount for standard power wheelchairs in 
the first half of 2007 ($4,018) was 383 percent of suppliers average 
acquisition cost.  In comparison, Medicares average payment under the 
Competitive Bidding Acquisition Program ($3,073) would have been   
293 percent of suppliers average acquisition cost.  Although Medicares 
fee schedule amount was reduced to $3,641 to offset the Competitive 
Bidding Acquisition Programs delay, the 2009 fee schedule amount 
exceeds the average competitively bid price by $568.   
Medicare and its beneficiaries paid almost two times the average 
amount paid by suppliers to acquire complex rehabilitation power 
wheelchair packages during the first half of 2007.  Suppliers purchased 
complex rehabilitation power wheelchair packages for an average of 
$5,880 and reported performing an average of seven services in the first 
half of 2007.  Because Medicare allowed an average of $11,507 for 
complex rehabilitation power wheelchair packages, Medicare and its 
beneficiaries paid suppliers an average of $5,627 beyond the suppliers 
acquisition cost to perform an average of seven services and cover 
general business costs.   
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  23   
   
 
R E C O M M E N D A T I O N  
Based on these findings, we recommend that CMS:  
Determine Whether Medicares Fee Schedule Amounts for 
Standard and Complex Rehabilitation Power Wheelchairs Should 
Be Adjusted  
CMS should consider the following methods for reviewing fee schedule 
amounts: 
  Use information from the Competitive Bidding Acquisition Program to adjust 
fee schedule amounts.  Medicares current fee schedule amount for a 
standard power wheelchair exceeds the average price established 
through competitive bidding by $568.  Medicare and its beneficiaries 
would have paid an average of $3,073 under the original round of 
the Competitive Bidding Acquisition Program.  Under the 2009 fee 
schedule, which was reduced by 9.5 percent to offset the Competitive 
Bidding Acquisition Programs delay, Medicare and its beneficiaries 
pay up to $3,641.  CMS should consider using the bids submitted by 
suppliers when determining whether fee schedule amounts are 
appropriate.   
  Seek legislation to ensure that fee schedule amounts are reasonable and 
responsive to market changes.  CMSs current methodology for 
developing power wheelchair fee schedule amounts is based on 
MSRPs.  In May 2006, CMS proposed a revised methodology for 
setting fee schedule amounts that would not rely upon MSRPs.  
CMS should continue to develop a new methodology that better 
reflects actual acquisition costs and is responsive to the market, 
and use notice and comment rulemaking to implement it.  Upon 
doing so, CMS should consider seeking legislation to apply the 
new methodology to existing power wheelchair fee schedule 
amounts.    
  Use the results of this evaluation to determine whether an inherent 
reasonableness review is appropriate.  CMS may use its inherent 
reasonableness authority to set special payment limits when 
payments are grossly higher or lower than acquisition costs.  
CMS should consider using its inherent reasonableness authority 
to determine whether power wheelchair fee schedule amounts are 
appropriate.        
When setting fee schedule amounts, CMS should consider that 
supplier acquisition costs and services differ by power wheelchair 
type.  Standard power wheelchairs cost suppliers less, as a percentage 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  24   
   
 
R E C O M M E N D A T I O N  
of their Medicare payment, than complex rehabilitation power 
wheelchair packages.  In addition, suppliers of complex rehabilitation 
power wheelchair packages reported performing more services, 
including twice as many at times other than the day of delivery, than 
suppliers of standard power wheelchairs.   
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
CMS concurred with our recommendation and noted that the report 
provides valuable insight on suppliers average acquisition costs for 
standard and complex rehabilitation power wheelchairs.  It also noted 
that it has worked on a number of important regulatory and 
administrative initiatives related to the coding, payment, and coverage 
of power wheelchairs in response to the significant growth in 
expenditures for these items under the Medicare program.  The goals of 
these initiatives are to ensure that beneficiaries have access to the 
appropriate technology and to improve the appropriateness of 
Medicares payment rates for this equipment. 
CMS also provided comments about each suggested method for 
determining whether Medicares fee schedule amounts for standard and 
complex rehabilitation power wheelchairs should be adjusted.  In 
response to our first suggested method, CMS concurred that it has the 
authority to use the payment amounts determined under the 
Competitive Bidding Acquisition Program to adjust the existing 
Medicare fee schedule amounts for DME items in areas not included in 
a competitive bidding program.  CMS stated that it will be conducting 
rulemaking to implement a detailed methodology and process for 
applying this authority. 
In response to our second suggested method, CMS stated that it will 
consider this method carefully.  CMS noted that, although it is 
considering taking steps to revise the administrative process for        
gap-filling fee schedule amounts for new DME items, new legislation 
may not be required to make these revisions. 
In response to our third suggested method, CMS did not concur with 
using its inherent reasonableness authority.  CMS noted that it is not 
likely to consider undertaking a review of the standard and complex 
rehabilitation power wheelchair fee schedule amounts until the results 
of the supplier bids under the Competitive Bidding Acquisition Program 
have been assessed. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  25   
   
 
R E C O M M E N D A T I O N  
CMS also stated that it will consider that supplier purchase prices and 
services differ by power wheelchair type when setting fee schedule 
amounts.   
We did not make changes to the report based on CMS comments.  We 
support CMSs efforts to address these issues and encourage it to 
continue to make progress in these areas.  The full text of CMSs 
comments is provided in Appendix G. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  26   
   
 
 A P P E N D I X ~ A  
 
Population and Sample Sizes, by Category 
Population  Sample 
 Stratum  Definition  Claims  Expenditures  Suppliers  Claims  Expenditures  Suppliers 
Standard power wheelchairs 
1  supplied by low-volume suppliers  7,223  $28,949,132  2,352  125  $499,152  124 
Standard power wheelchairs 
2  supplied by high-volume suppliers  35,910  $144,354,060  716  125  $502,989  94 
1 and 2  All standard power wheelchairs   43,133 $173,303,192  3,068  250  $1,002,141  218 
Complex rehabilitation power 
3  wheelchairs*  3,001  $16,010,906  1,064  125  $665,200  113 
  Total  46,134 $189,314,098  3,362**  375  $1,667,341  325** 
* Procedure codes K0835K0864. 
** Suppliers figures do not sum to totals because of overlap (some suppliers in our sample provided both standard and complex rehabilitation power wheelchairs).    
Source:  Office of Inspector General analysis of Medicare power wheelchair claims with dates of service from January 1 to June 30, 2007. 
 
 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  27   
   
 
 A P P E N D I X ~ B  
 
Complex Rehabilitation Power Options and Accessories, From Sample 
Number of 
Chairs Item  Fee   
Supplied  Schedule 
HCPCS  With  Description of Complex Rehabilitation Power Option and Accessory Amount* 
Manual swingaway, retractable or removable mounting hardware for joystick, other control interface or 
E1028  60  positioning accessory $207  
E0955  51  Headrest, cushioned, any type, including fixed mounting hardware, each $202 
E1002  40  Power seating system, tilt only $4,113 
Positioning wheelchair back cushion, planar back with lateral supports, width less than 22 inches, any 
E2620  38  height, including any type mounting hardware $548 
Electronic connection between wheelchair controller and two or more power seating system motors, 
including all related electronics, indicator feature, mechanical function selection switch, and fixed 
E2311  24  mounting hardware $2,369 
E1010  21  Addition to power seating system, power leg elevation system, including legrest, pair $1,144 
E1007  19  Power seating system, combination tilt and recline, with mechanical shear reduction $8,741 
K0734  17  Skin protection wheelchair seat cushion, width less than 22 inches, any depth $331 
E2607  13  Skin protection and positioning wheelchair seat cushion, width less than 22 inches, any depth $290 
Electronic connection between wheelchair controller and one power seating system motor, including all 
E2310  12  related electronics, indicator feature, mechanical function selection switch, and fixed mounting hardware $1,170 
E0956  11  Lateral trunk or hip support, any type, including fixed mounting hardware, each $99 
General use wheelchair back cushion, width less than 22 inches, any height, including any type mounting 
E2611  8  hardware $312 
Positioning wheelchair back cushion, posterior-lateral, width less than 22 inches, any height, including any 
E2615  8  type mounting hardware $452 
K0736  8  Skin protection and positioning wheelchair seat cushion, adjustable, width less than 22 inches, any depth $334 
E2209  7  Arm trough, with or without hand support, each $107 
K0108**  7  Wheelchair component or accessory not otherwise specified NA 
E2617**  6  Custom-fabricated wheelchair back cushion, any size, including any type mounting hardware NA 
Positioning wheelchair back cushion, posterior, width less than 22 inches, any height, including any type 
E2613  5  mounting hardware $393 
E2373**  3  Hand or chin control interface, compact remote joystick, proportional, including fixed mounting hardware NA 
E2605  3  Positioning wheelchair seat cushion, width less than 22 inches, any depth $269 
E1004  2  Power seating system, recline only, with mechanical shear reduction $4,869 
E1008  2  Power seating system, combination tilt and recline, with power shear reduction $8,742 
Head control interface, proximity switch mechanism, nonproportional, including all related electronics, 
E2330  2  mechanical stop switch, mechanical direction change switch, head array, and fixed mounting hardware $3,422 
K0735  2  Skin protection wheelchair seat cushion, adjustable, width 22 inches or greater, any depth $422 
K0737  2  Skin protection and positioning wheelchair seat cushion, adjustable, width 22 inches or greater, any depth $42 
Hand control interface, multiple mechanical switches, nonproportional, including all related electronics, 
E2322  1  mechanical stop switch, and fixed mounting hardware $1,410 
Expandable controller, including all related electronics and mounting hardware, upgrade provided at initial 
E2377  1  issue $486 
E2392**  1  Solid (rubber/plastic) caster tire with integrated wheel, any size, replacement only, each NA 
E2399**  1  Not otherwise classified interface, including all related electronics and any type mounting hardware NA 
E2609**  1  Custom-fabricated wheelchair seat cushion, any size NA 
* Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 2007 Fee Schedule.  (Amounts have been rounded to the nearest dollar.) 
** Reimbursement amount determined on a case-by-case basis. 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  28   
   
 A   P P E N D I X ~ C  
Estimates and Confidence Intervals for Power Wheelchair Acquisition Costs 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval 
High-Volume Standard Power Wheelchair Suppliers 
Average acquisition cost  99  $1,006  $965-$1,047 
Average Medicare-allowed amount ($4,020) as a 
percentage of acquisition cost   99  400%  384%-417% 
Low-Volume Standard Power Wheelchair Suppliers 
Average acquisition cost  102  $1,249  $1,187-$1,311 
Average Medicare-allowed amount ($4,008) as a 
percentage of acquisition cost  102  321%  306%-338% 
All Standard Power Wheelchairs Suppliers  
Average acquisition cost  201 $1,048  $1,012-$1,083 
Average Medicare-allowed amount during the first half of 
2007 ($4,018) as a percentage of acquisition cost   201 383%  371%-397% 
Average Medicare payment under Competitive Bidding 
Acquisition Program ($3,073) as a percentage of 
acquisition cost  201  293%  284%-304% 
January 2009 Medicare fee schedule amount ($3,641) as 
a percentage of acquisition cost   201 347%  336%-360% 
Beneficiarys average copayment ($804) as a percentage 
of acquisition cost  201 77%  74%-79% 
Complex Rehabilitation Power Wheelchair Packages 
Average acquisition cost for package  71  $5,880  $5,231-$6,529 
Average Medicare-allowed amount during the first half of 
2007 ($11,507) as a percentage of acquisition cost  71  196%  176%-220% 
Medicare-allowed amount based on January 2009 fee 
schedule ($10,414) as a percentage of acquisition cost   71  177%  160%-199% 
Beneficiarys average copayment ($2,301) as a 
percentage of average  acquisition cost  71  39%  35%-44% 
Average acquisition cost for power wheelchair  71  $2,565  $2,389-$2,740 
Average Medicare-allowed amount for power wheelchair  
during the first half of 2007 ($5,354) as a percentage of 
acquisition cost  71  209%  195%-224% 
Average acquisition cost for power options  71  $3,316  $2,748-$3,883 
Average Medicare-allowed amount for power options and 
accessories during the first half of 2007 ($6,153) as a 
percentage of acquisition cost  71  186%  158%-224% 
Comparison 
Comparison of acquisition cost for standard power 
wheelchairs paid by high- and low-volume suppliers  201  $243  $170-$317 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  29   
   
 
 
A P P E N D I X ~ C  
 
Estimates and Confidence Intervals for Average Number of Supplier Services, by Category 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval 
All Standard Power Wheelchairs Suppliers 
Average number of services suppliers reported performing prior to delivery  201  1.4  1.3-1.6 
Average number of services suppliers reported performing during delivery  201 3.4  3.2-3.6 
Average number of follow-up services suppliers reported performing  201 0.2  0.1-0.4 
Average number of responses to beneficiary questions, other, and 
uncategorized services suppliers reported performing  201 0.2  0.1-0.3 
Average number of all services suppliers reported performing   201 5.3  5.0-5.6 
High-Volume Standard Power Wheelchair Suppliers 
Average number of services suppliers reported performing prior to delivery  99  1.4  1.2-1.6 
Average number of services suppliers reported performing during delivery  99  3.6  3.4-3.8 
Average number of follow-up services suppliers reported performing  99  0.3  0.1-0.4 
Average number of responses to beneficiary questions, other, and 
uncategorized services suppliers reported performing  99  0.2  0.1-0.3 
Average number of all services suppliers reported performing   99  5.4  5.1-5.8 
Low-Volume Standard Power Wheelchair Suppliers 
Average number of services suppliers reported performing prior to delivery  102 1.6  1.4-1.8 
Average number of services suppliers reported performing during delivery  102 2.5  2.3-2.7 
Average number of follow-up services suppliers reported performing  102 0.2  0.1-0.4 
Average number of responses to beneficiary questions, other, and 
uncategorized services suppliers reported performing   102 0.2  0.1-0.3 
Average number of all services suppliers reported performing    102 4.6  4.3-5.0 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  30   
   
   
A P P E N D I X ~ C  
 
Estimates and Confidence Intervals for Average Number of Supplier Services, by Category 
(Continued) 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval 
Complex Rehabilitation Power Wheelchair Packages 
Average number of services suppliers reported performing prior to delivery  71  2.4  2.1-2.7 
Average number of services suppliers reported performing during delivery  71  3.0  2.8-3.2 
Average number of follow-up services suppliers reported performing  71  0.7  0.5-1.0 
Average number of responses to beneficiary questions, other, and 
uncategorized services suppliers reported performing  71  0.4  0.2-0.6 
Average number of all services suppliers reported performing  71  6.5  6.0-7.1 
Complex Rehabilitation Power Wheelchairs With No Power Options or Accessories 
Average number of services suppliers reported performing prior to delivery  30  1.8  1.3-2.2 
Average number of services suppliers reported performing during delivery  30 2.5  2.2-2.8 
Average number of follow-up services suppliers reported performing  30 0.4  0.1-0.8 
Average number of responses to beneficiary questions, other, and 
uncategorized services suppliers reported performing  30 0.3  0.1-0.5 
Average number of all services suppliers reported performing  30 5.0  4.3-5.7 
All Complex Rehabilitation Power Wheelchairs 
Average number of services suppliers reported performing prior to delivery  101  2.2  2.0-2.5 
Average number of services suppliers reported performing during delivery  101 2.8  2.7-3.0 
Average number of follow-up services suppliers reported performing  101 0.7  0.5-0.9 
Average number of responses to beneficiary questions, other, and 
uncategorized services suppliers reported performing  101 0.4  0.2-0.5 
Average number of all services suppliers reported performing  101 6.1  5.6-6.5 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  31   
   
 
 
A P P E N D I X ~ C  
 
Estimates and Confidence Intervals for Supplier Service Categories 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval 
  
All Standard Power Wheelchairs Suppliers 
 
Predelivery services, as percentage of all services   1,008  27.3%  25.2%-29.5% 
During-delivery services, as percentage of all services   1,008  64.2%  61.4%-67.0% 
Follow-up services, as percentage of all services   1,008  4.7%  2.8%-6.7% 
Responses to beneficiary questions, other, and uncategorized services, as 
percentage of all services   1,008  3.8%  2.4%-5.1% 
Complex Rehabilitation Power Wheelchair Packages 
Predelivery services, as percentage of all services   464  37.1%  34.0-40.1% 
During-delivery services, as percentage of all services   464  45.5%  42.2%-48.8% 
Follow-up services, as percentage of all services   464  11.4%  8.2%-14.7% 
Beneficiary questions, other, and uncategorized services, as percentage of all 
services   464  6.0%  3.7%-8.4% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  32   
   
 
 
A P P E N D I X ~ C  
Estimates and Confidence Intervals for Percentage of Claims That Involved Supplier Services 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate Interval 
 
All Standard Power Wheelchair Suppliers 
A P P E N D I X ~ C  
Percentage of power wheelchairs the supplier reported assembling  201  64.0%  55.7%-71.5% 
Percentage of power wheelchairs for which the supplier reported performing a patient evaluation  201  46.6%  38.3%-55.0% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment prior 
to delivery   201  27.3%  21.1%-34.7% 
Percentage of power wheelchairs for which the supplier reported providing for an equipment trial  201  5.9%  3.1%-10.9% 
Percentage of power wheelchairs the supplier reported delivering  201  99.8%  98.8%-100.0% 
Percentage of power wheelchairs for which the supplier reported educating the beneficiary or 
caregiver  201  93.1%  89.2%-95.7% 
Percentage of power wheelchairs for which the supplier reported making adjustments during delivery  201  61.0%  52.7%-68.6% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment 
during delivery  201  54.9%  46.7%-62.8% 
Percentage of power wheelchairs for which the supplier reported testing the wheelchairs functionality 
during delivery   201  23.8%  17.3%-31.8% 
Percentage of power wheelchairs for which the supplier reported performing repairs or maintenance  201  10.9%  6.5%-17.6% 
Percentage of power wheelchairs for which the supplier reported performing follow-up adjustment(s)  201  5.4%  2.8%-10.0% 
Percentage of power wheelchairs for which the supplier reported responding to a beneficiary or 
caregiver question about the power wheelchair  201  4.4%  2.0%-9.2% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment that 
could not be categorized as prior to or during delivery  201  7.2%  3.8%-13.2% 
Percentage of power wheelchairs for which the supplier reported performing a service not referenced   201  8.2%  4.8%-13.8% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment  201  89.4%  83.2%-93.6% 
Complex Rehabilitation Power Wheelchair Packages 
Percentage of power wheelchairs the supplier reported assembling  71  66.2%  54.6%-76.1% 
Percentage of power wheelchairs for which the supplier reported performing a patient evaluation  71  74.6%  63.4%-83.4% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment prior 
to delivery   71  50.7%  39.3%-62.0% 
Percentage of power wheelchairs for which the supplier reported providing for an equipment trial  71  33.8%  23.9%-45.4% 
Percentage of power wheelchairs the supplier reported delivering  71  100.0%  95.1%-100.0% 
Percentage of power wheelchairs for which the supplier reported educating the beneficiary or 
caregiver  71  91.5%  82.5%-96.1% 
Percentage of power wheelchairs for which the supplier reported making adjustments during delivery  71  62.0%  50.3%-72.4% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment 
during delivery  71  23.9%  15.5%-35.1% 
Percentage of power wheelchairs for which the supplier reported testing the wheelchairs functionality 
during delivery   71  18.3%  11.0%-29.0% 
Percentage of power wheelchairs for which the supplier reported performing repairs or maintenance  71  31.0%  21.4%-42.5% 
Percentage of power wheelchairs for which the supplier reported performing follow-up adjustment(s)  71  26.8%  17.8%-38.1% 
Percentage of power wheelchairs for which the supplier reported responding to a beneficiary or 
caregiver question about the power wheelchair  71  7.0%  3.0%-15.8% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment that 
could not be categorized as prior to or during delivery  71  5.6%  2.1%-14.0% 
Percentage of power wheelchairs for which the supplier reported performing a service not referenced  71  19.7%  12.1%-30.5% 
Percentage of power wheelchairs for which the supplier reported performing a home assessment  71  80.3%  69.5%-87.9% 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  33   
   
 
 
A P P E N D I X ~ C  
 
Estimates and Confidence Intervals for Percentage of Claims That Involved Supplier Services (Continued) 
95-Percent 
Sample  Point  Confidence 
Estimate Description  Size  Estimate  Interval  P-Value 
Comparisons by Wheelchair Type 
Difference in percentage of power wheelchairs for which the supplier 
reported performing a patient evaluation  272  (28.1%)  (41.1%)-(15.1%)  <0.001 
Difference in percentage of power wheelchairs for which the supplier 
reported providing for an equipment trial  272 (27.9%)  (39.4%)-(16.5%)  <0.001 
Difference in percentage of power wheelchairs for which the supplier 
reported performing a home assessment prior to delivery   272 (23.4%)  (36.7%)-(10.0%)  0.001 
Difference in percentage of power wheelchairs for which the supplier 
reported performing a home assessment during delivery  272 31.0%  18.2%-43.7%  <0.001 
Difference in percentage of power wheelchairs for which the supplier 
reported performing repairs or maintenance  272 (20.1%)  (32.0%)-(8.2%)  0.001 
Difference in percentage of power wheelchairs for which the supplier 
reported performing follow-up adjustment(s)  272 (21.4%)  (32.1%)-(10.7%)  <0.001 
Note:  Parentheses indicate a negative value. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  34   
   
 
 A P P E N D I X ~ D  
 
Supplier Service Categories and Descriptions  
Category  Service  Service Description 
Supplier employee performed or participated in an evaluation of the 
Evaluate beneficiary  beneficiary 
Provide for equipment trial  Supplier provided trial power wheelchair(s) to beneficiary 
Predelivery 
services  Assemble wheelchair  Supplier assembled wheelchair 
Supplier evaluated home to verify that the beneficiary could adequately 
maneuver the wheelchair, considering physical layout, doorway width, 
Perform home assessment *  doorway thresholds, and surfaces (may also be performed during delivery) 
Deliver wheelchair *  Supplier delivered the power wheelchair to beneficiary 
Adjust wheelchair  Supplier adjusted power wheelchair at time of delivery 
During- Supplier educated the beneficiary or caregiver on the power wheelchairs 
delivery  Educate beneficiary *  use, safety, or maintenance  at time of delivery 
services 
Supplier tested the power wheelchairs functions, such as brakes or 
Test wheelchair  electronics system, at time of delivery 
Perform home assessment *  (May also be performed prior to delivery) 
Supplier performed maintenance on or replaced the power wheelchair or 
Follow-up 
Perform repair/maintenance**  related accessories 
services 
Adjust wheelchair  Supplier adjusted the power wheelchair or accessories 
Supplier responded to question from beneficiary or caregiver regarding the 
Respond to beneficiary question **  power wheelchair 
(Documentation was insufficient to categorize as either a pre- or during-
Perform home assessment *  delivery service) 
Supplier loaned mobility equipment to beneficiary to use while waiting for 
Loan equipment  equipment 
Move wheelchair  Moved wheelchair for beneficiary from home to nursing facility 
Provide instructions  Instructions provided to beneficiary outside delivery 
Other 
Coordinate evaluation  Supplier coordinated evaluation for beneficiary 
services 
Services not  Perform administrative  Supplier performed activity related to administrative processing of 
referenced in  services  beneficiary or equipment 
request  Followup with  Follow-up contact with beneficiary initiated by supplier (does not include 
beneficiary  power wheelchair adjustment or maintenance) 
Provide 
part/accessory with no 
charge  Supplier provided part or accessory with no charge to beneficiary 
Perform purchasing 
activity  Supplier performed activity related to purchase of the device 
* Service is required by Medicare coverage policy for every power wheelchair. 
** Service is required to be performed as needed by Medicare coverage policy. 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  35   
   
 
 A P P E N D I X ~ E  
 
 
Median Supplier Acquisition Costs and Confidence Intervals 
Sample  Median Supplier  95-Percent Confidence 
Power Wheelchair  Sub-Type  Size  Acquisition Cost Interval 
Standard Power Wheelchairs 
High-volume suppliers  99  $930  $929-$985 
Low-volume suppliers  102  $1,168  $1,114-$1,201 
All suppliers  201  $969  $930-$1,052 
Complex Rehabilitation Power Wheelchair Packages 
Power wheelchair  71  $2,351  $2,273-$2,476 
Power options and accessories  71  $2,691  $2,402-$3,108 
Total package  71  $5,167  $4,813-$5,588 
Source:  Office of Inspector General analysis of supplier acquisition costs, 2008. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  36   
   
 A P P E N D I X ~ F  
 
 
Average Numbers of Supplier Services per Power Wheelchair, by Service Category  
Predelivery  During-Delivery  Follow-up  Other 
Power Wheelchair Sub-Type  Services  Services  Services  Services  All Services* 
Standard Power Wheelchairs 
High-volume suppliers  1.4  3.6  0.3  0.2 5.4
Low-volume suppliers  1.6  2.5  0.2  0.2 4.6
All suppliers  1.4  3.4  0.2  0.2 5.3
Complex Rehabilitation Power Wheelchairs 
Packages  2.4  3.0  0.7  0.4 6.5
Wheelchairs supplied with no power 
options or accessories**  1.8  2.5  0.4  0.3 5.0
All complex rehabilitation power 
wheelchairs  2.2  2.8  0.7  0.4 6.1
* Column may not sum to total because of rounding.   
** These estimates sample size consists of 30 claims.  See Appendix C for the confidence intervals.  
Source:  Office of Inspector General analysis of supplier services, 2008. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  37   
   
 
 
A P P E N D I X ~ F  
 
 
Supplier Service Frequencies 
Percentage of Power Wheelchairs for Which Supplier 
Performed Service 
All Standard 
Power  Complex Rehabilitation Power 
Category  Service  Wheelchairs  Wheelchair  Packages 
Assemble wheelchair  64%  66% 
Predelivery  Evaluate beneficiary  47%  75% 
services 
Perform home assessment * **  27%  51% 
Provide for equipment trial   6%  34% 
Deliver wheelchair *  100%  100% 
Educate beneficiary *  93%  92% 
During-
delivery  Adjust wheelchair  61%  62% 
services 
Perform home assessment * **  55%  24% 
Test wheelchair  24%  18% 
Follow-up  Perform repair/maintenance*  11%  31% 
services  Adjust wheelchair  5%  27% 
Respond to beneficiary question*  4%  7% 
Other 
Perform home assessment * **  7%  6% 
services 
Services not referenced in request  8%  20% 
* Service is required by Medicare coverage policy. 
** We determined whether home assessments were performed prior to or during delivery.  We included as an other service those with 
insufficient documentation to categorize as a pre- or during-delivery service.  
 
 
 
 
 
 
 
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  38  x
A P PEN 0 G
AGENCYCOMMENTS
DEPARTMENTOFHEALTH& HUMANSERVICES CenlersforMedicare&MedicaidServices
Administrator
Washington,DC 20201
DATE: 'AUG 072009
T(!): Daniel R. Levinson
,InspectorGeneral
FROM: CharlencFrizzcra
ActingAdministrator
SUBJECT: OfficeofInspectorGeneral'sDraftReport:"PowerWheelchairsintheMedicare
Program: SupplierAcquisitionCostsandServices"(OEl-04-07-00400)
ThankyoufortheopportunitytoreviewandcommentontheOfficeofInspectorGeneral's
(OIG)draftreportentitled,"PowerWheelchairsintheMedicareProgram: SupplierAcquisition
CostsandServices." Thereportcomparessuppliers'averageacquisitioncostsforstandardand
complexrehabilitationpowerwheelchairswithMedicare'saveragefeescheduleamountslor
2007and2009andtheaveragepaymentamountforthestandardpowerwheelchairderived
underthe2008RoundOneDurableMedicalEquipment,Prosthetics,Orthotics,andSupplies
(DMEPOS)CompetitiveBiddingAcquisitionProgram. Alsodetai.ledwithinthereportisthe
natureand frequencyoftheservicesperformedbythesupplierbefore,during,andafterthe
deliveryofapowerwheelchair.
[nrecentyears,theCentersforMedicare& MedicaidServices(CMS)hasbeenworkingona
numberofimpo11antregulatoryandadministrativeinitiativesrelatedtothecoding,payment,and
coverageofpowerwheelchairsinresponsetothesignificantgrowthinexpendituresforthese
itemsundertheMedicareprogram. Thegoalsoftheseinitiativesaretoensurethatbeneficiaries
haveaccesstotheappropriatetechnologytomeettheirneedsandtoimprovetheappropriateness
ofMedicare'spaymentratesforthisequipment. RevisedHealthcarcCommonProcedure
CodingSystem(HCPCS)codesandproducttestingrequirementsforpowerwheelchairswere
implementedin2006toensurethatHCPCScodesreflectcurrenttechnologyandtogroup
wheelchairproductsbasedonindustrystandardsforperfomlaneeanddurability. Thefee
scheduleamountsforthesecodeswereestablishedinaccordancewiththerulessetforth in
Section 1834(a)oftheSocialSecurityAct(theAct)andwerebasedonmanufacturer-suggested
retailprices.
AnotherimportantCMSinitiativerelatedtothepaymentforpowerwheelchairswasthe
implementationoftheRoundOneDMEPOSCompetitiveRiddingAcquisitionPrograminJuly
2008. Supplierssubmittedbidstoestablishpaymentamountsforstandardandcomplex
rehabilitationwheelchairs,alongwithotherDMEPOSitems,in 10competitivebiddingareas
acrosstheNation. Thebiddingcompetitionresultedinpaymentratesforstandardandcomplex
rehabilitationwheelchairsthatwere,onaverage,21 percentand 15percenllower,respectively,
OEI040700400 POWER WHEELCHAIRS IN THE MEDICARE PROGRAM: SUPPLIER ACQUISITION COSTS AND SERVICES 39  
   
 
 
A P P E N D I X ~ G  
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  40   
   
 
 
A P P E N D I X ~ G  
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  41   
   
 
 
A P P E N D I X ~ G  
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  42   
   
 
 A C K N O W L E D G M E N T S  
 
This report was prepared under the direction of Dwayne F. Grant, 
Regional Inspector General in the Atlanta regional office.   
Mina Zadeh served as the team leader for this study, and                
Sarah Ambrose served as the lead analyst.  Other principal Office of 
Evaluation and Inspections staff from the Atlanta regional office who 
contributed to this report include Peggy Daniel; central office staff who 
contributed include Berivan Demir, Kevin Farber, and Scott Manley.  
Robert A. Vito and Carolyn Kenline from the Philadelphia and Boston 
regional offices also contributed.  
 
 
 
 
  OEI-04-07-00400  POWER WHEELCHAIRS IN THE MEDICARE PROGRAM:  SUPPLIER ACQUISITION COSTS AND SERVICES  43