DEPARTMENT OF HEALTH AND HUMA..N SERVICES 

OFFICE OF INSPECTOR GENERAL 

WASHlNGTON, DC 2020 I 

SEP 0 5 2013 


TO: Marilyn Tavenner 

Administrator 


Centers for Medicare & Medicaid Services 


FROM: Stuart Wright 

Deputy Inspector General 

for Evaluation and Inspections 

SUBJECT: 	 Memorandum Report: Medicaid DMEPOS Costs May Be Exceeding 

Medicare Costs in Competitive Bidding Areas, OEI-06-13-00470 

This memorandum report provides an example of potential Medicaid savings under a 

provision in the President's Federal Fiscal Year (FFY) 2014 budget proposal to limit 

Federal reimbursement for State Medicaid spending on items in the category of durable 

medical equipment, prosthetics, orthotics, and supplies (DMEPOS) to what Medicare 

would have paid. We compared payment amounts for the Texas Medicaid program and 

the Medicare DMEPOS Competitive Bidding Program by examining the FFY 2011 

fee-for-service payment amounts for 32 DMEPOS items covered by both programs. 1 The 

findings illustrate differences between the two in fee-for-service payment amounts for 

equipment and supplies and potential savings for the Dallas/Fort Worth area. 

SUMMARY 

We found that in FFY 2011, the Texas Medicaid fee-schedule amounts for 30 ofthe 

32 DMEPOS items exceeded the payment amounts under the Medicare DMEPOS 

Competitive Bidding Program. During this period, Texas Medicaid spent approximately 

$12 million on these 32 items in the Dallas/Fort Worth area. If it had used the payment 

amounts from the Medicare Competitive Bidding Program, Medicaid could have saved 

approximately $2 million (State and Federal shares combined) in the Dallas/Fort Worth 

area. In July 2013, the Medicare DMEPOS Competitive Bidding Program expanded to 

cover a total of 100 metropolitan areas nationwide. If the State Medicaid programs were 

to use the Medicare Competitive Bidding Program amounts-rather than the State 

Medicaid fee-schedule amounts-the States and the Federal Government could achieve 

savmgs. 

1 FFY 2011 began October I, 20 10, and ended September 30, 2011. 
 

 

 

 

 

Page 2 – Marilyn Tavenner 

BACKGROUND 

Medicaid 

The Medicaid program provides medical assistance to low-income individuals and those 

with disabilities. The Centers for Medicare & Medicaid Services (CMS) and the States 

jointly fund and administer Medicaid.2 Each State administers its Medicaid program in 

accordance with a CMS-approved State plan.3 Medicaid beneficiary participation has 

increased steadily in Texas over the last several years in fee-for-service and managed 

care. From State fiscal years (SFYs)4

 2008 to 2011, Texas Medicaid enrollment 

increased by 20 percent, from 4.2 million beneficiaries (3.3 million in fee-for-service, 

2.1 million in managed care) to 5.1 million beneficiaries (3.8 million in fee-for-service, 

2.6 million in managed care).5 

This increase in enrollment resulted in a corresponding increase in expenditures for 

DMEPOS. From SFYs 2008 to 2011, the Medicaid expenditures for DMEPOS in Texas 

increased by 48 percent, from $405 million ($347 million for fee-for-service and 

$58 million for managed care) to $600 million ($499 million for fee-for-service and 

$101 million for managed care).6 In SFY 2011, fee-for-service accounted for 83 percent 

of Texas Medicaid expenditures and managed care accounted for 17 percent.7 However, 

the proportion of services provided through managed care is growing, and on March 1, 

2012, Texas Medicaid began transitioning approximately 880,000 beneficiaries from 

fee-for-service to managed care.8 

States establish their Medicaid payment amounts for all services—including DMEPOS— 

working within Federal parameters to limit costs while ensuring access.9 The Social 

Security Act requires that States establish payments that are “consistent with efficiency, 

economy, and quality of care and are sufficient to enlist enough providers so that care and 

services are available under the plan at least to the extent that such care and services are 

available to the general population in the geographic area.”10 The President’s 

FFY 2014 budget proposal also emphasized cost containment by Medicaid programs, 

proposing “limiting Federal reimbursement for a State’s Medicaid spending on certain 

2

 The portion of the Medicaid program funded by the Federal government is known as the Federal Medical
 

Assistance Percentage (FMAP). The FFY 2011 FMAP for Texas was 61 percent. 74 Fed. Reg.
 

62315–62317 (Nov. 27, 2009). 

3

 Social Security Act (SSA), Title XIX. 4

 In Texas, the SFY differs from the FFY, running from September 1 to August 31.
 5

 Texas Health and Human Services Commission (HHSC), SFY 2008 to SFY 2012 Texas Medicaid
 

Eligibility File. Medicaid beneficiaries may be enrolled in both fee-for-service and managed care during
 

the year. Therefore, the number of beneficiaries in the former plus the number of beneficiaries in the latter 

exceeds the total number of beneficiaries. 

6

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

7

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

8

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

January/February 2012. 

9

 CMS, Fee for Service. Accessed at http://www.medicaid.gov/ on August 21, 2012. 10 SSA § 1902(a)(30)(A).
 

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Page 3 – Marilyn Tavenner 

DME services to what Medicare would have paid in the same State for the same 

services.”11 

The Texas Health and Human Services Commission (HHSC) administers Texas’s 

Medicaid program and sets Statewide fee-for-service payment amounts for DMEPOS. 

HHSC policy indicates that it sets amounts for covered DMEPOS items “equal to or a 

percentage of the Medicare reimbursement rate” for the procedure code on the Medicare 

fee schedule specific to Texas.12 For items not covered under Medicare and for items 

where the Medicare rate is deemed insufficient, HHSC uses other sources to determine 

Medicaid payment amounts. These sources can include reimbursement amounts for 

similar items within Texas, reimbursement amounts for the same or similar items in other 

States, and the costs shown on manufacturers’ invoices. Every 2 years, HHSC reviews 

Texas Medicaid payment amounts for DMEPOS to ensure that these amounts reflect 

established payment methodologies. To complete these reviews, HHSC conducts public 

hearings, solicits comments regarding the proposed payment amounts, and then publishes 

the final payment amounts.13 Once established, these payment rates apply statewide. 

Medicare DMEPOS Competitive Bidding 

On January 1, 2011, CMS implemented the first phase of the Medicare DMEPOS 

Competitive Bidding Program—known as the Round 1 Rebid—with the goals of 

reducing both program and beneficiary costs while ensuring access to items and 

services.14 The initial phase included selected DMEPOS items within nine competitive 

bidding areas (CBA). Each CBA includes a metropolitan area and the ZIP Codes 

surrounding it.15, 16 

On August 19, 2011, CMS announced that the program would be expanded to an 

additional 91 CBAs under Round 2, with new prices going into effect July 1, 2013.17 At 

the same time, CMS will expand the Competitive Bidding Program for mail-order 

11 To date, this proposal has not been enacted into law. CMS, Department of Health and Human Services 

Fiscal Year 2014 Justification of Estimates for Appropriations Committees, p. 151. Accessed at
 

http://www.cms.gov/ on April 25, 2013. See also CMS, Fiscal Year 2013 DHHS Legislative Proposal, 

CMS-2013-17, p. 27. 

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

13 HHSC Rate Analysis Department, Proposed Medicaid Payment Rates for Durable Medical Equipment,
 

Prosthetics, Orthotics and Supplies for: 1) Hospital Beds and Accessories (2) Incontinence Supplies 

(3) Miscellaneous Equipment and Supplies (4) Mobility Aids (5) Nutrition (Enteral and Parenteral) 

(6) Wheelchairs and Accessories. February 15, 2012. Accessed at http://www.hhsc.state.tx.us/ on June 19, 

2013. 

14 CMS, Medicare Claims Processing Manual, ch. 36, § 10. 15 CMS, Facts about the DMEPOS Competitive Bidding Program Round 1 Rebid Competitive Bidding
 

Areas (CBA). Accessed at http://www.dmecompetitivebid.com/ on August 21, 2012.
 16 The nine CBAs are: Charlotte, Gastonia, Concord (North Carolina and South Carolina); Cincinnati, 

Middletown (Indiana, Ohio, and Kentucky); Cleveland, Elyria, Mentor (Ohio); Dallas, Fort Worth,
 

Arlington (Texas); Kansas City (Kansas and Missouri); Miami, Fort Lauderdale, Pompano Beach (Florida);
 

Orlando, Kissimmee (Florida); Pittsburgh (Pennsylvania); and Riverside, San Bernardino, Ontario 

(California).

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

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

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470) 
 

 

 

 

 

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diabetic supplies to include all ZIP Codes in all parts of the United States.18 CMS 

estimates that over 10 years, the program will save Medicare $25.8 billion and will save 

Medicare beneficiaries $17.2 billion.19 

Using the bids submitted by selected suppliers, CMS sets a single payment amount for 

each DMEPOS item in each CBA that replaces the prior Medicare fee-schedule amount.20 

The DMEPOS items included in the Competitive Bidding Program are generally 

high-cost or high-volume products.21 DMEPOS items are grouped into product 

categories, with each product category consisting of multiple related items (see Table 1). 

Round 2 of the Competitive Bidding Program made several changes to the original 

product categories, such as expanding the standard mobility device category to include 

more items, adding a category for negative-pressure wound therapy pumps and related 

supplies and accessories, and eliminating the category of complex rehabilitative power 

wheelchairs.22 

Table 1: Medicare DMEPOS Competitive Bidding Product Categories 

Round 1 Rebid Product Categories Round 2 Product Categories 

 Oxygen, oxygen equipment, and supplies 

 Standard power wheelchairs, scooters, and related 

accessories 

 Complex rehabilitative power wheelchairs and related 

accessories (Group 2 only) 

 Mail-order diabetic supplies 

 Enteral nutrients, equipment, and supplies 

 Continuous Positive Airway Pressure devices and 

Respiratory Assist Devices, and related supplies and 

accessories 

 Hospital beds and related accessories 

 Walkers and related accessories 

 Support surfaces (Group 2 mattresses and overlays in 

Miami CBA only). 

 Oxygen supplies and equipment 

 Standard (power and manual) wheelchairs, scooters, 

and related accessories 

 Enteral nutrients, equipment and supplies 

 Continuous positive airway pressure, respiratory 

assist devices, and related supplies and accessories 

 Hospital beds and related accessories 

 Walkers and related accessories 

 Support surfaces (Group 2 mattresses and overlays) 

 Negative pressure wound therapy pumps and related 

supplies and accessories 

Sources: CMS, DMEPOS Competitive Bidding–Round 1 Rebid Product Categories and HCPCS Codes; accessed at 

http://www.dmecompetitivebid.com/ on August 21, 2012. Also see, CMS, Round 2 Items & Services; accessed at 

http://www.dmecompetitivebid.com/ on July 31, 2012. 

Previous OIG Work 

In previous reports, OIG found opportunities for savings by lowering payments for 

DMEPOS. A 2012 OIG report estimated that the Ohio Medicaid program could have 

achieved savings of approximately $8 million during SFY 2011 by establishing a 

competitive bidding program or through the use of manufacturer rebates for one type of 

18 CMS, Competitive Bidding Areas (CBAs). Accessed at http://www.dmecompetitivebid.com/ on 

July 31, 2012. 

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

Appropriations Committees. Accessed at http://www.cms.gov/ on April 25, 2013. (p. 151) 20 SSA § 1847(b)(5); 42 CFR § 414.416. 21 CMS, General Overview of the Final Rule for Competitive Acquisition for Certain Durable Medical 

Equipment, Prosthetics, Orthotics, and Supplies. April 10, 2007. Accessed at https://www.cms.gov/ on
 

August 21, 2012. See also 72 Fed. Reg. 17992, 18021 (Apr. 10, 2007). 

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

July 31, 2012. 

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DMEPOS product, home blood glucose test strips.23 The report estimated a potential cost 

reduction of 50 percent per unit of diabetes testing strips. A 2013 OIG report found that 

the New Jersey Medicaid program could have achieved savings of approximately 

$1.8 million to $2.7 million during the period January 1, 2011, through December 31, 

2011, by reducing reimbursement rates for testing strips to retail rates or by establishing a 

competitive bidding program for testing strips.24 

METHODOLOGY 

We compared Texas Medicaid fee-for-service payment amounts for DMEPOS to 

Medicare payment amounts for the same items in the Dallas/Fort Worth CBA.25 Using 

CMS’s Durable Medical Equipment Standard Analytic File, we identified the first 

6 months of 2011 Medicare claims for items covered under Round 1 Rebid of the 

Medicare DMEPOS Competitive Bidding Program in the Dallas/Fort Worth CBA—i.e., 

claims for 211 Healthcare Common Procedure Coding System (HCPCS)26 codes.27 To 

focus our review on those items likely to have the greatest impact on program 

expenditures, we identified the covered items with the greatest amount in Medicare 

reimbursement that were also covered by Texas Medicaid.28 We selected items with total 

Medicare reimbursement amounts greater than $190,000 per HCPCS code during the 

6-month period, which resulted in 26 covered items. We also identified the Medicare 

fee-schedule amounts for these items. 

Six of the twenty-six items are represented twice because there is one HCPCS code for 

the purchase of the item and another for its rental, and the two codes are reimbursed at 

different amounts.29 We added together the 26 single items and the 6 items represented 

23 OIG, Ohio Medicaid Costs for Home Blood-Glucose Test Strips Could Be Reduced by Approximately 

50 Percent, A-05-11-00098, March 2012. 24 OIG, New Jersey Medicaid Program Could Achieve Savings by Reducing Home Blood-Glucose Test 

Strip Prices, A-02-12-01010, forthcoming. 25 We did not analyze DMEPOS provided under managed care arrangements.
 26 HCPCS Level 1 numerical codes (e.g., 70405) are identical to CPT codes and are used by CMS 

when services and procedures involve Medicare beneficiaries. The five character codes and 

descriptions included in this report are obtained from Current Procedural Terminology (CPT®), 

copyright 2011 by the American Medical Association (AMA). CPT is developed by the AMA as a 

listing of descriptive terms and five character identifying codes and modifiers for reporting medical 

services and procedures. Any use of CPT outside of this report should refer to the most current 

version of the Current Procedural Terminology available from AMA. Applicable FARS/DFARS 

apply.

27 We excluded items in the complex rehabilitative power wheelchairs category because this category will 

not be included in Round 2 of the Medicare DMEPOS Competitive Bidding Program. We also excluded 

support surfaces because they are covered only in the Miami CBA. 28 The HCPCS codes for blood glucose test strips (A4253) and lancets (A4259) are covered only under the 

Medicare DMEPOS Competitive Bidding Program when they are provided via mail order. However, 

Medicaid rules do not require States to distinguish when these items are delivered via mail order or picked 

up in a retail store. We decided to keep these codes in our analysis. 

29 The following items are represented twice: enteral nutrition infusion pump (B9002); walker (E0143); 

humidifier, heated (E0562); power wheelchair (K0822); power wheelchair (K0823); and power wheelchair 

(K0825). Texas Medicaid uses the type-of-service codes 9 (other/DME purchase), J (purchase), and L 

(rental) to determine pricing for DMEPOS items. 

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470) 
 

Page 6 – Marilyn Tavenner 

twice to arrive at 32 individual items to include in our final analysis. (See Appendix A 

for a list of the 32 items.) 

We used the Medicaid Management Information System (MMIS) to (1) identify the 

FFY 2011 Texas Medicaid fee-for-service claims and (2) determine the volume of claims 

for the 32 selected DMEPOS items. We included claims only for Medicaid beneficiaries 

who lived in the Dallas/Fort Worth CBA, using the beneficiary ZIP Code information 

stored in the FFY 2011 Medicaid Statistical Information System (MSIS) Eligibility File. 

To determine whether one program’s payment amount exceeded that of the other, we 

calculated the difference in payment amounts for each of the 32 items between Texas 

Medicaid and the Medicare DMEPOS Competitive Bidding Program. For each item for 

which the Texas Medicaid fee-schedule amount exceeded the Medicare payment amount, 

we used the Medicaid claims volume to estimate the potential savings that could have 

been achieved using the Medicare payment amount instead. We then calculated the 

overall potential savings by summing the potential savings per item. 

Limitations 

The study has three significant scope limitations. We reviewed only a subset of 

DMEPOS items (32 items). Also, we examined only one metropolitan area. As prior 

OIG reports have noted, timely comprehensive Medicaid claims data for all States have 

not been readily available from CMS.30 Therefore, we studied a single CBA, obtaining 

FFY 2011 DMEPOS claims data directly from HHSC. We restricted the review to 

Dallas/Fort Worth, the only CBA entirely located in Texas. We do not project our 

findings beyond this study scope. Finally, we did not examine how the President’s 

budget proposal, if implemented, would potentially affect the profit margins for 

DMEPOS suppliers or beneficiaries’ access to DMEPOS supplies. 

Standards 

This study was conducted in accordance with the Quality Standards for Inspection and 

Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 

RESULTS 

Texas Medicaid fee-schedule amounts exceeded the Medicare DMEPOS 

Competitive Bidding Program payment amounts on almost all items 

The FFY 2011 Texas Medicaid fee schedule amounts for 30 of the 32 items exceeded the 

Medicare payment amounts. In FFY 2011, Texas Medicaid spent approximately 

$12 million on the 32 items in the Dallas/Fort Worth CBA. If it had used the Medicare 

payment amounts, Texas Medicaid could have saved approximately $2 million (State and 

Federal shares combined) on these items in this CBA. For the remaining 2 of 32 items, 

the Texas Medicaid fee-schedule amounts did not exceed the Medicare payment amounts. 

Appendix B lists each of the 32 items, along with the associated payment amounts and 

potential savings. 

30 OIG, MSIS Data Usefulness for Detecting Fraud, Waste, and Abuse, OEI-04-07-00240, August 2009. 

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Page 7 – Marilyn Tavenner 

Of the 32 items, 6 items had Texas Medicaid fee-schedule amounts exceeding the 

Medicare payment amounts by more than 200 percent, with the greatest difference being 

360 percent. Table 2 lists these items; combined, they account for 8 percent ($163,432) 

of the total potential savings. 

Table 2: Items with the greatest differences between the payment amount from the 

Texas Medicaid fee schedule and the Medicare DMEPOS Competitive Bidding Program 

HCPCS HCPCS Description 

Medicare 

Payment 

Amount 

Texas Medicaid 

Fee Schedule 

Amount 

Percent of 

Medicare 

Payment 

B4154 Enteral formula, nutritionally complete, for special 

metabolic needs (purchase) $0.87 $3.13 360% 

B4153 Enteral formula, nutritionally complete, hydrolyzed 

proteins (purchase) $1.45 $4.74 327% 

A4259 Lancets, per box of 100 (purchase) $4.43 $11.10 251% 

B4152 Enteral formula, nutritionally complete, calorically 

dense with intact nutrients (purchase) $0.41 $1.03 251% 

B4150 Enteral formula, nutritionally complete with intact 

nutrients (purchase) $0.48 $1.16 242% 

E0143 Walker, folding, wheeled, adjustable or fixed height 

(rental) $6.51 $14.62 225% 

Source: OIG analysis of the work in Dallas/Fort Worth Medicare DMEPOS Competitive Bidding Program payment amounts and the FFY 2011 

Texas Medicaid fee schedule. 

Seventy-five percent of the potential savings ($1.5 million) came from five items. 

Table 3 lists these items associated with the highest potential savings. Over half of this 

$1.5 million in savings resulted from a single item: monthly rental of oxygen 

concentrators (E1390), with potential savings of $883,483. Texas Medicaid paid $38.05 

per month more than Medicare for this item. Oxygen concentrators also had the highest 

Medicaid claims volume of the 32 items reviewed. 

Table 3: Items associated with the highest potential savings if Texas Medicaid were to use the 

Medicare DMEPOS Competitive Bidding Program payment amounts in Dallas/Fort Worth (DFW) 

HCPCS HCPCS Description 

Medicare 

Payment 

Amount 

Texas 

Medicaid 

Fee-Schedule 

Amount 

DFW 

Medicaid 

Claims 

Volume 

Potential 

Savings 

E1390 Oxygen concentrator, single delivery port (rental) $123.00 $161.05 23,219 $883,483 

A4253 Blood glucose test or reagent strips for home blood 

glucose monitor (purchase) $14.25 $28.28 13,307 $186,697 

K0823 

Power wheelchair, group 2 standard, captain’s chair, 

patient weight capacity up to and including 300 

pounds (purchase) 

$2,448.20 $2,703.93 598 $152,927 

A4259 Lancets, per box of 100 (purchase) $4.43 $11.10 22,510 $150,142 

E0260 Hospital bed, semi-electric, with any type side rails, 

with mattress (rental) $79.33 $111.87 4,374 $142,330 

Total potential savings from top 5 items $1,515,578 

Source: OIG analysis of the Dallas/Fort Worth Medicare DMEPOS Competitive Bidding Program payment amounts, the FFY 2011 Texas Medicaid 

fee schedule, and the FFY 2011 MMIS claims data. 

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470) 
Page 8 – Marilyn Tavenner 

CONCLUSION 

State Medicaid programs are required to establish payments that are consistent with 

efficiency, economy, and quality of care, and the President’s FFY 2014 budget proposes 

to limit Federal reimbursement for State Medicaid spending on DMEPOS items to what 

Medicare would have paid. Through competitive bidding, the Medicare program has 

demonstrated that DMEPOS can be accessible to beneficiaries at lower costs to the 

program. Our findings provide a tangible example of potential State and Federal savings 

for Medicaid programs if the programs were to use the Medicare Competitive Bidding 

payment amounts for DMEPOS items. Access to more timely Medicaid claims data 

would allow further analysis to better understand the full potential of the proposal to limit 

Federal reimbursement for State Medicaid spending on DMEPOS items to Medicare 

payment rates. 

This report is being issued directly in final form because it contains no recommendations. 

If you have comments or questions about this report, please provide them within 60 days. 

Please refer to report number OEI-06-13-00470 in all correspondence. 

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470) 
 

Page 9 – Marilyn Tavenner 

APPENDIX A 

Table A-1: Items Covered Under Both the Medicare DMEPOS Competitive Bidding Program and 

the Texas Medicaid Program 

HCPCS HCPCS Description Medicare Type 

of Service 

A4253 Blood glucose test or reagent strips for home blood glucose monitor, per 50 strips Purchase 

A4259 Lancets, per box of 100 Purchase 

A7030 Full face mask used with positive airway pressure device, each Purchase 

A7032 Cushion for use on nasal mask interface, replacement only, each Purchase 

A7034 Nasal interface used with positive airway pressure device, with or without head strap Purchase 

A7035 Headgear used with positive airway pressure device Purchase 

A7037 Tubing used with positive airway pressure device Purchase 

B4034 Enteral feeding supply kit; syringe fed Purchase 

B4035 Enteral feeding supply kit; pump fed Purchase 

B4150 Enteral formula, nutritionally complete with intact nutrients, administered through an enteral 

feeding tube Purchase 

B4152 Enteral formula, nutritionally complete, calorically dense, administered through an enteral feeding 

tube Purchase 

B4153 Enteral formula, nutritionally complete, hydrolyzed proteins, administered through an enteral 

feeding tube Purchase 

B4154 Enteral formula, nutritionally complete, for special metabolic needs, administered through an 

enteral feeding tube Purchase 

B9002 Enteral nutrition infusion pump - with alarm Purchase 

Rental 

E0143 Walker, folding, wheeled, adjustable or fixed height Purchase 

Rental 

E0260 Hospital bed, semi-electric, with any type side rails, with mattress Rental 

E0431 Portable gaseous oxygen system Rental 

E0439 Stationary liquid oxygen system Rental 

E0470 Respiratory assist device, bi-level pressure capability, without backup rate feature Rental 

E0471 Respiratory assist device, bi-level pressure capability, with backup rate feature Rental 

E0562 Humidifier, heated, used with positive airway pressure device Purchase 

Rental 

E0601 Continuous airway pressure device Rental 

E1390 Oxygen concentrator, single delivery port Rental 

K0822 Power wheelchair, group 2 standard, sling/solid seat/back, patient weight capacity up to and 

including 300 pounds 

Purchase 

Rental 

K0823 Power wheelchair, group 2 standard, captain’s chair, patient weight capacity up to and including 

300 pounds 

Purchase 

Rental 

K0825 Power wheelchair, group 2 heavy duty, captain’s chair, patient weight capacity 301 to 

450 pounds 

Purchase 

Rental 

Source: OIG analysis of the Medicare DMEPOS Competitive Bidding Program payment amounts and the FFY 2011 Texas Medicaid fee schedule. 

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470) 
HCPCS HCPCS Description 

Medicaid 

Type of 

Service 

Medicare 

Payment 

Amount 

Texas 

Medicaid 

Fee 

Schedule 

Amount 

Difference 

between 

Medicare 

and 

Medicaid 

DFW 

Medicaid 

Claims 

Volume 

Potential 

Savings 

Percentage 

of Medicare 

Payment 

A4253 Blood glucose test or reagent strips for 

home blood glucose monitor, per 50 strips Purchase $14.25 $28.28 $14.03 13,307 $186,697 198%

A4259 Lancets, per box of 100 Purchase $4.43 $11.10 $6.67 22,510 $150,142 251% 

A7030 Full face mask used with positive airway 

pressure device, each Purchase $119.51 $157.06 $37.55 77 $2,891 131%

A7032 Cushion for use on nasal mask interface, 

replacement only, each Purchase $25.67 $33.75 $8.08 51 $412 131%

A7034 Nasal interface used with positive airway 

pressure device, with or without head strap Purchase $73.12 $48.97 -$24.15 89 No savings 67% 

A7035 Headgear used with positive airway 

pressure device Purchase $21.61 $24.84 $3.23 114 $368 115%

A7037 Tubing used with positive airway pressure 

device Purchase $18.15 $15.96 -$2.19 157 No savings 88% 

B4034 Enteral feeding supply kit; syringe fed Purchase $3.83 $5.76 $1.93 2,472 $4,771 150% 

B4035 Enteral feeding supply kit; pump fed Purchase $7.35 $10.74 $3.39 13,465 $45,646 146% 

B4150 

Enteral formula, nutritionally complete with 

intact nutrients, administered through an 

enteral feeding tube 

Purchase $0.48 $1.16 $0.68 4,306 $2,928 242%

B4152 

Enteral formula, nutritionally complete, 

calorically dense, administered through an 

enteral feeding tube 

Purchase $0.41 $1.03 $0.62 3,315 $2,055 251%

B4153 

Enteral formula, nutritionally complete, 

hydrolyzed proteins administered through 

an enteral feeding tube 

Purchase $1.45 $4.74 $3.29 654 $2,152 327%

B4154 

Enteral formula, nutritionally complete, for 

special metabolic needs, administered 

through an enteral feeding tube 

Purchase $0.87 $3.13 $2.26 2,634 $5,953 360%

B9002 Enteral nutrition infusion pump - with alarm Purchase $850.53 $1,208.44 $357.91 88 $31,496 142%

Rental $85.05 $117.04 $31.99 3,022 $96,674 138%

E0143 Walker, folding, wheeled, adjustable or 

fixed height 

Purchase $65.12 $92.22 $27.10 1,087 $29,458 142%

Rental $6.51 $14.62 $8.11 25 $202.75 225%

E0260 Hospital bed, semi-electric, with any type 

side rails, with mattress Rental $79.33 $111.87 $32.54 4,374 $142,330 141%

E0431 Portable gaseous oxygen system Rental $21.00 $26.47 $5.47 14,175 $77,537 126% 

E0439 Stationary liquid oxygen system Rental $123.00 $159.32 $36.32 754 $27,385 130% 

E0470 Respiratory assist device, bi-level pressure 

capability, without backup rate feature Rental $150.00 $213.64 $63.64 560 $35,638 142%

E0471 Respiratory assist device, bi-level pressure 

capability, with backup rate feature Rental $342.51 $363.60 $21.09 555 $11,705 106%

E0562 Humidifier, heated, used with positive 

airway pressure device 

Purchase $179.92 $250.79 $70.87 199 $14,103 139%

Rental $17.99 $25.07 $7.08 1,183 $8,376 139%

E0601 Continuous airway pressure device Rental $59.90 $85.58 $25.68 1,998 $51,309 143% 

E1390 Oxygen concentrator, single delivery port Rental $123.00 $161.05 $38.05 23,219 $883,483 131%

K0822 

Power wheelchair, group 2 standard, 

sling/solid seat/back, patient weight 

capacity up to and including 300 pounds 

Purchase $2,448.11 $2,715.89 $267.78 30 $8,034 111%

Rental $244.81 $282.17 $37.36 7 $262 115%

K0823 

Power wheelchair, group 2 standard, 

captain’s chair, patient weight capacity up 

to and including 300 pounds 

Purchase $2,448.20 $2,703.93 $255.73 598 $152,927 110%

Rental $244.82 $272.85 $28.03 70 $1,963 111%

K0825 

Power wheelchair, group 2 heavy duty, 

captain’s chair, patient weight capacity 

301 to 450 pounds 

Purchase $2,900.00 $3,343.50 $443.50 85 $37,698 115%

Rental $290.00 $365.82 $75.82 2 $152 126%

Totals 115,182 $2,014,745 

 

Page 10 – Marilyn Tavenner 

APPENDIX B 

Table B-1: Potential Texas Medicaid Program Cost Savings If Medicare DMEPOS Competitive Bidding Payment 

Amounts Had Been Used in the Dallas/Fort Worth (DFW) Competitive Bidding Area During FFY 2011 

Source: OIG analysis of the Medicare DMEPOS Competitive Bidding Program payment amounts, the FFY 2011 Medicaid fee schedule, and the

FFY 2011 MMIS claims data. 

Medicaid DMEPOS Costs May Be Exceeding Medicare Costs in CBAs (OEI-06-13-00470)