Department of Health and Human Services

OFFICE OF 

INSPECTOR GENERAL 

 

Daniel R. Levinson 

Inspector General 

August 2009 

OEI-04-07-00400 

 

POWER WHEELCHAIRS IN THE 

MEDICARE PROGRAM: 

SUPPLIER ACQUISITION COSTS 

AND SERVICES 
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 OIG’s 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. 

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 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 

Office of Evaluation and Inspections 

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 Audit Services 

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: 
 

Δ EXECUTIVE SUMMARY 

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. 

Medicare’s 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 

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EXECUTIVE SUMMARY 

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 beneficiary’s copayment 

($804) covered 77 percent of suppliers’ average acquisition cost. 

Medicare’s average payment under the Competitive Bidding Acquisition 

Program ($3,073) would have been almost three times the average 

acquisition cost. Although Medicare’s fee schedule amount was reduced 

from $4,024 to $3,641 to offset the Competitive Bidding Acquisition 

Program’s 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’ 

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 EXECUTIVE SUMMARY 

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 CMS’s 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 

supplier’s acquisition cost to perform an average of five services and 

cover general business costs. 

Medicare’s 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 Medicare’s fee schedule 

amount was reduced to $3,641 to offset the Competitive Bidding 

Acquisition Program’s 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 supplier’s 

acquisition cost to perform an average of seven services and cover 

general business costs. 

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EXECUTIVE SUMMARY

oEI· 04· 07 ·00400

Based on these findings, we recommend that CMS:

Determine whether Medicare's 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.

• Seek legislation 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 consider that supplier

acquisition costs and services differ by power wheelchair type.

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.

CMS also provided comments about each suggested method for

determining whether Medicare's fee schedule amounts for standard and

complex rehabilitation power wheelchairs should be adjusted. 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 will conduct

rulemaking to implement a detailed methodology and process for

applying this authority. CMS also stated that it will carefully consider

seeking legislation to ensure that fee schedule amounts are reasonable

and responsive to market changes. It 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. Further, CMS did not concur

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 it is not

likely to consider undertaking a review ofthe standard and complex

rehabilitation power wheelchair fee schedule amounts until the results

ofthe supplier bids under the Competitive Bidding Acquisition Program'

have been assessed. Lastly, CMS stated that it will consider that

supplier purchase prices and services differ by power wheelchair type

when setting fee schedule amounts.

We support CMS's efforts to address these issues and encourage it to

continue to make progress in these areas.

OEI·04·07·00400 POWER WHEELCHAIRS IN THE MEDICARE PROGRAM: SUPPLIER ACQUISITION COSTS ANO SERVICES v
Δ TABLE OF CONTENTS 

EXECUTIVE SUMMARY .....................................i

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 

 

RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 

ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
 

Δ INTRODUCTION 

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 Medicare’s 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 powe

wheelchairs, at a total cost of $686 million.

r 

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 CMS’s claims data, July 2008. 

5 Social Security Act, § 1862(a)(1)(A). 

6 CMS’s Medicare Learning Network, “Medicare Coverage of Power Mobility Devices: 

Power Wheelchairs and Power Operated Vehicles,” April 2006. 

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INTRODUCTION 

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 

beneficiary’s medical record to support the medical necessity of the 

power wheelchair, along with the power wheelchair prescription.10

Based on the physician’s prescription, the supplier recommends a 

specific power wheelchair for the beneficiary. The physician must then 

review and approve the supplier’s 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. 

Medicare’s fee schedule amounts include reimbursement for the 

supplier’s 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 

2 

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 beneficiary’s 

need for a power wheelchair before prescribing it. The supplier must also conduct an 

assessment of the beneficiary’s 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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INTRODUCTION 

accessories, such as specialty controllers, power-operated tilt and recline 

systems, armrests, and batteries. 

CMS’s 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 model’s 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 program’s 

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 Program’s 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. 

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INTRODUCTION 

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/themedicare-improvements-for-patients-and-providers-act-of-2008-delay-and-reform-of-themedicare-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 

K0848–K0864 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. 

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INTRODUCTION 

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. 

Medicare’s 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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INTRODUCTION 

requires that a supplier maintain documentation to support performing 

the home assessment, the power wheelchair’s 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 beneficiary’s 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 Medicare’s 42 power 

wheelchair procedure codes (K0813–K0864).34 The procedure code 

assignment is based on the model’s 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 Medicare’s 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 K0817–K0819, 

K0832–K0834, and K0844–K0847. 

35 Statistical Analysis DME Regional Carrier, “Power Mobility Device Coding 

Guidelines,” August 3, 2006. 

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INTRODUCTION 

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 

Medicare’s average allowed amount for a standard power wheelchair 

accessory was $234. 

Medicare’s 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. 

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INTRODUCTION 

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 beneficiary’s 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 Medicare’s 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 

8 

41 OIG analysis of claims from National Claims History file submitted under procedure 

codes K0835–K0864 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 K0835–K0864 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. 

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 INTRODUCTION 

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 Medicare’s fee schedule amount of $4,024 exceeded by 36 percent. 

Another OIG report found that Medicare’s 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. 

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INTRODUCTION 

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 CMS’s 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. 

10 

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 supplier’s 

billing privileges because of a felony, noncompliance with enrollment requirements, etc. 

Pursuant to 42 CFR § 424.540, Medicare also may deactivate a supplier’s 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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INTRODUCTION 

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 manufacturer’s 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 claim’s 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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INTRODUCTION 

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 wheelchair’s 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 wheelchair’s delivery; 

• service(s) performed during the wheelchair’s 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. 

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INTRODUCTION 

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 supplier’s facility (if not included in 

the invoice price) and subtracted any discounts, rebates, or other 

incentives. The final calculated price represents the supplier’s 

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 Medicare’s 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. 

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INTRODUCTION 

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 

14 

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, E2360–E2365, 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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INTRODUCTION 

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. 

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16 

Δ 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. Medicare and its beneficiaries 

paid an average of $4,018 for standard power wheelchairs, which 

accounted for nearly three-quarters of Medicare’s 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 

beneficiary’s 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 

Pricing Information 

Average 

Supplier 

Acquisition 

Cost* (2007) 

Medicare’s 

Average Allowed 

Amount (2007) 

Medicare’s Average 

Competitive Bidding 

Price** (2008) 

Medicare’s 2009 

Fee Schedule 

Amount 

Average price $1,048 $4,018 $3,073 $3,641 

Comparison price, as a 

percentage of supplier 

acquisition cost 

NA 383% 293% 347% 

* OIG analysis of supplier acquisition costs, 2008. 

** Average of10 Competitive Bidding Area single payment amounts for standard power wheelchairs under the Competitive Bidding 

Acquisition Program’s cancelled Round 1. 

Medicare’s 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, Medicare’s 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. 

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FINDINGS 

293 percent of suppliers’ average acquisition cost.64 Although 

Medicare’s fee schedule amount was reduced to $3,641 to offset the 

Competitive Bidding Acquisition Program’s delay, the 2009 fee schedule 

amount exceeds the average competitively bid price by $568. Medicare’s 

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. 

17 

Table 2: Price Comparisons for Standard Power Wheelchairs 

Volume of Standard 

Power Wheelchair Sales 

Medicare’s 

Average 

Allowed 

Amount 

Average 

Supplier 

Acquisition 

Cost 

Range of Supplier 

Acquisition Costs* 

Medicare’s Average 

Allowed Amount as a 

Percentage of 

Suppliers’ Average 

Acquisition Cost 

High-volume suppliers $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 

two times the average amount paid by 

suppliers to acquire complex rehabilitation 

power wheelchair packages during the first 

half of 2007. Medicare and its 

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 

64 Single payment amounts for standard power wheelchairs based on selected bids under 

the Competitive Bidding Acquisition Program’s 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. 

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FINDINGS 

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 

supplier’s acquisition cost for the package, on average.68 

Table 3 compares Medicare-allowed amounts and supplier acquisition 

costs for complex rehabilitation power wheelchair packages. Medicare’s 

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, Medicare’s average allowed 

amount is 177 percent of suppliers’ average acquisition cost.69 70 

Table 3: Price Comparisons for Complex Rehabilitation Power Wheelchair Packages

Item(s) 

Medicare’s 

Average 

Allowed 

Amount 

Average 

Supplier 

Acquisition 

Cost** 

Range of Supplier 

Acquisition 

Costs*** 

Medicare’s Average 

Allowed Amount as a 

Percentage of Suppliers’ 

Average Acquisition Cost 

Power wheelchair* $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 

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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. 
 

FINDINGS 

ranged between $1,049 and $5,495 per chair, and the average 

acquisition cost was $2,565.71 Medicare’s 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 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 

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Suppliers reported performing an 

average of five services prior to, 

during, and within an average of 

9 months after delivering standard 

power wheelchairs to Medicare 

beneficiaries. Suppliers reported 

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 estimate’s sample size consists of 30 claims. See Appendix C for the confidence 

intervals. 
 

FINDINGS 

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. 

Figure 1.

Service Categories

as a Percentage of

All Services

Reported, by

Wheelchair Type

Complex Rehabilitation Power 

Wheelchair Packages

Other services

6%

During-delivery 

services

45%

Follow-up 

services 

11% 

Predelivery 

services 

37% 

Standard Power Wheelchairs

Follow-up 

services 

5% 

Predelivery 

services 

27%

Other services 

4% 

During-delivery 

services 

64%

 

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. 

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 F I N D I N G S 

power wheelchairs and 45 percent of services reported for complex 

rehabilitation power wheelchair packages. 

The most common service performed during the delivery of standard 

and complex rehabilitation power wheelchairs, other than the delivery 

itself, was education of the beneficiaries or caregivers on the power 

wheelchairs’ use or maintenance.75 Suppliers reported educating the 

beneficiaries or caregivers of standard and complex rehabilitation power 

wheelchairs at least 90 percent of the time. 

The most common service performed during the delivery of standard 

and complex rehabilitation power wheelchairs, other than the delivery 

itself, was education of the beneficiaries or caregivers on the power 

wheelchairs’ use or maintenance.75 Suppliers reported educating the 

beneficiaries or caregivers of standard and complex rehabilitation power 

wheelchairs at least 90 percent of the time. 

Suppliers reported performing few follow-up or other types of services 

Follow-up and all other services accounted for 9 percent of services 

reported for standard power wheelchairs.76 Suppliers reported 

performing maintenance or repairs for 11 percent of standard power 

wheelchairs. They reported adjusting 5 percent of standard power 

wheelchairs in the months following delivery. 

Follow-up and all other services accounted for 9 percent of services 

reported for standard power wheelchairs.76 Suppliers reported 

performing maintenance or repairs for 11 percent of standard power 

wheelchairs. They reported adjusting 5 percent of standard power 

wheelchairs in the months following delivery. 

Follow-up and all other services accounted for 17 percent of services 

reported for complex rehabilitation power wheelchair packages.77 

Suppliers reported performing maintenance or repairs on 31 percent of 

complex rehabilitation power wheelchairs supplied as part of packages. 

They reported adjusting 27 percent of these wheelchairs. 

Follow-up and all other services accounted for 17 percent of services 

reported for complex rehabilitation power wheelchair packages.77 

Suppliers reported performing maintenance or repairs on 31 percent of 

complex rehabilitation power wheelchairs supplied as part of packages. 

They reported adjusting 27 percent of these wheelchairs. 

Complex rehabilitation power wheelchair suppliers reported performing 

twice as many services as standard power wheelchair suppliers at times 

other than the day of delivery 

Suppliers reported performing an average of two predelivery, follow-up, 

and other services for standard power wheelchairs. They reported 

performing an average of four of these services in conjunction with 

providing complex rehabilitation power wheelchairs that were part of a 

package, twice the number that suppliers of standard power 

wheelchairs reported. 

Suppliers reported performing an average of two predelivery, follow-up, 

and other services for standard power wheelchairs. They reported 

performing an average of four of these services in conjunction with 

providing complex rehabilitation power wheelchairs that were part of a 

package, twice the number that suppliers of standard power 

wheelchairs reported. 

Suppliers of complex rehabilitation power wheelchair packages were 

more likely to report performing or participating in beneficiary 

evaluations, providing equipment trials for the beneficiaries, and 

conducting home assessments prior to delivering the wheelchairs. 

Suppliers of complex rehabilitation power wheelchair packages were 

more likely to report performing or participating in beneficiary 

evaluations, providing equipment trials for the beneficiaries, and 

conducting home assessments prior to delivering the wheelchairs. 

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75 The differences are statistically different from other during-delivery services at the 

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. 
 

FINDINGS 

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 services—delivering the 

power wheelchairs, providing education, and assessing the homes of 

beneficiaries—most 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. 

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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. 
 

Δ RECOMMENDATIONS 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 CMS’s power wheelchair 

payments and, therefore, its current methodology for developing power 

wheelchair fee schedule amounts do not reflect actual acquisition costs. 

Medicare’s 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 supplier’s acquisition 

cost to perform an average of five services and cover general business 

costs. 

Medicare’s 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, Medicare’s average payment under the 

Competitive Bidding Acquisition Program ($3,073) would have been 

293 percent of suppliers’ average acquisition cost. Although Medicare’s 

fee schedule amount was reduced to $3,641 to offset the Competitive 

Bidding Acquisition Program’s 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 supplier’s 

acquisition cost to perform an average of seven services and cover 

general business costs. 

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RECOMMENDATION 

Based on these findings, we recommend that CMS: 

Determine Whether Medicare’s 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. Medicare’s 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 Program’s 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. CMS’s 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 

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RECOMMENDATION 

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 

Medicare’s payment rates for this equipment. 

CMS also provided comments about each suggested method for 

determining whether Medicare’s 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. 

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RECOMMENDATION 

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 CMS’s efforts to address these issues and encourage it to 

continue to make progress in these areas. The full text of CMS’s 

comments is provided in Appendix G. 

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Δ APPENDIX~A 

Population and Sample Sizes, by Category 

Population Sample 

 Stratum Definition Claims Expenditures Suppliers Claims Expenditures Suppliers 

1 

Standard power wheelchairs 

supplied by low-volume suppliers 7,223 $28,949,132 2,352 125 $499,152 124 

2 

Standard power wheelchairs 

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 

3 

Complex rehabilitation power 

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 K0835–K0864. 

** 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. 

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Δ APPENDIX~B 

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Complex Rehabilitation Power Options and Accessories, From Sample 

HCPCS 

Number of 

Chairs Item 

Supplied 

With Description of Complex Rehabilitation Power Option and Accessory

Fee 

Schedule 

Amount* 

E1028 60 

Manual swingaway, retractable or removable mounting hardware for joystick, other control interface or 

positioning accessory $207 

E0955 51 Headrest, cushioned, any type, including fixed mounting hardware, each $202 

E1002 40 Power seating system, tilt only $4,113 

E2620 38 

Positioning wheelchair back cushion, planar back with lateral supports, width less than 22 inches, any 

height, including any type mounting hardware $548 

E2311 24 

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 

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 

E2310 12 

Electronic connection between wheelchair controller and one power seating system motor, including all 

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 

E2611 8 

General use wheelchair back cushion, width less than 22 inches, any height, including any type mounting 

hardware $312 

E2615 8 

Positioning wheelchair back cushion, posterior-lateral, width less than 22 inches, any height, including any 

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 

E2613 5 

Positioning wheelchair back cushion, posterior, width less than 22 inches, any height, including any type 

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 

E2330 2 

Head control interface, proximity switch mechanism, nonproportional, including all related electronics, 

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 

E2322 1 

Hand control interface, multiple mechanical switches, nonproportional, including all related electronics, 

mechanical stop switch, and fixed mounting hardware $1,410 

E2377 1 

Expandable controller, including all related electronics and mounting hardware, upgrade provided at initial 

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. 
 Δ APPENDIX~C 

Estimates and Confidence Intervals for Power Wheelchair Acquisition Costs 

Estimate Description 

Sample 

Size 

Point 

Estimate 

95-Percent 

Confidence 

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% 

Beneficiary’s 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% 

Beneficiary’s 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 

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APPENDIX~C 

Estimates and Confidence Intervals for Average Number of Supplier Services, by Category 

Estimate Description 

Sample 

Size 

Point 

Estimate 

95-Percent 

Confidence 

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 

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APPENDIX~C 

 

Estimates and Confidence Intervals for Average Number of Supplier Services, by Category 

(Continued) 

Estimate Description 

Sample 

Size 

Point 

Estimate 

95-Percent 

Confidence 

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 

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APPENDIX~C 

32 

Estimates and Confidence Intervals for Supplier Service Categories 

Estimate Description 

Sample 

Size 

Point 

Estimate 

95-Percent 

Confidence 

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% 

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APPENDIX~C 

APPENDIX~C 

Estimates and Confidence Intervals for Percentage of Claims That Involved Supplier Services 

Estimate Description 

Sample 

Size 

Point 

Estimate

95-Percent 

Confidence 

Interval 

All Standard Power Wheelchair Suppliers 

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 wheelchair’s 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 wheelchair’s 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% 

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APPENDIX~C 

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Estimates and Confidence Intervals for Percentage of Claims That Involved Supplier Services (Continued) 

Estimate Description 

Sample 

Size 

Point 

Estimate 

95-Percent 

Confidence 

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.
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Δ APPENDIX~D 

Supplier Service Categories and Descriptions 

Category Service Service Description

Predelivery 

services 

Evaluate beneficiary 

Supplier employee performed or participated in an evaluation of the 

beneficiary 

Provide for equipment trial Supplier provided trial power wheelchair(s) to beneficiary 

Assemble wheelchair Supplier assembled wheelchair 

Perform home assessment * 

Supplier evaluated home to verify that the beneficiary could adequately 

maneuver the wheelchair, considering physical layout, doorway width, 

doorway thresholds, and surfaces (may also be performed during delivery) 

Duringdelivery 

services 

Deliver wheelchair * Supplier delivered the power wheelchair to beneficiary 

Adjust wheelchair Supplier adjusted power wheelchair at time of delivery 

Educate beneficiary * 

Supplier educated the beneficiary or caregiver on the power wheelchair’s 

use, safety, or maintenance at time of delivery 

Test wheelchair 

Supplier tested the power wheelchair’s functions, such as brakes or 

electronics system, at time of delivery 

Perform home assessment * (May also be performed prior to delivery) 

Follow-up 

services Perform repair/maintenance** 

Supplier performed maintenance on or replaced the power wheelchair or 

related accessories 

Adjust wheelchair Supplier adjusted the power wheelchair or accessories 

Other 

services 

Respond to beneficiary question ** 

Supplier responded to question from beneficiary or caregiver regarding the 

power wheelchair 

Perform home assessment * 

(Documentation was insufficient to categorize as either a pre- or duringdelivery service) 

Services not 

referenced in 

request 

Loan equipment 

Supplier loaned mobility equipment to beneficiary to use while waiting for 

equipment 

Move wheelchair Moved wheelchair for beneficiary from home to nursing facility 

Provide instructions Instructions provided to beneficiary outside delivery 

Coordinate evaluation Supplier coordinated evaluation for beneficiary 

Perform administrative 

services 

Supplier performed activity related to administrative processing of 

beneficiary or equipment 

Followup with 

beneficiary 

Follow-up contact with beneficiary initiated by supplier (does not include 

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. 
 

Δ APPENDIX~E 

Median Supplier Acquisition Costs and Confidence Intervals 

Power Wheelchair Sub-Type 

Sample 

Size 

Median Supplier 

Acquisition Cost

95-Percent Confidence 

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.

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Δ 

APPENDIX~F 

 O E I - 0 4 - 0 7 - 0 0 4 0 0 P OWER WHEELCHAIRS IN THE MEDICARE P ROGRAM : S UPPLIER ACQUISITION C OSTS AND S ERVICES 37 

Average Numbers of Supplier Services per Power Wheelchair, by Service Category 

Power Wheelchair Sub-Type 

Predelivery 

Services 

During-Delivery 

Services 

Follow-up 

Services 

Other 

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. 
 

APPENDIX~F 

Supplier Service Frequencies 

Percentage of Power Wheelchairs for Which Supplier 

Performed Service 

Category Service 

All Standard 

Power 

Wheelchairs 

Complex Rehabilitation Power 

Wheelchair Packages 

Assemble wheelchair 64% 66% 

Evaluate beneficiary 47% 75% 

Perform home assessment * ** 27% 51% 

Predelivery 

services 

Provide for equipment trial 6% 34% 

Deliver wheelchair * 100% 100% 

Educate beneficiary * 93% 92% 

Adjust wheelchair 61% 62% 

Perform home assessment * ** 55% 24% 

Duringdelivery 

services 

Test wheelchair 24% 18% 

Follow-up Perform repair/maintenance* 11% 31% 

services Adjust wheelchair 5% 27% 

Respond to beneficiary question* 4% 7% 

Perform home assessment * ** 7% 6% Other 

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. 

 O E I - 0 4 - 0 7 - 0 0 4 0 0 P OWER WHEELCHAIRS IN THE MEDICARE P ROGRAM : S UPPLIER ACQUISITION C OSTS AND S ERVICES 38 
A P PEN 0 x G

AGENCY COMMENTS

DEPARTMENT OF HEALTH & HUMAN SERVICES Cenlers for Medicare & Medicaid Services

Administrator

Washington, DC 20201

DATE: 'AUG 072009

T(!): Daniel R. Levinson

,Inspector General

FROM: Charlenc Frizzcra

Acting Administrator

SUBJECT: Office of Inspector General's Draft Report: "Power Wheelchairs in the Medicare

Program: Supplier Acquisition Costs and Services" (OEl-04-07-00400)

Thank you for the opportunity to review and comment on the Office ofInspector General's

(OIG) draft report entitled, "Power Wheelchairs in the Medicare Program: Supplier Acquisition

Costs and Services." The report compares suppliers' average acquisition costs for standard and

complex rehabilitation power wheelchairs with Medicare's average fee schedule amounts lor

2007 and 2009 and the average payment amount for the standard power wheelchair derived

under the 2008 Round One Durable Medical Equipment, Prosthetics, Orthotics, and Supplies

(DMEPOS) Competitive Bidding Acquisition Program. Also detai.led within the report is the

nature and frequency ofthe services performed by the supplier before, during, and after the

delivery of a power wheelchair.

[n recent years, the Centers for Medicare & Medicaid Services (CMS) has been working on a

number ofimpo11ant 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 ofthese initiatives are to ensure that beneficiaries

have access to the appropriate technology to meet their needs and to improve the appropriateness

of Medicare's payment rates for this equipment. Revised Healthcarc Common Procedure

Coding System (HCPCS) codes and product testing requirements for power wheelchairs were

implemented in 2006 to ensure that HCPCS codes reflect current technology and to group

wheelchair products based on industry standards for perfomlanee and durability. The fee

schedule amounts for these codes were established in accordance with the rules set forth in

Section 1834(a) ofthe Social Security Act (the Act) and were based on manufacturer-suggested

retail prices.

Another important CMS initiative related to the payment for power wheelchairs was the

implementation ofthe Round One DMEPOS Competitive Ridding Acquisition Program in July

2008. Suppliers submitted bids to establish payment amounts for standard and complex

rehabilitation wheelchairs, along with other DMEPOS items, in 10 competitive bidding areas

across the Nation. The bidding competition resulted in payment rates for standard and complex

rehabilitation wheelchairs that were, on average, 21 percent and 15 percenllower, respectively,

OEI·04·07·00400 POWER WHEELCHAIRS IN THE MEDICARE PROGRAM: SUPPLIER ACQUISITION COSTS AND SERVICES 39
 

APPENDIX~G 

 O E I - 0 4 - 0 7 - 0 0 4 0 0 P OWER WHEELCHAIRS IN THE MEDICARE P ROGRAM : S UPPLIER ACQUISITION C OSTS AND S ERVICES 40 
 

APPENDIX~G 

 O E I - 0 4 - 0 7 - 0 0 4 0 0 P OWER WHEELCHAIRS IN THE MEDICARE P ROGRAM : S UPPLIER ACQUISITION C OSTS AND S ERVICES 41 
 

APPENDIX~G 

 O E I - 0 4 - 0 7 - 0 0 4 0 0 P OWER WHEELCHAIRS IN THE MEDICARE P ROGRAM : S UPPLIER ACQUISITION C OSTS AND S ERVICES 42 
 

 O E I - 0 4 - 0 7 - 0 0 4 0 0 P OWER WHEELCHAIRS IN THE MEDICARE P ROGRAM : S UPPLIER ACQUISITION C OSTS AND S ERVICES 43 

Δ ACKNOWLEDGMENTS 

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.