Pricing vs Reimbursement In The Homecare Industry – And The Competitive Bidding Solution

by Frank Barlin on November 6, 2007 in All, Editorial, Healthcare Marketing, Home Healthcare

After all the trauma of the recent deep reimbursement cuts by Medicare, the Office of Inspector General in the United States has found that Medicare, in certain cases pays 35% to 45% more than internet advertised prices for certain power wheelchairs.

The industry is quick to protest and will argue “the higher bar” that Medicare providers have to attain accounts for the difference in cost.

Nevertheless – here is the recommendation of the Office of Inspector General.

RECOMMENDATION
We found that consumers could have purchased most power wheelchairs over the Internet at prices lower than the Medicare fee schedule amounts. We recommend that CMS: Consider performing additional reviews to determine whether the current Medicare power wheelchair fee schedule amounts for certain groups and procedure codes are appropriate.

And Medicare agrees:

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL
RESPONSE
CMS concurred with our recommendation. In addition, CMS noted that, in mid-2008, Medicare payment amounts for power wheelchairs in 10 large metropolitan statistical areas will be based on power wheelchair suppliers’ competitive bids. CMS further noted that it has the authority in future years to use payment information from the competitive bidding program to adjust payments in areas not included in the program. OIG work is continuing in this area. We plan to conduct further evaluations to compare Medicare fee schedule amounts to actual prices paid by suppliers.

The report goes on to estimate a total saving to Medicare and consumers of close to $40 million in the first quarter of 2007.

Again there will be a counter argument from the industry which will point to the extra regulatory and service hurdles that Medicare imposes.

The fact of the matter is that – pricing (and reimbursement) on Power mobility products is under strong review (again). CMS is looking to their newly established national competitive bidding process to lower prices – and it, together with other measures it will take, will again reduce the price of power wheelchairs to the government and consumers.

The full OIG (smallish pdf download) report can be found here.