Medicare Paying Above-Market Prices for Medical Supplies, Report Says

Medicare and its beneficiaries are charged "significantly higher" amounts for standard medical supplies such as wheelchairs and saline solution compared to regular market prices and prices paid by the Department of Veteran Affairs, according to a new report from the HHS Inspector General. USA Today reports that a review of the findings, scheduled to be released June 12, indicated that Medicare spent $1.7 billion in 2000 on 16 common medical items. Had Medicare been charged the same prices as the VA, $958 million would have been saved, a 56% savings. For example, a standard wheelchair cost Medicare $570.68, compared with the VA's price of $127.72, a difference of 78%. USA Today reports that some of these savings could have been passed on to Medicare beneficiaries without supplemental insurance coverage, who must pay 20% of the cost of medical supplies out-of-pocket. CMS Administrator Tom Scully attributed the price discrepancy to a congressionally mandated moratorium on Medicare's authority to demand "inherently reasonable" prices from suppliers. Congress passed the moratorium on competitive bidding in 1997 in response to a request from medical suppliers, USA Today reports. Because the moratorium has expired, Scully said Medicare is working to lower the prices it pays for medical supplies. In addition, House Ways and Means Committee Chair Bill Thomas (R-Calif.) is planning legislation that would allow Medicare to bid competitively, according to Thomas spokesperson Christin Tinsworth (Welch, USA Today, 6/10).