(1) To compare the prices that suppliers paid for new negative pressure wound therapy pump models to Medicare’s purchase price for the pumps.
(2) To describe how suppliers acquired these new pumps.
(3) To describe the extent to which suppliers reported providing
required services to Medicare beneficiaries who rented these pumps.
stationary devices used for the treatment of ulcers or wounds that have
not responded to traditional wound treatment methods. Medicare pays
for the pumps under Part B coverage of durable medical equipment,
prosthetics, orthotics, and supplies (DMEPOS) as a capped rental item.
Between 2001 and 2007, Medicare payments for these pumps increased
583 percent, from $24 million to $164 million.
When Medicare first started covering pumps in 2001, it covered only one model, which was both manufactured and supplied by Kinetic Concepts,
Inc. (KCI). Medicare reimbursed KCI for this pump based on the
purchase price as identified by KCI. Beginning in 2005, Medicare
expanded its coverage to include several new pump models that are
manufactured by other companies. Medicare reimburses suppliers for
these new pumps based on the purchase price of the KCI pump.
This study compares the prices that suppliers paid for new pump
models to Medicare’s purchase price. Although the new pump models
currently account for a small percentage of the pump market, their
market share may grow rapidly if there is a large difference between the
amount that suppliers pay for these pumps and the amount that they
are reimbursed by Medicare. Wide profit margins may also make
pumps vulnerable to fraud, waste, and abuse.
Suppliers paid an average of $3,604 for the new pump models,
compared to Medicare’s purchase price of $17,165.
purchased 171 of the 223 new pump models that were provided to
beneficiaries in the first half of 2007. Suppliers paid an average of$3,604 for these pumps. Medicare reimbursed suppliers for these pumps based on a purchase price of$17,165, which is more than four times the average price paid by
suppliers. On a monthly basis, Medicare reimbursed suppliers $1,716 for these pumps for the first 3 months. At this rate, suppliers recouped the average cost of a new pump model in about 2 months. Further, beneficiaries’ coinsurance
payments for pumps cover a substantial portion of the average cost of anew pump model. After just 4 months of rental, a beneficiary’scoinsurance of $1,286 covers over one-third (36 percent) of the average cost of a new pump model.
Suppliers acquired one-quarter of the new pump models byleasing, renting, or exchanging them. Suppliers acquired nearly
one-quarter (52 of 223) of the new pump models provided to
beneficiaries in the first half of 2007 through methods other than
purchasing them. They acquired these pumps through lease-to-own
agreements, daily rentals, hourly rentals, or exchanges of old pumps for
new ones. Suppliers reported not always communicating with beneficiaries’
clinicians, as required; however, they appeared to meet other
standards. Suppliers are required to communicate with the
beneficiary’s treating clinician toassess wound healing progress and to determine whether the beneficiary continues to qualify for Medicare
coverage of the pump. In addition, suppliers must meet certain
standards that include providing delivery and instruction on equipment
usage (either from the supplier or another qualified party), maintaining
and repairing the equipment as needed, and responding to beneficiaries’
questions and complaints about the equipment. Suppliers reported not
having contact with clinicians for almost one-quarter of thebeneficiaries. Suppliers reported delivering the pumps and educating
almost all of the beneficiaries, as well as providing maintenance and
repairs when needed.
Based on the findings in this report, we recommend that CMS:
Reduce Medicare’s reimbursement amount for pumps.
consider two methods to reduce its reimbursement amount for pumps.
Use its inherent reasonableness authority to reduce the reimbursement
amount for pumps. CMS should consider using its inherent
reasonableness authority to reducethe amount that it reimburses
suppliers for pumps.
•Include pumps in the second round of the the Competitive Bidding
Acquisition Program. CMS should include pumps in the second round
of the Competitive Bidding Acquisition Program. This could better
align Medicare’s reimbursement amount for pumps with the amount
that suppliers pay for the new pump models.
CMS should: Monitor the growth of the new pump market.
CMS should continue to monitor the growth of the new pump market by tracking trends in market share among different suppliers.
Educate suppliers of new pump models on the importance of
communication with beneficiaries’ treating clinicians.
CMS should:educate suppliers of new pump models that the continued need for a
pump can be determined only through clinician input and that it isinappropriate for suppliers to submit claims for continued pump use
without this input. Follow up on the pump claims that may be inappropriate.
CMS should follow up on the claims in which suppliers: (1) reported having no
contact with the beneficiaries’ treating clinicians, (2) could not be
located, or (3) did not submit any documentation. To help CMS address this recommendation, we will forward information about these claims in
a separate memorandum.
AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL
CMS concurred with four of our recommendations and will consider the
remaining recommendation. It noted that it has worked on a number of
regulatory and administrative initiatives related to the prescription
Equinox Medical is just launched their smallest and lightest negative pressure wound therapy pump system
in the wound care market. Halo Mini is a great alternative for any K C I wound pump when trying to win any hospital and nursing home accounts for DME and HME companies in the US.