Medicare payments for a standard type of back brace has been more than four times greater than the average cost to the supplier, according to a Department of Health and Human Services inspector general report released Wednesday.
The average Medicare payout for an L0631 back orthosis from July 2010 to June 2011 was $919, while IG investigators found that the average supplier acquisition cost was $191.
Overall, the IG reports that Medicare and its beneficiaries paid $37 million more than the braces cost the suppliers, and noted that the beneficiary co-payments — 20 percent of the cost of the brace — could have covered most of suppliers’ acquisition costs.
According to The Associated Press, which first obtained the report, 30 cents of every dollar spent on the medical system — or $750 billion annually — is “squandered” on wasteful spending, fraud or unneeded care. It further noted that Medicare spends $10 billion a year on medical devices such as these back braces.
The IG’s report offers a glimpse into the high potential for waste, noting that from 2008 to 2011, Medicare claims for L0631 back orthoses increased from $36 million to more than $96 million. Further, while Medicare pays for 12 other back brace models, this model cost Medicare more than all the others combined.
The report looked at a random sample of claims from over 320 suppliers who responded to their inquiry and arrived at the large cost disparity between Medicare payment and supplier cost.
The report recommended — and the Centers for Medicare & Medicaid Services (CM) agreed to consider — that CMS institute a competitive bidding program.