Feds losing millions annually on vacuum erection devices

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Not only does Medicare cover vacuum erection systems (VES) but it is also paying more than twice as much for the devices as non-Medicare payers.

For the uninitiated, VES treat impotence and are eligible for coverage under Medicare Part B.

According to a report from Health and Human Services’ Office of Inspector General, if the government had adjusted the fee schedule for VES to the amount paid by non-Medicare consumers, the Federal government would have saved on average $14.4 million each calendar year from 2006 to 2011.

Further, in those years reviewed, Medicare beneficiaries would have saved a combined $3.6 million annually.

“Medicare payment amounts for VES remain grossly excessive compared with the amounts that non-Medicare payers pay,” the report reads. “Specifically, the Medicare fee schedule payment rate is more than twice the average payment rate for the non-Medicare payers. Consequently, the Medicare program and Medicare beneficiaries lose potential cost savings.”

Based on OIG’s review of Medicare VES claims for 2006 to 2011, the average price paid for the device was $451.16. On average, Medicare paid about $360.93 and the beneficiary, responsible for 20 percent of the price, paid $90.23.

The OIG reviewed the prices the Department of Veterans Affairs paid and consumer Internet prices and determined the average non-Medicare cost to be $175.35.

During that time period, Medicare paid 473,620 VES claims totaling $172.4 million and the yearly claims nearly doubled over that time from $20.6 million in 2006 to $38.6 in 2011.

The watchdog estimated that if claims levels remain the same as it was from 2009-2011, the government would save $18 million annually if it adjusted the payments. Beneficiaries would save $4.5 million.

According to the report, the Centers for Medicare and Medicare Services agreed with both OIG’s recommendations, which included 1) that CMS “use its authority under the inherent reasonableness regulations to determine whether the payments for VES are grossly excessive and, if so, establish a special payment limit or” 2) CMS “seek legislative authority to include VES in the Competitive Bidding Program and then implement a National Mail-Order Competitive Bidding Program for VES.”

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