ABSTRACT

Category I enteral nutrition formulas represented $201 million of the $311 million in Medicare Part B payments for all enteral nutrition formulas in 2001. The Office of Inspector General (OIG) compared the amount Medicare reimburses for Category I enteral nutrition formulas (procedure code B4150) to prices available to the supplier community. We obtained 177 individual contract prices for Category I formulas through 1 national wholesaler, 1 group purchasing organization, and 1 supplier who negotiated contracts directly with 2 enteral nutrition formula manufacturers. We found that Medicare’s reimbursement amount for Category I formulas ($0.61 in 2001) exceeded median contract prices available to suppliers from the 3 sources reviewed by 70 to 115 percent. Median contract prices ranged from $0.28 per unit to $0.36 per unit. Individual contract prices for Category I formulas varied from a low of $0.18 per unit to a high of $0.86 per unit, yet the majority (75 percent) of individual contract prices were lower than $0.42 per unit. OIG recommended that the Centers for Medicare & Medicaid Services (CMS) consider using its inherent reasonableness authority to reduce the Medicare reimbursement amount for Category I formulas. CMS agreed with our recommendation.

← Home | Executive Summary →