State refutes charge of overpaying for patients' medical equipment.

Byline: Tim Christie The Register-Guard

In an effort to rein in costs and save money for the embattled Oregon Health Plan, the state of Oregon has changed its policy on how it reimburses vendors of medical equipment.

A state official said Friday that the change took effect in August, but it came as news to the head of a Eugene health insurer that has been under fire for alleged mistreatment of Oregon Health Plan patients.

Terry Coplin, chief executive of the Lane Individual Practice Association, told legislators earlier this week that vendors earn exorbitant profits on medical equipment at state expense.

LIPA administers the Oregon Health Plan for about 27,000 people in Lane County. It's been under fire since last spring, when state investigators said in a preliminary report that the for-profit, doctor-owned company violated state and federal regulations and the terms of its contract with the state by the way it treated patients, providers and medical vendors.

Coplin, facing questions Tuesday from legislators about the alleged mistreatment of patients, produced a document showing huge profit margins enjoyed by vendors of wheelchairs and other medical equipment.

Lawmakers on the Joint Committee on Human Services were outraged when they saw the document and demanded a response from the state Department of Human Services.

In Coplin's document, a line item showed the "maximum allowable" charge for a standard wheelchair as $781; the manufacturer's suggested retail price, or MSRP, as $282; and the actual cost as $185. It listed the profit margin at $596 and the percent profit as 322 percent.

Coplin asked legislators why medical equipment vendors "need this kind of profit" when the Oregon Health Plan is struggling financially.

"It's my understanding some vendors are charging the maximum allowable and more," he said Friday.

But Coplin's depiction of vendors earning triple-digit profits at state expense doesn't square with the state's policy for reimbursing vendors for medical equipment, a state official said Friday.

Before the August policy change, vendors were allowed to charge either the maximum allowable price, as set by Medicare, or their usual charge to the public, whichever was less, said Allison Knight, an official in the Office of Medical Assistance Programs, which oversees the Oregon Health Plan. In most cases, the charge was far less than the maximum allowable charge, she said.

In the past six months, the state's average reimbursement for a standard wheelchair was $430, or 55 percent of the maximum allowable cost, she said.

State officials changed the pricing policy last month so that a vendor is reimbursed at either the maximum allowable price, the vendor's usual charge to the public, or the manufacturer's suggested retail price, whichever is lowest, Knight said.

If the MSRP were $300, that's the amount the vendor would bill to the state and that's what the state would reimburse, she said.

Coplin said he wasn't aware that the state had changed its policy to include the MSRP when reimbursing equipment vendors, nor were four vendors contacted by LIPA. He said he was surprised that LIPA hadn't been notified.

"I'm glad OMAP has just changed that policy because we've been advocating for that for a long time," he said.

State Rep. Billy Dalto, R-Salem, co-chairman of the Joint Committee on Human Services, said the information Coplin presented at Tuesday's hearing "raised a lot of eyebrows," which is why he asked Gary Weeks, director of the Department of Human Services, to research the matter and report back to the committee.

"Before we go off on some crusade, we want to make sure the information is accurate," he said. "We want to get to the bottom of this, but we don't want to make wild accusations without a full set of facts."