WASHINGTON -LRB- CNN -RRB- -- Power-driven wheelchairs are costing Medicare and its beneficiaries nearly four times what suppliers pay for them , and competitive bidding could have reduced those costs , according to an inspector general 's report released Wednesday . Competitive bidding would have cut costs on a standard power wheelchair by nearly $ 1,000 , the report says . A standard power wheelchair costs the federal health insurance program for seniors an average of $ 4,018 to lease , compared with $ 1,048 for suppliers to buy , the Department of Health and Human Services ' internal watchdog reported . `` Medicare and its beneficiaries paid suppliers an average of $ 2,970 beyond the supplier 's acquisition cost to perform an average of five services and cover general business costs , '' the report found . The difference was not as dramatic for more advanced wheelchairs used for physical rehabilitation patients , but at an average lease of $ 11,507 , those chairs still cost Medicare about twice as much as the $ 5,880 paid by suppliers , the report found . More than 173,000 Medicare beneficiaries received power wheelchairs in the first half of 2007 , at a cost of about $ 686 million , the report said . The cost could have been reduced considerably had Congress not delayed a planned system of competitive bidding for what Medicare classifies as `` durable medical equipment , '' such as wheelchairs and oxygen tanks , the report said . Competitive bidding would have cut Medicare 's average cost of a standard power wheelchair by nearly $ 1,000 , the inspector general found . `` Medicare and beneficiary payments under the Competitive Bidding Acquisition Program would have decreased by an average of 26 percent across all included categories of -LSB- durable medical equipment -RSB- , saving up to an estimated $ 1 billion annually , '' the report found . `` However , Congress delayed the program and exempted complex rehabilitation power wheelchairs from future competitive bidding . '' Medicare 's annual budget for 2008 was $ 444 billion . In January , it cut its payments to suppliers by 9.5 percent to make up for what it thought competitive bidding would have saved taxpayers , according to the report . In July , a CNN investigation found that a patient and taxpayers were billed about $ 1,200 over four years for a nonmotorized chair , while a nearly identical chair could be bought from the same supplier for $ 349 . The issue has become controversial as the Obama administration tries to overhaul the U.S. health care system and rein in the cost of Medicare . Administration officials want to require competitive bids for items such as wheelchairs . But the American Association for Homecare , which represents many in the durable equipment industry , said the bidding program would reduce patient choice , limit access to home medical care and drive up Medicare costs by requiring more hospital stays .