Getty Images

American taxpayers are "grossly" overpaying for penis pumps for Medicare beneficiaries to the tune of millions of dollars each year, a government watchdog says.

The inspector general for the Department of Health and Human Services found that Medicare payments for vacuum erection systems (VES) - a treatment for erectile dysfunction - are more than double the amounts paid for the same or similar devices by people who are not part of the government health program.

The little-noticed IG report, completed in December, is grabbing attention this week as Congress turns its focus to a new $1.1 trillion budget agreement and efforts to cut waste.

Medicare spent $38.6 million on VES in 2011 - up from $20.6 million in 2006, the report found. All told, the government spent $172 million over the five-year period. The IG called it a "grossly excessive" use of taxpayer dollars.

The report found taxpayers could save about $14.4 million a year if Medicare put a payment limit on the devices and/or included them in a competitive bidding program.

The Centers for Medicare and Medicaid Services said it agreed with recommendations by the IG aimed at curbing spending on penis pumps, but suggested that Congress bears the most responsibility for fixing the problem.

"Medicare prices for medical equipment prescribed to a patient by a doctor are set in statute by Congress," said CMS spokesman Aaron Albright. "While Medicare strives to pay appropriately for items and services, and has had success replacing outdated pricing with more reasonable market prices for items covered by our competitive bidding program, CMS does not currently have the authority to subject this equipment to competitive bidding."

Only Congress has the authority to designate items and services which are subject to the competitive bidding program, Albright said. Male vacuum erection systems are currently not covered.