Oxygen: Not for the Faint of Heart

Oxygen delivery systems may be the least understood and least appreciated machines in the eyes of government regulators. As the target of relentless reimbursement reductions throughout the years, oxygen providers suffered yet another blow in the form of a Government Accountability Office report issued in February.

At its core, the 114-page report contained many of the same conclusions as in the past but with a hint of a silver lining lurking beneath the black cloud.

"In the report, the GAO did come flat out and say that CMS is paying too much for oxygen," says Bob Hoffman, RRT, director of VGM's Nationwide Respiratory, Waterloo, Iowa. "More importantly, at the end of the report, they did say that CMS should restructure Medicare's home oxygen payment methodology to establish more accurate rates for all the different types of oxygen."

Medicare payment for concentrators, for example, encompasses the machine, supplies and oxygen refills. "That should not be the case," argues Hoffman. "As a result, they are paying less than they should for the portables."

At the same time, some clinicians are pushing for better prescriptions and more monitoring to make certain that oxygen therapy — and equipment — is doing its job for the patient.

As usual, providers are left wondering how they are going to provide service and survive in today's market. As to the question of whether CMS is subtly pushing providers toward one modality or the other, Hoffman doesn't believe it. "I don't think CMS really cares as far as one modality or the other," he says. "They are just looking for ways to cut the budget."

Fundamental concerns with the GAO report include specific questions of methodology. Ron Richard, vice president and general manager, respiratory, Chart SeQual Technologies (a division of Caire), San Diego, points out that the eight private insurers the GAO interviewed for its report used payment methodologies similar to Medicare's, but seven did not use a rental cap.

According to the report, if Medicare had used the payment rates of the lowest-paying private insurer, it could have saved about $670 million of the estimated $2.15 billion it spent on home oxygen in 2009. But Richard explains, "If the cap is taken out of the equation, one has to assume that they are not projecting a 'longevity' variable, just per-year costs. In other words, it does not seem they are accounting for a particular beneficiary's length of usage — and suppliers' billing — to calculate costs/savings."