CMS Makes Some Payment Changes in Oxygen Final Rule

BALTIMORE–CMS will increase some monthly oxygen payments–vs.
those released in its proposed rule–under a final rule issued
Wednesday.

The rule implements a provision in the Deficit Reduction Act
that requires providers to transfer title of oxygen equipment to
the beneficiary after a 36-month rental period, which began Jan. 1,
2006, for beneficiaries already using oxygen. The provision also
caps rental of other DME, such as wheelchairs and hospital beds, at
13 months.

Under changes in the 416-page final rule, which takes effect
Jan. 1, 2007, for new and existing users, payments for stationary
equipment during the rental period increased from $177 per month in
the proposed rule to $198.40. After the ownership transfer, CMS
will pay providers $77.45 a month to fill portable cylinders vs. a
proposed payment of $55. Also under the final rule, the add-on rate
for oxygen generating portable equipment will be $51.63 per month
for 2007.

The agency said it will redistribute the current payment amounts
each year to ensure annual budget neutrality, required under the
law.

“In general, we are pleased that the administration/CMS
recognize the various patient and cost saving benefits of patients
using new technology [such as home transfilling systems], and that
CMS addressed some of the industry’s most significant concerns,”
said Cara Bachenheimer, vice president, government relations, for
Elyria, Ohio-based Invacare Corp. “We are also glad that CMS is
giving oxygen patients the freedom to switch to new technology, if
they sign a patient consent form. CMS obviously wants to make it
easier for patients to have access to the best technology available
to them.”

However, much of the rule is identical to the draft proposal,
issued in July (see HomeCare Monday, July 31), which
completely overhauled the oxygen payment system, creating new fees
and classes.

CMS stressed that Medicare will continue to make monthly
payments for oxygen contents for beneficiary-owned tanks and
cylinders for as long as the patient medically needs oxygen.
Medicare will also:

–Pay for “reasonable and necessary” maintenance and servicing
of beneficiary-owned oxygen equipment and capped rental DME not
covered by a supplier’s or manufacturer’s warranty. Specifically,
CMS will allow payments for maintenance and servicing visits for
certain oxygen equipment every six months beginning six months
after beneficiary ownership, and also will pay for any required
repairs. Payments will be based on the carrier’s or the DME
Medicare Administrative Contractor’s rates for parts and labor.

–Allow one payment for suppliers to pick up and store or
dispose of tanks and cylinders owned by beneficiaries who no longer
need them.

–Continue to make separate payments for necessary supplies and
accessories, such as replacement of cannulas and tubing.

As proposed in the draft, the final rule also contains supplier
requirements to safeguard beneficiaries who own oxygen equipment
and other capped-rental items. These include requiring a supplier
who furnishes rented oxygen equipment or a capped-rental item in
the first month to continue furnishing the item throughout the
entire rental period. If suppliers switch out equipment, the
replacement equipment must be of the same or greater value.
Suppliers also may be responsible for replacing equipment that does
not last for the useful lifetime established for the equipment
under Medicare.

Additionally, CMS will require suppliers to disclose intentions
regarding assignment for the entire rental period.

“There has been a great deal of misinformation about whether
Medicare will continue to cover supplies and services for oxygen
equipment,” said Acting CMS Administrator Leslie Norwalk. “Be
assured that beneficiaries will get the personalized support that
they need.”

According to CMS, the goals of reworking the payment structure
are to “ensure that payments for oxygen and oxygen equipment are
accurate, that beneficiaries who use portable oxygen systems have
sufficient access to oxygen contents, and that Medicare payments do
not create inappropriate incentives to provide particular types of
oxygen technology.”

To view the final rule, click here.