OIG Releases Study for 2005 Oxygen Reimbursement

Washington

Last month the government revealed several pieces of next year’s oxygen reimbursement puzzle, as the HHS OIG released a report recommending CMS cut oxygen reimbursements by 10 to 20 percent.

As required by the Medicare Modernization Act (MMA), CMS will reduce payments for oxygen and certain DME, including beds and air mattresses, power and manual wheelchairs, nebulizers, diabetic lancets and test strips.

The law instructs the agency to base these cuts on two HHS OIG reports that detail 2002 median prices paid by the Federal Employee Health Benefits Plans (FEHBP). One report, covering certain items of DME, was released several years ago, while the other report, covering oxygen, was released last month. Although at press time final reimbursement amounts had yet to be released, CMS has said cuts could range, on average, between 2 percent and 14 percent.

To compile its report on oxygen reimbursement, the OIG used data from 164 FEHBP and Medicare+Choice (now Medicare Advantage) managed care plans, but did not distinguish between managed care and traditional fee-for-service plans in its calculations. According to industry advocates, this creates an “apples-to-oranges” comparison.

“[The OIG] has…succeeded in doing a complete apples-to-oranges comparison based on extremely minimal data,” said Cara Bachenheimer, vice president of government relations for Elyria, Ohio-based Invacare. “They failed to distinguish fee-for-service and managed care plans under FEHBP. They give totals, but the devil is in the details that they don’t identify.”

“The most appropriate comparison between Medicare and any other managed care entity is the fee-for-service plan model,” said Kay Cox, president and CEO of the American Association for Homecare. “Unlike health maintenance organizations, preferred provider organizations or other hybrid managed care models involved in the FEHBP and Medicare+Choice plans, the traditional Medicare program does not contract directly with home oxygen providers and does not guarantee enrollee volume in exchange for pricing concessions, especially across multiple product lines. The OIG report blends the data from all types of plans together, which is an apples-to-oranges comparison.”

An AAHomecare report, also released last month, found only small differences between fee-for-service federal health plan and traditional Medicare payments for oxygen, including only a 0.6-percent difference for stationary oxygen systems and a 0.3-percent difference for portable oxygen systems.

Another industry concern involves HCPCS codes. The OIG report, which used Medicare reimbursement data from 2002, did not account for plan-specific codes that managed care plans asked providers to use in billing for oxygen contents, according to AAHomecare.

The AAHomecare study tracked HCPCS codes that were commonly in use in 2002 and are in place among managed care payers today, the association said, adding that the “inclusion of these oxygen content payments is critical to the accuracy of any survey of median FEHBP prices.”

Stakeholders have also raised the issue of administrative cost differences between the Medicare program and the FEHBP or Medicare+Choice plans. “Medicare’s administrative requirement for home oxygen providers far exceeds those for private managed care plans,” said Lisa Getson, executive vice president, business development/clinical services for Lake Forest, Calif.-based Apria Healthcare, one of the nation’s largest home respiratory care providers. “For example, only 12 percent of FEHB plans require a DMERC CMN for oxygen…yet the OIG was silent on the subject of administrative requirements.”

On the legislative front, H.R. 4491, a bill sponsored by Reps. David Hobson, R-Ohio, and Harold Ford, Jr., D-Tenn., would repeal the 2005 reimbursement cuts. At press time, the bill had picked up 64 cosponsors, but, according to Invacare’s Bachenheimer, “We need 100 [cosponsors] to increase our chances of having this bill passed into law.”