AAHomecare Details Flaws in OIG Oxygen Report

ALEXANDRIA, Va.–A new analysis commissioned by the American
Association for Homecare disputes the findings in a recent HHS
Office of Inspector General report on home oxygen.

The analysis from Mechanicsburg, Pa.-based Morrison Informatics
said that the recommendations in the OIG report–including a
13-month cap on home oxygen rental–are based on “limited and
inadequate data” about the actual costs of providing home oxygen
therapy to Medicare beneficiaries. An earlier study from Morrison,
also commissioned by AAHomecare, found that services account for
the lion’s share of costs in providing home oxygen at 72 percent
(see HomeCare Monday, July 10).

According to the health care consulting firm, the OIG report
considers only the costs of oxygen concentrators, which understates
actual costs. “The narrow scope of the OIG report results in
information that is neither accurate nor complete, and its findings
should not be used for determining Medicare home oxygen
reimbursement policy,” AAHomecare reported in its newsletter last
week.

The analysis noted other problems, including:

• Methodological Concerns
  –The OIG report only examined selected costs associated with home
  oxygen therapy and therefore cannot justify a recommendation to
  reduce the payment period from 36 months to 13 months. The costs of
  oxygen equipment comprise only 28 percent of home oxygen providers’
  total costs.
  –The report did not study a statistically valid sample of
  beneficiaries to project the results over the entire Medicare
  population.
  –The OIG’s savings estimate using a 13-month capped rental period
  is not accurate since it does not reflect payments Medicare would
  have to make to reimburse providers for services currently covered
  in the monthly, bundled payment rate, and it includes savings that
  would not be scored by the Congressional Budget Office and CMS
  Office of the Actuary as cost savings to Medicare.
  –The OIG report stated that most non-equipment service costs were
  not studied by the OIG, and CMS acknowledged the same in its
  comment letter to the OIG. So the OIG savings estimates do not
  account for costs that Medicare will incur and the estimates
  require adjustment, as recommended by CMS.
• Invalid Comparative Data
  –The OIG’s repeated use of 36 months of total reimbursement is
  inappropriate because this represents only 22 percent of all
  patients, not the average patient length of stay of 18 months, and
  therefore does not provide a valid comparison of Medicare
  reimbursement to the average cost of oxygen concentrators that was
  cited.
  –The Veterans Administration’s model cited by OIG is completely
  different than the Medicare model. Once all comparative costs
  incurred by the VA are accounted for, its payment levels for home
  oxygen therapy approach an acceptable range of Medicare’s payment
  levels.
• Reimbursement Cuts Are Already Underway with Savings
  Yet to be Realized
  –The OIG report did not account for the financial savings
  attributable to the Medicare Modernization Act of 2003, which
  mandated two reimbursement reductions for oxygen: the Federal
  Employees Health Benefits Plan median pricing adopted in 2005,
  resulting in an 8 percent savings, and competitive bidding,
  scheduled to begin in 2007, for which CMS projects 10 percent
  savings. Nor did OIG account for savings attributable to the
  Deficit Reduction Act of 2005, which will begin to be realized in
  2009.
  –Establishing a 13-month maximum reimbursement/rental period for
  home oxygen, when added on top of a series of statutory and
  administrative reimbursement cuts already undertaken or
  contemplated, would harm vulnerable beneficiaries.