6 scenarios in which HME providers can legally restart the oxygen rental period
by Jeffrey S. Baird
April 8, 2019

Providing oxygen will always be an important part of the home medical equipment (HME) industry. The reason is simple: HME providers furnish products and services to people who need them to function on a daily basis. In many cases, the people who need such products and services are seniors. Incidences of chronic obstructive pulmonary disease (COPD) increase among the senior population, which makes it a common area of concern for HME providers.

Providers often ask: “Are there scenarios in which the HME provider can start over the initial 36-month rental period?” The answer is yes. The following will review each of these scenarios.

1. After the 5-year Reasonable Useful Lifetime Period Has Expired

The reasonable useful lifetime (RUL) for oxygen equipment is five years. At any time after the end of the five-year RUL for oxygen equipment, the beneficiary may elect to receive new equipment, thus beginning a new 36-month rental period. The five-year period begins on the initial date of service and runs for five years from that date. It is not based on the actual age of the equipment. It does not restart if there has been a change in oxygen modality, change-out of equipment, or change in supplier.

When the RUL of a beneficiary’s portable oxygen equipment differs from the RUL of the beneficiary’s stationary oxygen equipment, the RUL of the stationary oxygen equipment will govern for both types of oxygen equipment, stationary and portable. If the RUL end date of the portable oxygen equipment is before the RUL end date of the stationary oxygen equipment, the RUL end date of the portable oxygen equipment is extended to coincide with the RUL end date of the stationary oxygen equipment. If the RUL end date of the portable oxygen equipment is after the RUL end date of the stationary oxygen equipment, the end date of the RUL of the portable oxygen equipment is shortened.

2. Damage Beyond Repair, Stolen or Lost

A specific incident of damage to equipment such as the equipment falling down a flight of stairs, as opposed to equipment that is worn out over time. A new 36-month rental period cannot be started if the equipment is replaced due to malfunction, wear and tear, routine maintenance or repair.

3. After a More than 60-Day Break in Medical Need

If a Medicare beneficiary enters a hospital or skilled nursing facility (SNF), or joins a Medicare Advantage plan, and continues to need oxygen during that period, when he or she returns home or rejoins Medicare fee-for-service (FFS), then payments resume where they left off.

During the 36-month rental period, if the patient’s need for oxygen equipment ends, but then resumes sooner than the remainder of the rental month of discontinuation plus 60 days, rental payment resumes where it left off.

If there is an interruption in medical necessity of greater than 60 days plus the days remaining in the last paid rental month, once the need for oxygen resumes, the supplier will need to collect supporting documentation of the new medical need in order to resume care.

4. Abandonment of Oxygen Patients

In late August 2013, the Centers for Medicare & Medicaid Services (CMS) published the following announcement addressing “abandonment” of patients.

“Effective immediately, CMS will allow for the replacement of oxygen equipment in cases where a supplier exits the Medicare oxygen business and is no longer able to continue furnishing oxygen and oxygen equipment. In these instances, the oxygen equipment will be considered lost and a new 36-month rental period and reasonable useful lifetime will begin for the new supplier furnishing replacement oxygen equipment on the date that the replacement equipment is furnished to the beneficiary.”

According to CMS, suppliers exiting the Medicare oxygen business with patients that they are unable to transfer to new suppliers should be aware that they are in violation of statutory and regulatory requirements for furnishing oxygen equipment both before and after the payment cap.

As such, oxygen suppliers who do not fulfill their oxygen obligations and voluntarily exit the Medicare oxygen business are not in compliance with HME provider standards.

5. Oxygen Patients of Closed HME Provider

The Durable Medical Equipment Medicare Administrative Contractor (DME MACs) have published guidance that states: Suppliers voluntarily exiting the program must provide a minimum of 30 days’ notice to the beneficiary of their intention to no longer provide oxygen therapy services. This must be provided in writing and must take one of two forms:

  1. A letter to the beneficiary notifying him or her of the supplier’s intention to discontinue oxygen therapy services. The letter must specify a date upon which this will occur; or
  2. Working with the beneficiary, a letter to a new supplier selected by the beneficiary, transferring provision of oxygen therapy services to the new supplier as of a specific date.

In the event of an audit, suppliers should be prepared to provide documentation demonstrating that the beneficiary was transferred from a supplier exiting the Medicare oxygen program. Examples of documentation to meet this requirement are:

  • Copy of a notice sent to the beneficiary from the old supplier indicating that the supplier’s services were being terminated;
  • Letter from the old supplier to the new supplier indicating transfer of the beneficiary due to the voluntary exit from the Medicare program; or
  • Attestation statement from the beneficiary indicating that the beneficiary or his or her caregiver has attempted to contact the existing supplier and has been unable to obtain service.

6. Oxygen Patients of Bankrupt HME Provider

CMS provides the following guidance related to payment for replacement oxygen equipment in bankruptcy situations:

“When a supplier files for Chapter 7 or 11 bankruptcy ... and cannot continue to furnish oxygen to its Medicare beneficiaries, the oxygen equipment is considered lost in these situations and payment may be made for replacement equipment. For replacement oxygen equipment, a new reasonable useful lifetime period and a new 36-month payment period begins on the date of delivery of the replacement oxygen equipment.”

CMS guidance for a Chapter 7 states, “supporting documentation must include court records documenting that the previous supplier filed a petition for a Chapter 7 bankruptcy in a United States Bankruptcy Court ... ” For a Chapter 11, the “supporting documentation must include Court records documenting that the previous supplier filed a petition for a Chapter 11 bankruptcy in a United States Bankruptcy Court; and documents filed in the bankruptcy case confirming that the equipment was sold or is scheduled to be sold.”

Oxygen customers are allowed 36 months or three years with their equipment before it is required that they recertify their disease state. Providers must be aware of exactly when that rental period starts and when it has the potential to restart—and why—to better serve their patients and avoid compliance headaches.