American Association for Homecare’s Initial Summary of Oxygen Policy Payment Changes Outlined In the 2009 Physician Fee Schedule Final Rule

The Centers for Medicare & Medicaid Services (CMS) has announced new oxygen payment rules and supplier responsibilities required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). The CMS regulation addresses home oxygen provider responsibilities and coverage policy after the 36-month rental cap including for oxygen contents, maintenance, service, supplies, accessories, and repairs; treatment of traveling patients; and useful lifetime policy.

CMS has indicated that the Agency will continue to provide additional program guidance over the next few months on specific policies and rules related to implementation of the changes to Medicare payment for oxygen and oxygen equipment mandated by both MIPPA and the Deficit Reduction Act of 2005. The American Association for Homecare‘s initial summary of the key provisions is below.

Oxygen Equipment

• The home oxygen provider that furnishes oxygen equipment during the 36-month rental period must continue to furnish and maintain the oxygen equipment after the 36-month rental period during any period of medical need for the remainder of the useful lifetime of the equipment.
• If the beneficiary relocates at some time after the 36-month rental period but before the end of the reasonable useful lifetime of the equipment, the home oxygen provider must make arrangements for the beneficiary to continue receiving the equipment at his or her new place of residence. This responsibility is not transferred to another supplier.
• If a break in medical need occurs following the 36-month rental period, the supplier must resume furnishing the oxygen equipment after the break ends and the beneficiary once again has a medical need for the oxygen equipment.
  • The supplier is responsible for furnishing the item for no additional rental payments until the end of the equipment’s useful lifetime.

• If the equipment’s useful lifetime (which is determined based on the date the equipment is first delivered rather than the age of the equipment) ends during a break in medical need, the supplier is under no obligation to continue furnishing the equipment once the beneficiary again has medical need for the oxygen.
  • The beneficiary may elect to obtain new equipment in these situations where the useful lifetime of the equipment ends during a break in need.
  • If the beneficiary elects to obtain new equipment, a new 36-month rental period and a new useful lifetime (currently 5 years for oxygen equipment) begin.

• The protection against supplier replacement of oxygen equipment, unless an exception applies, continues to be in effect after the 36-month rental period ends until the expiration of the useful lifetime established for the equipment.
  • CMS believes that this is a necessary safeguard for the beneficiary against changes in equipment made by the supplier in order to maximize payments resulting from moving from one payment class or modality to another.
  • The exceptions to the prohibition of supplier replacement of oxygen equipment are: (i) The supplier replaces an item with the same, or equivalent, make and model of equipment because the item initially furnished was lost, stolen, irreparably damaged, is being repaired, or no longer functions; (ii) A physician orders different equipment for the beneficiary. If the order is based on medical necessity, then the order must indicate why the equipment initially furnished is no longer medically necessary and the supplier must retain this order in the beneficiary’s medical record; (iii) The beneficiary chooses to obtain a newer technology item or upgraded item and signs an advanced beneficiary notice (ABN); or (iv) CMS or the carrier determines that a change in equipment is warranted.

Oxygen Contents

• Payment will be made for oxygen contents for use with liquid or gaseous oxygen equipment furnished after the 36-month rental period.
• An oxygen provider that furnishes liquid or gaseous oxygen equipment during a 36-month rental period must continue to furnish both the oxygen equipment and contents for any period of medical need for the remainder of the useful lifetime of the liquid or gaseous oxygen equipment.
• The supplier must make arrangements for the beneficiary to continue receiving oxygen contents if the beneficiary relocates at some time after the 36-month rental period but before the end of the reasonable useful lifetime of the liquid or gaseous equipment (stationary and portable). The supplier must make arrangements for the beneficiary to continue receiving the oxygen contents and equipment at his or her new residence.

Routine Maintenance & Service

• Payments will be made when the provider performs a routine maintenance and servicing visit for certain oxygen equipment (concentrators and transfilling equipment) following each period of continuous use of 6 months after the 36-month rental period ends.
  • Routine maintenance and servicing payments do not apply to liquid or gaseous oxygen equipment (stationary or portable) because CMS believes the provider should ensure that the tanks and cylinders are functioning properly at the time it is furnishing oxygen contents.

• Payment will be equal to only 30 minutes of labor for general maintenance and servicing of oxygen equipment (other than liquid or gaseous equipment – stationary and portable).
  • CMS believes that this is adequate compensation based on findings by the OIG in the September 2006 report that many routine maintenance activities performed by suppliers on concentrators could be performed within that timeframe.

• Maintenance and servicing payments will be made only for an actual visit to the beneficiary’s home or temporary residence and do not accurately reflect additional costs associated with travel to the beneficiary’s residence.
  • The primary purpose of the periodic visit would be to check the supplier-owned oxygen equipment to ensure that it will continue to function properly for the succeeding 6-month period of continuous use and does not need to be replaced.

• Separate payment will NOT be made for parts replaced during the routine maintenance and servicing visit.
  • The supplier should be responsible for replacing the parts on equipment from their inventory in order to meet the beneficiary’s medical need for oxygen.

Non-Routine Maintenance & Service

• CMS believes that it is not reasonable and necessary to make payments for repair or nonroutine maintenance and servicing (including repair) of supplier-owned oxygen equipment.
  • CMS believes that oxygen equipment is largely reliable equipment which requires minimal maintenance and servicing during the first 5 years of use. Warranties covering 5 years are generally available for the top selling brands of oxygen equipment and it is CMS’ understanding from manufacturers that such products are generally dependable.
  • The Department of Veterans Affairs (VA) has reported to CMS that, based on their experience, oxygen concentrators will usually operate for 5 years without the need for significant repair or replacement of costly parts.

Supplies and Accessories

• Payments will not be made for supplies and accessories furnished after the 36-month rental period.
  • CMS believes that payments during the 36-month rental period cover all of these costs through-out the useful lifetime of the equipment.