CMS to Overhaul Oxygen Fees, Add Supplier Requirements

Baltimore

CMS announced its plans in late July to overhaul its oxygen payment system, creating new categories and fees.

The proposed rule, issued in late July, implements a capped rental provision in the Deficit Reduction Act that requires providers to transfer title of oxygen equipment to the beneficiary after 36 months of rental. Similarly, according to the proposal, beneficiaries will acquire title to other capped rental equipment after 13 months of rental. The beneficiary would continue to pay coinsurance of 20 percent of rental payments, but would no longer pay coinsurance on the equipment after the transfer of title.

Under the proposal, CMS calls for reworking the oxygen classification system, splitting stationary and portable oxygen contents into two separate payment classes. The proposal also calls for a third payment class for new technologies, such as portable concentrators and home transfilling systems, that eliminate the need for refilling and delivery of oxygen contents.

In a release accompanying the proposal, CMS said the new structure is intended to ensure that payments for oxygen and oxygen equipment are accurate, that beneficiaries who use traditional portable oxygen systems have sufficient access and that Medicare payments do not create incentives to provide particular types of oxygen technology.

According to the proposal, payment for portable oxygen refills would increase to $55 compared to the current average refill payment of $21, but the monthly payment amounts for stationary oxygen equipment and contents would drop from an average of $199 to $177.

After the rental period, Medicare will continue to make monthly payments for oxygen contents for beneficiary-owned equipment. In addition, Medicare said it will 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.”

Provider Janice Petsch said the payment changes, combined with the oxygen cap, could make it impossible to maintain her company’s current business model. For starters, the company will no longer be able to send therapists out to patients, she said, and other cost-saving measures will follow.

“I think we could handle a lot more if it was just one thing at a time,” said Petsch, who runs six-year-old Petsch Respiratory Services with her husband in Martinez, Ga. “I don’t have a problem with the fee cuts and new regulations, but to do everything at one time now is incorrigible.”

The American Association for Homecare said it was concerned that CMS did not consult providers, patients or pulmonary physician groups about the proposed rule.

“Policy for medical oxygen under Medicare deserves review to ensure that the payment system is appropriately aligned with the actual clinical and lifestyle needs of the oxygen patient,” said Tom Ryan, AAHomecare chairman and CEO of Homecare Concepts, Farmingdale, N.Y. “But the changes proposed in this rule do nothing to address the needs of the approximately one million Medicare beneficiaries receiving oxygen therapy at home.

“The logic behind this new rule is still driven by the idea that the chief cost component of oxygen therapy in the home is equipment. The reality is oxygen therapy requires many services that CMS does not account for in its reimbursement.”

CMS also calls for additional supplier requirements “to safeguard beneficiaries.” These include requiring a supplier that furnishes rented oxygen equipment or a capped rental item in the first month to continue furnishing the item throughout the entire rental period. Suppliers also would not be allowed to switch out equipment during the rental period, except under specified circumstances, and they would also be required to disclose their intentions regarding assignment for the entire rental period.

The new requirements would take effect Jan. 1, 2007.

For more, see “Washington Wit & Wisdom” on page 86.

CMS is accepting comments on the proposal through Sept. 25. Visit www.cms.hhs.gov/eRulemaking.

Proposed Oxygen Payment Rates

• Stationary: $177; after 36 months: $101
• Concentrator and portable tanks: $209 ($177 concentrator, $32 portable add-on); after 36 months: $55
• Concentrator and oxygen-generating portable equipment: $241 ($177 concentrator, $64 add-on); after 36 months: $0
• Stationary and portable: $209 ($177 stationary, $32 add-on); after 36 months: $156 refills ($101 stationary, $55 portable)
• Stationary and oxygen-generating portable equipment: $241 ($177 for stationary, $64 add-on); after 36 months: $101 for refills
• Concentrator: $177; after 36 months: $0