CMS Sets 2005 Oxygen Fees

Baltimore

Some providers who had braced for big reimbursement cuts expressed quiet relief when Medicare announced that it was reducing home oxygen fees by an average of less than 9 percent. Last year, an HHS Office of Inspector General report had recommended cuts of up to 20 percent.

“We prepared for the worst, and we’re pleasantly surprised,” said Rebecca Olson, sales manager for Oxygen One, Wakesha, Wis. The independent provider had planned for severe oxygen cuts — anywhere from 10 to 30 percent, Olson said, but her state only experienced a 1.8 percent drop in stationary oxygen payments.

Required by the Medicare Modernization Act to bring oxygen reimbursements in line with median Federal Employee Health Benefits Plan pricing, CMS published the 2005 fee schedule in late March after delaying the release to allow for further OIG analysis.

The agency estimates that the average rate reduction is 8.6 percent for stationary oxygen and 8.1 percent for portable units. Actual fee cuts, however, vary by state. The new monthly payment amounts range from $194.48 to $200.41 for stationary oxygen and $30.57 to $32.08 for portable equipment.

A number of states saw no change. But some providers, especially those outside of the continental U.S., weren’t as fortunate. Hawaii was hit with a 20 percent cut for stationary oxygen and a 28 percent cut for portable systems, and more than half of all states are seeing a 12 percent cut on stationary systems.

Bobby Bowden, general manager at Nare Home Medical in Cullman, Ala., said the cuts will do more than affect business’ bottom lines. “Whether anybody likes it or not, it’s all about patient care, and when they start cutting money, it’s going to cut patient care,” he said. “I don’t know what it’s going to take for the patients to start screaming nationwide.”

The new OIG report was a revision of an earlier analysis, which was scrutinized for its methodology. The American Association for Homecare was one of its most outspoken critics, contending that the report did not take into account the differences between managed care and fee-for-service models, creating an “apples-to-oranges” comparison. A study the organization commissioned last year found virtually no difference in oxygen fees between FEHBP and Medicare fee-for-service plans.

The new fees took effect in early April, but 2005 claims submitted before that will be paid at 2004 rates and will not be retroactively adjusted.

To view the new fee schedule, visit www.cms.hhs.gov/suppliers/dmepos and click on the oxygen payment rates link in the highlights box.

THE BIGGEST DECREASES

For stationary oxygen:

Puerto Rico — 31% decrease, from $291.32 to $200.40

Alaska — 15% decrease, from $234.88 to $200.40

Hawaii — 20% decrease, from $251.18 to $200.39