A Costly Proposition

Last month, President Bush announced his administration’s FY 2007 budget proposal, which would reduce Medicare spending over the next five years by $36 billion. The president’s proposed Medicare package includes $7 billion in proposed cuts for DME, and would limit Medicare rental payments for home oxygen therapy to 13 months. (The remaining half billion comes from a proposal to eliminate the first-month purchase option for power wheelchairs.)

That means almost 20 percent of the proposed Medicare cuts would come from a benefit that accounts for approximately 2 percent of Medicare program expenditures.

The oxygen proposal builds off a controversial provision Congress recently included in the Deficit Reduction Act. That provision limits rental payments for home oxygen to 36 months, and forces the beneficiary to own the oxygen equipment from that point forward. How beneficiaries receive ongoing care, maintenance, service and repair services beyond 36 months is unclear.

Congress included the DRA provision at the last minute, after the House and Senate had passed versions of the bill without it, and without any study, hearings or consultation with affected parties.

The administration’s budget proposal will sharply limit the Medicare home oxygen benefit after 13 months and further jeopardize beneficiary access to quality care and services. Virtually every beneficiary requiring home oxygen to sustain life will suffer dramatic benefit reduction because Medicare beneficiaries are on home oxygen therapy for an average of 26 months.

Once ownership of the equipment transfers to the beneficiary, the home oxygen provider will no longer have a relationship with that person. The beneficiary will then be responsible for ensuring the equipment continues to function properly, that the oxygen purity levels are appropriate, that regular maintenance is performed and that he or she has the necessary accessories/supplies, such as cannulas and tubing.

In addition, today beneficiaries typically have ongoing access to a respiratory therapist to monitor their condition. It is unclear how seniors will obtain necessary RT services once equipment ownership passes to the consumer. Most important, in the event of an electrical outage, it is unclear how beneficiaries will obtain back-up compressed oxygen tanks to use when there is no electricity to power the oxygen concentrator.

Many beneficiaries will end up in hospital emergency rooms or being admitted to a hospital, where the daily cost exceeds $3,600. In contrast, an entire year of home oxygen therapy can be provided for about $2,784.

Medicare and its beneficiaries are not paying for oxygen equipment; they are paying for home oxygen therapy — 24 hours a day, seven days a week, 365 days a year. Oxygen is a federal legend drug, and the devices dispense a prescription drug: oxygen. The oxygen technologies used to produce and/or deliver the drug are only technical components associated with the overall provision of home oxygen therapy.

Focusing attention on the relationship between the overall cost of providing this therapy and the cost of a single component of its provision is a complete misunderstanding of how beneficiaries on home oxygen therapy receive care.

The unplanned effect will transfer the burden of maintenance and repair of sophisticated oxygen technologies to beneficiaries or caregivers and, therefore, the total management of their home oxygen therapy regimen. This will clearly produce the undesired effect of unmonitored and unregulated dispensing and distribution of a prescription drug. This presents a serious risk to patient safety and care — and will undoubtedly result in higher costs to the patient and the system.

Home oxygen payments have been drastically reduced over the last decade. The 1997 Balanced Budget Act produced a 30 percent cut in the home oxygen payment in conjunction with CPI freezes that are still in place today. The FEHBP cuts resulting from the Medicare Modernization Act added another 12 percent cut.

If there ever was a time when your company should take an active role in educating your senators and representatives about the impacts of this budget proposal, this is it.

A specialist in health care legislation, regulations and government relations, Cara C. Bachenheimer is vice president, government relations, for Invacare Corp., Elyria, Ohio. Bachenheimer previously worked at the law firm of Epstein, Becker & Green in Washington, D.C., and at the American Association for Homecare and the Health Industry Distributors Association. You can reach her by phone at 440/329-6226 or by e-mail at [email protected].