The Importance of Service

Tucked away in committee report language accompanying the CHAMP (Children’s Health and Medicare Protection Act of 2007) bill, is a mandate for the Department of Health and Human Services to conduct a study to examine the services provided to beneficiaries as part of the home oxygen therapy benefit.

This language is a critical next step for policy makers as they assess whether the Medicare program pays appropriately for home oxygen.

Take note of a few facts. Oxygen is under scrutiny by Congress, the Office of Inspector General, CMS and others, based upon the ill-founded but deep assumption that Medicare pays too much for this benefit. (Never mind the connected fact that those misperceptions are based on a comparison of the acquisition cost of a concentrator to the monthly payment amount).

For years, the industry has told Congress about all of the services that we provide to oxygen beneficiaries and how critical these services are to ensure compliance. And we have done a notable job in demonstrating the real service costs incurred in providing home oxygen therapy.

A 2006 Morrison Informatics study, sponsored by the American Association for Homecare, demonstrates that equipment acquisition is only 28 percent of a supplier’s “total delivered costs,” and that 72 percent of costs are attributable to services, claims filing, normal business operation costs, etc.

Members of Congress, however, will never make significant policy decisions based on an industry-funded study. A government-backed study is necessary if federal policy makers are to recognize the value of these services — and then make a decision to pay for them.

The good news here is that the drafters of this language understand there is a real need for services when a frail senior requires oxygen, that oxygen is not “just an equipment benefit.” This is a huge step forward.

Their next questions are what those services are, which services provide value and how much they reasonably cost providers. As an industry, we describe the “bundled payment amount” that is akin to a capitated payment amount, and under which the consumer can expect to receive all necessary services. But the prudent payers on Capitol Hill want to get into the details, understand what is value-added, and then pay appropriately.

The conference report language asks HHS to assess six related questions related to oxygen services. Following is the full text of the report language:

“The Secretary would be required to conduct a study to examine the services component and equipment component of the provision of oxygen to Medicare beneficiaries. The study would assess: (a) the type of services provided and variation across suppliers in providing services; (b) whether the services were medically necessary or affected patient outcomes; (c) whether the Medicare program pays appropriately for equipment in connection with the provision of oxygen; (d) whether the program pays appropriately for necessary services; (e) whether the payment should be divided between equipment and services; (f) how the payment rate compares to the competitively bid rate. The Secretary would be required to submit the report to Congress not later than 18 months after the date of enactment of this Act.”

Obviously, the devil will be in the details necessary to examine these issues. Of course, the industry must be heavily involved with the government officials responsible for the study. We must do our due diligence in educating the drafters from A to Z about oxygen therapy, the patients, the services, the equipment and the many and varied costs involved.

While the CHAMP bill will never be passed into law in the form it was approved by the House on Aug. 2, the language on the oxygen services report will likely be lifted and either placed in alternative legislation or be copied into a letter directive from Congress to HHS. Legislation is not necessary for members of Congress to have HHS conduct the study.

The representatives who drafted this language have expressed a strong desire to pursue this report and to understand better the total delivered costs in providing home oxygen therapy. We must work closely with them to ensure the report is as accurate and comprehensive as possible.

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].