OIG Suggests 13-Month O2 Cap; Senate Scraps Idea for Now

Atlanta

Respiratory providers were breathing a little easier last month after they learned that a proposed 13-month cap on rental of oxygen equipment has been taken off the table, at least for the time being.

“I’m going to sleep a lot better tonight … At least for now it appears we have dodged a bullet,” Invacare CEO Mal Mixon said at the American Association for Homecare Humanitarian Dinner during Medtrade.

On Sept. 14, the HHS Office of Inspector General said that the Deficit Reduction Act’s 36-month oxygen rental cap didn’t go far enough, and recommended that CMS work to reduce the rental period to 13 months.

If Medicare rental payments for oxygen concentrators were limited to 13 months, the program would save approximately $3.2 billion over five years, the OIG report said, noting that home oxygen equipment accounted for $2.4 billion of the $11.1 billion Medicare paid for DMEPOS in 2004.

According to the report, the DRA allows up to $7,215 over 36 months for rental of stationary concentrators that average only $587 to buy. Beneficiaries add another $1,443 in copayments over that time, the OIG said. “Medicare and its beneficiaries will continue to pay more than 12 times the purchase price for concentrators under the new 36-month rental limitation,” the report said.

The study, “Medicare Home Oxygen Equipment: Cost and Servicing,” set out to compare Medicare spending for oxygen concentrators with suppliers’ average purchase price and to determine the nature and frequency of servicing for concentrators and portable equipment.

The OIG said that “minimal servicing and maintenance for concentrators and portable equipment are necessary,” and that suppliers teach beneficiaries routine maintenance and check concentrators more than manufacturer guidelines require.

“Unfortunately, Sen. Charles Grassley, [R-Iowa], either knowingly or unknowingly, endorsed this,” John Gallagher, vice president of government relations for Waterloo, Iowa-based The VGM Group, explained during a Medtrade session.

Grassley, chairman of the Senate Finance Committee, which oversees Medicare, had planned to turn the proposal into a Senate bill. “That’s scary,” Gallagher said.

But the industry reacted quickly. VGM sent out an alert to Iowa providers, the Midwest Association of Medical Equipment Suppliers and VGM’s more than 430 employees asking them to contact Grassley’s office about the cap and the negative effect it would have on Medicare beneficiaries.

According to Mixon, who called the OIG report a “biased, flawed, stupid study,” both VGM and Apria Healthcare “mobilized virtually their entire workforce to make calls and send faxes” about the report.

“We won one for a change, thanks to you all, thanks to your beneficiaries, and thanks to the various industry stakeholders,” Gallagher said.