Another Surprise

Catching the entire home care industry by surprise, CMS announced a dramatically different Medicare payment system for home oxygen on July 27.

In the proposal, which implements the oxygen and DME capped rental provisions of the Deficit Reduction Act, CMS calls for establishing separate monthly payment “classes” for portable and stationary oxygen contents delivery and new, alternative oxygen equipment technologies that meet the patient’s oxygen needs without delivery.

• Classes and Payment Rates: CMS proposes establishing a new class and monthly payment amount for new technology such as portable oxygen transfilling equipment and portable oxygen concentrators. A higher portable add-on payment would be allowed for these systems that eliminate the need for delivery and refilling of oxygen contents for portable systems. The agency also suggests establishing two separate classes and monthly payment amounts for stationary and portable oxygen contents for gas and liquid beneficiary-owned equipment. By law, CMS is required to keep total spending for all modalities of oxygen equipment, including contents, the same under the proposed change as it would be without the change. To achieve this budget neutrality, CMS calls for lowering payments for some classes of oxygen and increasing payments for others.
• Maintenance and Service Payments: CMS would continue to pay for “reasonable and necessary” maintenance and service to beneficiary-owned oxygen equipment that must be performed by technicians (e.g., breaking seals). Beneficiaries and their caregivers would perform routine maintenance on beneficiary-owned equipment. CMS also would continue to pay for loaner equipment while a beneficiary’s equipment is being repaired.
• Replacement: Under the proposal, the supplier would be responsible for replacement of beneficiary-owned oxygen equipment or capped rental items in use for less than five years — the current reasonable useful lifetime for DME — if total accumulated costs of repair exceed 60 percent of the replacement cost for the item. This would not apply in cases where replacements are covered under a supplier’s or manufacturer’s warranty. For beneficiary-owned items, the supplier that transferred title for the item to the beneficiary would be responsible for furnishing the replacement item. Separate payment for replacement of supplies and accessories (e.g. cannulas, tubing) would continue after ownership of the equipment transfers to the beneficiary.
• Beneficiary Safeguards: A supplier that furnishes rented oxygen equipment/capped rental to the beneficiary must continue to furnish that item throughout the beneficiary’s entire length of medical need, except in certain circumstances, under the proposal. CMS says this is to protect a beneficiary from being forced to change equipment or suppliers during the period of medical need unless he or she wants to.

The agency also states that it is “concerned that there might be potential incentives for a supplier to provide lower-quality equipment before the title transfers to the beneficiary.” Therefore, CMS proposes that, with certain exceptions, the supplier may not switch out equipment at any time during the 36- or 13-month rental period.

The supplier also must disclose to the beneficiary its intentions regarding assignment of all potential monthly rental claims for oxygen equipment/capped rental DME items. “Because a supplier’s decision on assignment has direct financial effect on beneficiaries, we are making this proposal so that beneficiaries can make an informed choice and to promote competition among suppliers,” CMS said.

Further, the agency states that “to promote beneficiary choices,” it plans to post information on a CMS or CMS contractor Web site indicating the percentage of beneficiaries for which a supplier accepts assignment and the percentage of cases for which the supplier accepted assignment during the beneficiary’s entire rental period.

In cases where a beneficiary moves, either temporarily or permanently outside the initial supplier’s service area, CMS proposes that another supplier may be arranged to furnish the item on either a temporary or permanent basis.

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].