New Oxygen Policy Synchronizes RULs

The following release from MiraVista LLC includes a clear explanation from industry consultant Andrea Stark on how CMS’ new reasonable useful lifetime (RUL) policy for stationary and portable oxygen equipment affects HME suppliers. Announced in CR 7213, the new policy took effect May 8, 2011. For additional information, contact Stark at [email protected].

COLUMBIA, S.C. — On May 8, 2011, a new oxygen policy went into effect that synchronizes the reasonable useful lifetimes (RUL) of stationary and portable oxygen equipment. In cases where a patient has both stationary and portable equipment, the RUL of the stationary unit will now serve as the RUL for both pieces of equipment, regardless of when the portable was prescribed.

The most common reason for asynchronous RULs between stationary and portables is that a patient initially qualified nocturnally. Patients who initially qualify for oxygen therapy during sleep only qualify for stationary equipment and must secure a separate test, while they are awake, to qualify for portability.

DME consultant and reimbursement expert Andrea Stark expects the change will be positive for most suppliers.

“It’s important to note that the new policy is just synchronizing the reasonable useful lifetime at the 60-month mark. It is not directly affecting the capped rental mark of 36 rental payments,” Stark said. “The majority of suppliers will still receive their full 36-months of rental for both pieces of equipment, with the added bonus of starting new capped rentals for their portable units earlier.”

According to Stark, portable equipment is generally prescribed along with, or shortly after, a stationary concentrator. So for the majority of suppliers, the new rule means less time servicing portable equipment and less time providing contents they can’t bill for separately.

For example, if a patient is prescribed a portable system six months after a concentrator, the supplier may bill for the following once the concentrator caps at 36 months:

• Six additional months of simultaneous billing for the remaining portable rentals and portable contents to reach the portable’s 36-month cap (billing for portable contents may begin only after the stationary unit caps).
• An additional 18 months of billing for portable contents only (once the portable unit caps, the stationary unit will be 42 months into its service period and will have 18 months remaining to reach its 60-month RUL).

Under previous policy guidelines, if the patient above elects to start a new capped rental period for their stationary equipment, the supplier must discontinue billing for portable contents (as this is considered included in the stationary rental) and must wait an extra six months to restart the portable rental. Since the portable unit has capped, this leaves the supplier servicing the equipment for the remainder of its RUL without separate payment. However, this wait is eliminated under the new RUL policy.

Effective May 8, 2011, suppliers may chop off those additional non-paid months of portable service and simultaneously begin a new rental period for portables with stationary equipment.

According to Stark, even if a portable unit is added after a stationary unit caps, suppliers still receive up to two full years of both rental and content payments for the portable, plus have the added benefit of completely eliminating the additional two-year service period for the portable equipment.

“Not only will suppliers be able to start new rentals sooner,” said Stark, “but the new policy alleviates the administrative burden of going back multiple times to get revised documentation and CMNs. Now they can do it all in one swoop.”

While Stark sees this policy change as positive for suppliers, she understands why some may be tempted to view the change as negative.

“In the past, changes to the oxygen policy haven’t necessarily been in the best interests of suppliers,” said Stark. “So it’s only natural that the first instinct may be to see history as repeating itself. However, I see suppliers as ultimately coming out on top with this one.”

Stark did provide one situation where suppliers may initially take issue with the policy change.

“If a supplier doesn’t provide gas or liquid portables and chooses to provide a home fill or portable concentrator more than two years after stationary therapy was initiated, the potential exists to lose out on a few premium rentals over the course of 10 years,” said Stark. “But this scenario is such a far stretch, that you really have to be reaching for sour milk.”

One thing that hasn’t changed is the inability to bill for separate contents when a concentrator is under rental.

“Under both the former and current policy, whenever the stationary is not renting, suppliers can simultaneously bill for the portable rental and contents, said Stark, “but once the stationary restarts, contents are cut out.”

The new change in policy also proves positive for suppliers affected by competitive bidding.

Under current bidding guidelines, if a grandfathered supplier provides oxygen equipment to a patient and the patient starts a new capped rental, the patient must use a contracted supplier for the new rental. At the same time, the grandfathered supplier must continue to provide any oxygen equipment (i.e. the old portables) for which a new capped rental period has not yet started.

“If a stationary unit reaches its RUL and the patient resides in a bid area, then the patient must get their replacement equipment from a contracted supplier,” said Stark. “Under the old policy, if the therapy is staggered and a new concentrator rental begins, the grandfathered supplier is strapped with continuing to provide the portable until its RUL is reached, and they are unable to bill for contents.”

The new RUL policy alleviates grandfathered suppliers from the burden of continuing to service unpaid portable units by requiring contracted suppliers to take over both pieces of equipment simultaneously.

Read CR7213 in full.