Providing Oxygen Sensibly

HME providers who supply home oxygen are under siege. Reimbursement is declining and threats of further cuts occur with increasing frequency. There are constantly changing rules, a rebid of competitive bidding — and the lack of clarity and communication from CMS is truly alarming.

Coupled with these problems is the fact that new oxygen delivery technology continues to be introduced that must be evaluated for purchase, and patients are beginning to request new and different equipment so they can travel with their oxygen on airplanes, rail, bus and cruise ships.

Providers who wish to stay profitable must now be very astute businesspeople. This requires a thorough understanding of the types of oxygen patients they serve, their clinical requirements, referral source preferences for technology and the oxygen modality choices available within the current reimbursement system.

With every new oxygen patient referral, the HME provider must determine what oxygen delivery technology will be the most effective and appropriate for that patient. Their oxygen delivery choices are as follows:

• Stationary concentrator only;
• Stationary concentrator and multiple aluminum cylinders with an oxygen conserving device (OCD) that has been titrated to meet the patient’s clinical requirements and activities of daily living;
• Liquid oxygen delivered through one base unit or two base units (tandem system) and one liquid oxygen portable device;
• Transfilling concentrator that allows in-home filling of one or more portable cylinders;
• Portable oxygen concentrator (POC) that delivers pulse doses only and that weighs less than 10 pounds;
• Stationary oxygen concentrator plus POC;
• POC capable of pulse dose and continuous flow and that weighs between 10 and 20 pounds.

Some would say that matching the patient with the device is an art. We would suggest it can be based upon empirical data and science.

Types of Oxygen Patients

The entire population of oxygen-dependent patients can be described and placed into four convenient and easy-to-understand groups.

1. Nocturnal patients, those that require oxygen only at night These patients have a myriad of clinical disorders that require them to have supplemental oxygen to minimize their oxygen desaturation during sleep.
2. Homebound patients, those in the latter stages of advanced chronic lung disease These patients typically lack the mobility that they enjoyed earlier in their disease process. While most of them require 5 L/min or less, a small percentage requires higher flows.
3. Ambulatory patients who have standard portability requirements Standard portability is defined as a movable oxygen source and a consumption requirement no more than 40 “liter hours,” where the hours are defined as prescribed L/min multiplied by the estimated number of hours of use per week.
4. Ambulatory patients who have high portability requirements High portability is defined as a movable oxygen source and a consumption requirement more than 40 “liter hours” per week.

We can show these patient groups as a typical bell-shaped curve as illustrated in Figure 1.

To better understand the percentage of oxygen patients who fit within each group, we reviewed 2007 Medicare data and compared it to a market research study in which we collected data from a stratified random sample of HME providers.

The Medicare data tells us that in 2007, 38 percent of the patient population was nocturnal use only. This group has been growing year after year and is likely a result of aggressive efforts to identify early-stage COPD patients who desaturate during sleep but not while awake or during exertion.

Our own empirical research suggests that 5 percent of the market is homebound. This means that 57 percent of the population is ambulatory. These results allow us to see the percentage of oxygen patients in each group as shown in Figure 2.

This data will vary from year to year as the patient population changes, and each provider’s patient population may look different based upon the company’s referral base and target market. This will cause the slope of the curve to change from year to year and from provider to provider.

Figure 2 is useful because it allows us to break down the total oxygen market into segments. Each segment has different technology requirements because of the activity levels of the patient population. As can be seen from Figure 2, the nocturnal group (38 percent) and the homebound group (5 percent) generally do not require portability. An exception would be the nocturnal patient who travels frequently.

This graph clearly shows that 57 percent of oxygen-dependent patients are ambulatory to some degree and thus require oxygen devices that can provide portability. Each HME provider can construct a similar graph for the company’s existing patient population so the patient requirements can be easily seen.

Understanding Portability

The terms “ambulation” and “portability” are often used interchangeably when discussing a COPD patient’s requirements. Webster’s dictionary defines “ambulation” as “to move from place to place.” It defines “portability” as “the quality or state of being portable,” and “portable” is then defined as “capable of being carried or moved about.”

This is an important designation and one that goes beyond the recommendations of the Fifth Long-Term Oxygen Therapy Consensus Conference in 1999. This group recommended that “portable O2 be defined as equipment that can be carried by most patients on their person during activities of daily living, weighs 10 pounds or less and provides 2 L/min for at least four hours.”

Following that definition would rule out use of continuous flow/pulse flow concentrators that typically weigh over 10 pounds but less than 20 pounds. These devices are typically provided to the patient on a rollable cart with an extension handle, much like conventional rollable luggage. These devices clearly provide portable oxygen.

In the Sixth Long-Term Oxygen Therapy Consensus Conference, it was agreed that “portable or wearable” devices should be a size and weight that allow the patient to do the activities of daily living suitable to his or her own lifestyle while maintaining proper oxygen saturation.

A portable oxygen device can be further defined as something that can be used around the home, around the city and outside of the HME provider’s service or anywhere in the world. This implies that a truly portable oxygen device could be used by patients wherever they go, using all methods of transportation such as an automobile, airline, boat, rail or bus.

Most patients who require long-term portable oxygen have some common requests:

• They want a reliable and dependable source of oxygen.
• They don’t want to run out of oxygen.
• They don’t want to have to schedule their day around a delivery of oxygen cylinders or liquid oxygen.
• They want the freedom to lead as normal a lifestyle as possible. Most want their oxygen to move with them when they are doing their normal activities of daily living around their home, around their community and around the world.
• They do not want to be tethered to their oxygen device via 50 feet of tubing when at home.

Matching Technology to Patient

With each new oxygen patient referral, the HME provider must determine what oxygen delivery technology will be the most clinically effective for that patient. In other words, it must provide adequate oxygen saturation with oxygen conservation.

Providers must also provide an oxygen device that is acceptable to the patient. In other words, it must match the patient’s lifestyle. Last, providers must provide a device that is cost-effective so that they can stay in business to provide care for the next oxygen-dependent patient.

Some of the equipment choices are easy. Patients who require nocturnal oxygen typically use a standard stationary 5 L/min oxygen concentrator. Those patients who are in the end stage of their disease process and are essentially homebound either use what equipment they have been previously provided or they use a stationary 5 L/min oxygen concentrator.

The problem is determining what device to provide to the patient who requires portability. Our suggested guidelines are described below. Ambulatory oxygen patients with high and standard portability requirements should receive one of the following two oxygen modality choices:

1. A transfilling concentrator with refillable cylinders; or
2. A stationary concentrator plus POC.

These devices are preferred because they can provide continuous flow for the oxygen-dependent patient who requires it during sleep, and pulse dose oxygen and portability during the day.

In our opinion, pulse dose-only POCs that weigh less than 10 pounds are best used for patients who travel and who have undergone an overnight oximetry test to ensure they do not desaturate during sleep.

Pulse/continuous flow devices are best used for patients requiring portability during travel and who desaturate at night as proven by an overnight oximetry test and who can lift or move a device that weighs 11-20 pounds. These devices are also very useful within hospitals and skilled nursing facilities.

Due to their two- or three-year limited warranty, we do not see these devices or POCs less than 10 pounds as 24/7/365 devices. If the length of the product warranty improves or the cost to rebuild the pump/motor assembly decreases markedly, this would alter our thinking.

But the warranty per se is not the problem. The issue is the cost to the HME provider for the routine repair and maintenance beyond the warranty period and up to the end of the product’s useful life.

We believe that if improvements in pump/motor designs can be made or if reimbursement was increased, then pulse/continuous flow devices or POCS have the potential to be the preferred product for the ambulatory patient. These devices have the advantage that they are a single source of oxygen and can operate on standard alternating current (AC) or direct current (DC) as found in most motorized vehicles or from a rechargeable battery.

Until and unless improvements in either reimbursement and/or pump/motor design occurs, a transfilling concentrator with one or more refillable cylinders will cost the HME provider less money in total cost of ownership over the lifetime of the device. This will also be true for a stationary concentrator plus POC unless the HME buys a plethora of replaceable batteries.

The two- to three-year limited warranty is less germane when a POC is used in conjunction with a stationary oxygen concentrator because it is only being used a portion of the day and the pump/motor assembly should last for several years.

Liquid oxygen is still a very viable method of oxygen delivery for the HME company that can supply it economically. However, very few HME providers have the patient density and volume to do this consistently.

Any time an oxygen device is used that incorporates an OCD, it should be titrated to the patient to ensure that the patient does not desaturate during rest or exertion. This is especially important when using POCs because their small size limits the amount of therapeutic oxygen the device can provide. As of this writing, the available range is 480 mL/min to 1,040 mL/min. Each device must be carefully matched to the patient, and it can be for many LTOT patients.

Economics of Home Oxygen

Our modality recommendations make particular sense when they are compared to the oxygen reimbursement by modality as shown in Figure 3. For convenience, each method of oxygen delivery is shown on one axis and then compared with their billing code, monthly revenue, acquisition cost, monthly operational cost, monthly net income, payment after 36 months and total payment in 36 months. Actual published values are used for monthly revenue, payment after 36 months and total payment in 36 months.

Since the product acquisition cost can change quickly and frequently, we used a range of dollar signs to show low to higher prices. To show the monthly net income, we compared them from best to worst when compared against each other. This is an important designation. When we say “best net income,” we are not implying that the reimbursement is best for that modality but it is best compared to the other oxygen delivery modalities.

Conclusions

Each year there are new oxygen delivery devices that are introduced to the market. The HME provider should review each new device carefully and objectively to determine how it will benefit their patient population clinically and their company financially before a purchase.

Product standardization and limiting the number of different oxygen modalities offered drives down cost because it provides cost efficiencies in purchasing, distribution, training and repair. Matching the equipment to the patient can ensure a profitable business even in a tough reimbursement climate.

Thomas J. Williams, MBA, RRT, is managing director of Strategic Dynamics Inc., Scottsdale, Ariz. Williams assists clients in strategy formulation, market research, sales training and clinical and benchmark studies. He can be reached at [email protected].

Robert Chatburn, RRT-NPS, FAARC, is clinical research manager, Respiratory Institute, Cleveland Clinic; associate professor of medicine at Lerner College of Medicine, Case Western Reserve University, Cleveland; and vice president of research and clinical services for Strategic Dynamics Inc.