by Bob Fary
May 11, 2017

CMS’s DMEPOS Competitive Bidding program has challenged the HME provider community on all fronts, but no more then on the provision of oxygen equipment to Medicare beneficiaries.

Shrinking reimbursement in the face of increasing documentation requirements, increased claims auditing and an immense backlog on the adjudication of appealed claims has increased the pressure on oxygen providers. Most recently, CMS’s application of a regulation regarding utilization has resulted in reimbursement reductions in rural areas that is actually below the reimbursement in more populated areas where competitive bidding contracts are offered.

One way to address the issues of oxygen customer service, customer satisfaction and the significant costs of providing this service is to adopt a non-delivery model for oxygen users. Portable oxygen concentrators (POCs) have become an excellent tool for use as a component of a non-delivery oxygen model.

POCs are preferred by oxygen users, as they provide a level of flexibility that oxygen cylinders do not. Oxygen users enjoy their independence—not having to be home for regular cylinder deliveries and not having to swap regulators and carry extra cylinders (required when the cylinder in use runs out) with them when they go out. POCs enable oxygen users to remain active and to continue the activities they engaged in before they became tethered to oxygen, including family visits, shopping trips, airline travel and vacations. The most favorable feature for oxygen users is knowing that, with a POC, they will not run out of oxygen.

How Do POCs Work?

POCs harvest oxygen from the air around them, and as long as the user has power via the battery, wall or car plugs, they will have supplemental oxygen. Modern POCs—with longer battery life and the ability to connect to any power source—offer peace of mind that is important to users. In fact, most oxygen users that I have spoken with over the many years cite running out of oxygen as their top concern with the use of cylinder oxygen systems.

Cost Savings

For providers, elimination of the regular home visits for the exchange of cylinders brings cost savings that are necessary in the current reimbursement environment. Delivery costs represent the largest cost burden, including the cost of trucks and vans. When non-delivery savings are added to the saving of the costs of cylinders, regulator inventory and the maintenance and testing requirements of cylinder-based oxygen programs, the case for POCs has never been stronger.

It is no surprise that POC use has grown substantially over the past few years. Recent increased use is just the tip of the iceberg, as the majority of oxygen users still receive cylinders for their ambulatory needs.

How to Assess the Non-Delivery Model

Oxygen providers can follow this process when assessing their need to move to the non-delivery model:

  • Compute the total cost of the current delivery model, including the costs per delivery, vehicle leasing, cylinder and regulator stock, refilling costs and equipment maintenance costs.
  • Consider beginning the switch to non-delivery with the highest consumers of oxygen, and those that are the most distant from the branch.
  • Consider asking the oxygen user to visit the branch for training and maintenance of the POC, which is similar to the current CPAP set-up model.
  • Begin the non-delivery model with new oxygen users as they are added to their service.
  • Take advantage of the higher reimbursement for the E1390/E1392 combination versus cylinder reimbursement.
  • Take advantage of the online training and in-services offered by POC manufacturers.

POCs are reliable, durable and are available at prices and with longer warranties that make them the best solution for providers wishing to adopt the non-delivery strategy. This benefits oxygen users, their families and the providers who continue to face the headwinds of shrinking reimbursement while maintaining their commitment to beneficiaries and their local communities.

Oxygen 2017 Fee Schedule Update

As first reported in December 2016, AAHomecare has been working to get rural and non-bid area oxygen suppliers relief from “double dip” cuts in the 2017 Medicare fee schedule for stationary oxygen, which results in rates for rural and other non-bid area suppliers that are lower than the competitive bidding rates for this product category in many CBAs. The 2017 fee schedule rates stem from the application of a 2006 budget neutrality offset balancing increased utilization for oxygen-generating portable equipment with lower reimbursement for stationary equipment.

AAHomecare originally raised concerns about the issue in a letter to the outgoing CMS General Counsel and is now engaging new leadership at HHS and CMS on the issue, aiming to reinforce these efforts by generating Congressional interest and support on the issue as well.

If the additional cuts are impacting your company’s bottom line and your ability to serve patients, AAHomecare requests providers let their senators and representatives know the concerns, and ask them to contact CMS on your behalf.

The following points have been provided by AAHomecare as a guideline for discussions with CMS:

  • Medicare improperly reduced payments for E1390 concentrators by applying a regulation introduced in 2006 that only should be applied to unadjusted fee schedules called the budget
    neutrality offset.
  • CMS’s inappropriate application of the budget neutrality offset has resulted in rural and non-bid area rates being lower than CBA rates in many cases.
  • The 2017 adjusted fee schedule payments for stationary oxygen equipment must be consistent with those based on regional average SPAs from CBAs.
  • How these cuts affect your business and patients.

Providers who need assistance in crafting a message or who need contact information for health care legislative assistants in House and Senate offices can contact Gordon Barnes at gordonb@aahomecare.org. Find the comparison of the rural and non-bid area rates to selected bid area rates as well as the Dec. 20 letter on homecaremag.com.