New Medicare Oxygen Fees, Additional Supplier Requirements Proposed

BALTIMORE–CMS plans to overhaul its oxygen payment system,
creating new categories and fees, under a proposed rule released
Thursday.

The rule implements a capped rental provision in the Deficit
Reduction Act that requires providers to transfer title of oxygen
equipment to the beneficiary after 36 months of rental. Similarly,
according to the proposal, beneficiaries will acquire title to
other capped rental equipment after 13 months of rental. The
beneficiary would continue to pay coinsurance of 20 percent of
rental payments, but would no longer pay coinsurance on the
equipment after the transfer of title.

Under the proposed rule, CMS calls for reworking the oxygen
classification system, splitting stationary and portable oxygen
contents into two separate payment classes. The proposal also calls
for a third payment class for new technologies, such as portable
concentrators and home transfilling systems, that eliminate the
need for refilling and delivery of oxygen contents.

In a release accompanying the rule proposal, CMS said the new
structure is intended to ensure that payments for oxygen and oxygen
equipment are accurate, that beneficiaries who use traditional
portable oxygen systems have sufficient access and that Medicare
payments do not create incentives to provide particular types of
oxygen technology.

According to the proposal, payment for portable oxygen contents
would increase to $55 compared to the current average payments of
$21, but the monthly payment amounts for stationary oxygen
equipment and contents would drop from an average of $199 to
$177.

The proposed payment rates are as follows:

• Stationary payment: $177
• Portable add-on: $32
• Oxygen-generating portable equipment add-on (portable
  concentrators or transfilling systems): $64
• Stationary contents delivery: $101
• Portable contents delivery: $55

According to CMS, under the proposed new oxygen and oxygen
equipment class structure, in those cases where the beneficiary
needs both stationary and portable oxygen, monthly payments of $241
or $209 (proposed revised stationary payment of $177 plus one of
two proposed portable equipment payments, $32 or $64) would be made
during rental months one through 36. The stationary payment (which
includes payment for stationary equipment, as well as oxygen
contents for stationary and portable systems) of $177 would be made
during rental months one through 36 for beneficiaries who only need
stationary oxygen and oxygen equipment.

Monthly payments of $101 for stationary oxygen contents and/or
$55 for portable oxygen contents would be made in cases where
beneficiaries own their stationary and/or portable oxygen
equipment. The $101 payment is for stationary oxygen contents only
and is derived from the current payment of $156, which is made for
both stationary and portable oxygen contents. The $55 payment for
portable oxygen contents only is also derived from the current
payment of $156 that is made for both stationary and portable
oxygen contents and would replace the current statewide portable
oxygen contents fees (average of $21), which was based on a
relatively small number of claims and allowed services compared to
the number of claims and allowed services that were used in
computing the statewide fees (average of $156) for a combination of
stationary and portable oxygen contents.

After the rental period, the release said, “Medicare will
continue to make monthly payments for oxygen contents for
beneficiary-owned equipment as long as the beneficiary needs oxygen
equipment.” In addition, Medicare said it will pay for “reasonable
and necessary maintenance and servicing of beneficiary-owned oxygen
equipment and capped rental DME not covered by a supplier’s or
manufacturer’s warranty.”

CMS also calls for additional supplier requirements “to
safeguard beneficiaries.” These include requiring a supplier that
furnishes rented oxygen equipment or a capped rental item in the
first month to continue furnishing the item throughout the entire
rental period. CMS said this is necessary to ensure beneficiary
access, “which we believe could be jeopardized if suppliers have
the option to take back the rented equipment just before the rental
period expires in order to retain title to that equipment.”

Suppliers also would not be allowed to switch out equipment
during the rental period, except under specified circumstances, and
they would also be required to disclose their intentions regarding
assignment for the entire rental period.

The new requirements would take effect Jan. 1, 2007.

CMS is accepting comments on the proposed rule until Sept. 25. A
final rule will be published later in the fall.

To view the rule, visit http://www.cms.hhs.gov/HomeHealthPPS/downloads/CMS1304Pdisplay.pdf.

A backgrounder on the DME portion of the rule can be found at
www.cms.hhs.gov/HomeHealthPPS/downloads/DMEBackground.pdf.

To comment on the rule, click here.