New Study Documents Cost of Home Oxygen Services

WASHINGTON--More than 40 congressional staffers crowded Room S-120 in the U.S. Capitol June 27 for a briefing on home oxygen therapy--and its costs.

Led by Rep. Tom Price, R-Ga., a physician, the session centered on a new study commissioned by AAHomecare that shows services account for the lion's share of costs in providing home oxygen--72 percent--while equipment represents only 28 percent.

In late May, Price, along with Rep. Joe Schwarz, R-Mich., also a physician, introduced a bill to repeal the oxygen provision in the Deficit Reduction Act, which caps Medicare oxygen rental at 36 months then transfers equipment title to the beneficiary (see HomeCare Monday, June 5).

Conducted by independent research firm Morrison Informatics, Mechanicsburg, Pa., the new study shows that services including delivery, patient assessment and education, routine safety inspections, maintenance, ongoing support including refills, emergency services and related expenses such as regulatory compliance contribute to the majority of the costs in providing home oxygen therapy.

Morrison based its research on a survey of 74 home oxygen providers that collectively serve more than 600,000 beneficiaries, more than half of the Medicare population receiving oxygen at home. According to the study, the average cost per patient, per month, for home oxygen therapy is $201.20, with $55.81 of that total for equipment and $145.39 for services.

"The study shows that, contrary to some perceptions, home oxygen therapy involves much more than a piece of equipment," said Tom Ryan, AAHomecare chairman and CEO of Homecare Concepts, Farmingdale, N.Y. "It is time that CMS and Congress recognize that the services documented in the Morrison study represent the industry standard of care in the United States, regardless of payer source. Managed care, Medicaid and Medicare patients alike all require the same service categories.

"A national Medicare policy that does not account for the many services associated with oxygen therapy shortchanges both the patient and the provider," Ryan said. "As a result, up to a million Medicare patients who require medical oxygen may find breathing even harder than it already is."

Price said the DRA mandate, which forces patients to own the equipment, is "extremely short-sighted from a clinical and cost perspective." Before the last-minute cap was added to the DRA, he noted, home oxygen patients had a "safety net" of choosing whether to manage their respiratory care after 13 months.

Industry leaders also have argued that many beneficiaries may not be able to take care of their equipment or to pay for its maintenance. The DRA policy change raises numerous patient safety issues, they say, because it effectively severs the patient-provider relationship. The physicians' bill, the Home Oxygen Patient Protection Act (H.R. 5513), would return ownership of the equipment to providers.

"What matters is who makes the equipment function correctly. It is the difference between life and death," Price said.

The bill has picked up a flurry of co-sponsors in the past two weeks, bringing the total to 29. If it doesn't move in the 109th Congress, Rep. Schwarz has vowed he will introduce the bill again next session.

To download a PDF of the Morrison Informatics study, called "A Comprehensive Cost Analysis of Medicare Home Oxygen Therapy," visit To view H.R. 5513, the Home Oxygen Patient Protection Act, click here.