OIG Tells CMS to Reduce O2 Rental Period to 13 Months

WASHINGTON–As if the Deficit Reduction Act’s 36-month cap on
oxygen equipment rental wasn’t bad enough, the industry may have to
fight to keep the rental period from shrinking even more.

In a report issued Thursday, the HHS Office of Inspector General
said that “further reform is warranted” and recommended that CMS
work to reduce the oxygen rental period to 13 months.

“If Medicare rental payments for oxygen concentrators were
limited to 13 months, the program and its beneficiaries would save
approximately $3.2 billion over five years,” the OIG report said,
noting that home oxygen equipment accounted for $2.4 billion of the
$11.1 billion Medicare paid for DME, prosthetics, orthotics and
supplies in 2004.

The OIG said it found that “minimal servicing and maintenance
for concentrators and portable equipment are necessary,” and that
suppliers teach beneficiaries routine maintenance and check
concentrators more than manufacturer guidelines require.

According to the report, the DRA’s oxygen cap did not go far
enough, allowing up to $7,215 over 36 months for rental of
stationary concentrators that average only $587 to buy.
Beneficiaries add another $1,443 in copayments over that time, the
OIG said. “Medicare and its beneficiaries will continue to pay more
than 12 times the purchase price for concentrators under the new
36-month rental limitation,” it said.

The study, “Medicare Home Oxygen Equipment: Cost and Servicing,”
set out to compare Medicare spending for oxygen concentrators with
suppliers’ average purchase price and to determine the nature and
frequency of servicing for concentrators and portable
equipment.

The American Association for Homecare called the report “deeply
flawed” and said “the further erosion of the oxygen benefit
recommended by the report and by CMS will put oxygen patients at
even greater risk than they are already.”

According to AAHomecare, the OIG study did not reflect the full
range of services provided to patients or the actual costs in
providing them. The association also noted that the OIG study looks
at old cost data from 2003.

Among the association’s other criticisms of the government
study:

• It focuses primarily on the cost of acquiring oxygen
  concentrators, which is a small fraction of the complete cost of
  providing oxygen therapy to Medicare patients in the home;
• The OIG notes that other costs were not considered because they
  are included in the fee schedule amounts that are based on
  historical reimbursement levels of nearly 20 years ago. During
  recent decades, transportation, regulatory compliance, insurance,
  and other costs have increased while oxygen reimbursement under
  Medicare has declined sharply;
• The study only asked for cost information about oxygen
  concentrators. The study should have looked at all types of oxygen
  modalities including liquid and the full costs of portable oxygen
  systems;
• The report does not consider average delivery cost per patient,
  average miles driven, average customer service time, bad debt, or
  Medicare-required documentation and compliance costs;
• The OIG study gathered information only about new users of
  oxygen who began services in 2004 and who had no services previous
  to that year. Because COPD is a progressive disease, new users
  often start with nocturnal use only, and longer-term patients
  require more service;
• The OIG presented data that suggests that all patients rent
  oxygen for 36 months. Their own data shows that 78 percent never
  reach the 36th month; and
• The 145 patients in the sample represent only about “one
  one-hundredth of 1 percent” of total beneficiaries using oxygen
  therapy at home.

The Council for Quality Respiratory Care (CQRC), a coalition of
home oxygen providers and manufacturers, also issued a statement,
saying the OIG study failed to consider “critical patient services
in the provision of quality home oxygen care.”

To view the OIG report, click here.