WASHINGTON — Oxygen providers who bill Medicare will be about $850 million short in reimbursement in 2009, according to a new study on Medicare payment policy and home oxygen therapy.
Commissioned by the Council for Quality Respiratory Care, the study by Washington-based Avalere Health, titled "Home Oxygen Therapy: An Analysis of Recent Medicare Payment Policy," looks at the cumulative effects of the 36-month oxygen rental cap and the 9.5 percent Medicare reimbursement cut, both of which are set to take effect Jan. 1.
"We estimate that Medicare spending on home oxygen therapy will actually decrease by approximately 27 percent in 2009 as a result of the impact of the 36-month capped rental period and the 9.5 percent [Medicare Improvements for Patients and Providers Act of 2008]-stipulated payment reduction," the study said.
According to Avalere, there are more than 1.5 million Medicare beneficiaries on oxygen therapy, 26 percent of whom are expected to continue use of oxygen past 36 months. Avalere believes these patients are distributed across the country in the same proportion as the total Medicare oxygen user population. That means the cap could affect 34,500 beneficiaries in Florida, 29,800 in Texas and 24,000 in California alone.
"We estimate that the 36-month capped rental policy will reduce Medicare expenditures for home oxygen by approximately $550 million beginning in 2009," the study said.
In addition, providers will feel the effects of the 9.5 percent cut to oxygen reimbursement specified under MIPPA. The law, which passed in July and delayed competitive bidding for 18 months, stipulated the cut to all product categories included in Round 1 to "pay for" the bid delay. One of those categories was oxygen.
"We estimate that this provision will reduce Medicare spending on home oxygen therapy by almost $300 million in 2009," Avalere said.
Wayne Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers, said in a press release he believes providers will take an even greater hit. Included in the final rule for oxygen, he said, is another 2.53 percent cut that is listed as a "budget neutrality reduction" required by the Social Security Act. Also, he noted, oxygen is exempt from the 5 percent CPI increase.
"NAIMES feels strongly that CMS abused their authority by applying the 2.53 percent reduction based on the 2006 rule, knowing that an additional 9.5 percent reduction would exceed budget neutrality requirements set by the DRA 2005. It is again a case of CMS using the authority given by Congress to penalize suppliers," Stanfield said.