Medicare Rule on Paying for Oxygen Vexes Patients
By AMY MERRICK   June 2009

More than one million people rely on Medicare to pay for home-oxygen therapy. Now some patients are running into problems switching their suppliers because of complex new rules the federal insurer uses to pay for the services. Under the new rules, which began to affect patients on Jan. 1, Medicare will pay suppliers at its prevailing rate for the first three years after a
patient begins coverage. Suppliers are then required to continue providing oxygen services to patients for another two years, but at a sharply reduced payment rate. After that, patients are entitled to receive new equipment and Medicare will resume paying suppliers at the higher rate.
The changes, aimed at trimming costs for Medicare, have created problems for some patients who want to find a new source for their oxygen, perhaps because they want to move closer to family members. Some suppliers are balking at accepting new patients who are approaching, or have already reached, Medicare's new three-year limit on full payments. That's because the companies would have to provide oxygen services for the next two years without getting much payment.
"I can't afford to take [new patients] for four or five months, and then not get paid anymore," says Jim Jewell, the owner of In Home Medical, which provides oxygen to about 400 people in Washington and Oregon. Mr. Jewell says he is trying to make up for lost Medicare revenue by boosting sales of wheelchairs and other equipment. He says he has scaled back the hours of his company's respiratory therapist to save money.
Donna Miller of Lancaster, Ohio, uses an oxygen concentrator and a CPAP machine at night to help her breathe. The 71-year-old says she is planning to move into senior housing located in another town and that she contacted a nearby supplier that she heard provides good service. But because Medicare cut the payment for her oxygen when she reached the three-year cap this year, Ms. Miller says she is still trying to work out a transition plan with the new supplier. "I don't think it's fair that I have to go through all this red tape," she says.
Waste and Fraud
The rule changes are part of broader efforts by Congress and the Centers for Medicare and Medicaid Services, or CMS, which oversees the federal insurance  programs, to attack what is perceived to be waste and fraud among home-oxygen suppliers and other providers of so-called "durable medical equipment," which includes tools such as wheelchairs and walkers.
The government is planning to restrict where patients may buy or rent medical equipment, by paying for devices sold only by approved suppliers.
Medicare also has stepped up its efforts to root out fraud. Last month, the U.S. Attorney General's Office and the Department of Health and Human Services, which oversees CMS, announced they would form a new team to share data about suspicious Medicare billing patterns.
President Barack Obama is counting on big cost-savings at Medicare and  Medicaid to help pay for a health-care overhaul. In a speech delivered Monday to the American Medical Association, the president spoke of the dangers of unchecked growth in the federal insurance programs.
Efforts to cut payments to suppliers of home-oxygen therapy underline how complicated and difficult it will be to control Medicare costs. A 2006 report prepared for CMS calculated that the agency was paying an excessive amount to private companies to supply oxygen equipment and services -- on average about $200 a month per patient. The average cost to purchase an oxygen concentrator was $587 and the equipment required little maintenance, the report concluded. CMS says it expects to save about $220 million in the fiscal year beginning in October as a result of the new payment rules. Last year, Medicare spent $2.9 billion on home-oxygen therapy, out of the insurance program's total budget of nearly $500 billion. Laurence Wilson, director of CMS's chronic-care policy group, says the agency felt it could reduce payments to suppliers after three years because the oxygen equipment should be fully paid for by that time. After that, suppliers receive minimal payments for occasional follow-up visits and other services. But the insurer won't pay for certain services, such as repair calls that suppliers have to make when equipment breaks down. Medicare says monthly payments made in the initial three years should be sufficient to cover ongoing repairs.
"We're looking for ways to try to pay more accurately," Mr. Wilson says.
Patients also benefit, since they pay 20% of the cost of home-oxygen therapy, he says. Mr. Wilson says he is surprised to hear that some suppliers are refusing some new patients, because their equipment "is something that arguably Medicare's already paid for." Although suppliers aren't obliged to take on new patients, Medicare says patients having trouble switching can contact the insurer for help finding a new supplier.
Suppliers Protest
Oxygen suppliers say CMS is overly focusing on the cost of equipment and isn't accurately accounting for other expenses. A 2006 survey commissioned by the American Association for Homecare, an industry group, found that oxygen equipment and refills make up 28% of the cost of providing oxygen. The remainder comes from delivery and maintenance, training patients and other services. Including all expenses, it costs about $200 a month before taxes on an ongoing basis to provide oxygen to a patient, the survey found.  Suppliers say many of their patients have cognitive problems, making it more difficult for patients to monitor their own equipment. That means employees often make house visits to fix problems. The supply companies are required by law to have someone constantly on call for emergencies.
"The equipment is the least-expensive piece of it. Medicare doesn't consider this," says Wayne Stanfield, president of the National Association of Independent Medical Equipment Suppliers. The group is pressing Congress to reverse Medicare's three-year limit on full payments.  Some patients are sympathetic to suppliers' claims. Clarence A. Martin of Burbank, Wash., who has been on oxygen for more than five years because of chronic bronchitis and emphysema, says the company that supplies his oxygen once sent an employee out in the middle of the night to help him with his equipment during a power outage.
"They're trying to have these people that furnish me oxygen do all this running out here and not get any reimbursement," says the 81-year-old. "I don't think that's right."
New Patient Charges
To make up for lost Medicare revenue, some suppliers have told patients they will begin charging them for services they once provided for no additional fee, such as in-home visits from a respiratory therapist.  Suppliers are scrambling to adapt to the new rules. Sam Clay, owner of Clay Home Medical in Petersburg, Va., says he struggled recently to work out arrangements for a new patient moving from North Carolina. The patient wanted to switch to his service, but Mr. Clay says he couldn't afford to accept her because she was near the three-year limit on full Medicare payments.
Ultimately, Mr. Clay agreed to act as a subcontractor to the patient's previous supplier to provide services that Medicare won't pay for, such as equipment repairs. He says he will receive payment from the previous supplier on a fee-for-service basis. But he says he's discounting his usual charges because he knows the other supplier already is taking a hit by continuing to be responsible for the patient with minimal reimbursement.
"If we were able to do what we had been doing for 20 years, the patient would have just changed their service here," Mr. Clay says.
http://online.wsj.com/article/SB124511204251317173.html
Printed in The Wall Street Journal, page D1

Oxygen cap: Providers paint bleak picture of future
HMENews - Newswire                Dec 20, 2008

YARMOUTH, Maine - When the 36-month oxygen cap goes into effect Jan. 1, CMS will pay for routine, in-home service and maintenance once every six months.  That's of little comfort to the 57% of HME NewsPoll respondents who service and maintain equipment three to five times per beneficiary in any given year.

In dozens of written comments, respondents said the cap will force them to make changes in their business models. Here is a sample of what they had to say:

Reduced services
Staffing shakeups
On the future
http://www.hmenews.com/index.php?p=article&id=hm200811c5zql3

Special Oxygen Alert!!!   November 3, 2008

Alarming New Oxygen Rules Released by Medicare

After reviewing the 2009 Physician Fee Schedule final rule, which was released by the Centers for Medicare and Medicaid Services (CMS) on Thursday evening, AAHomecare has determined this new guidance on oxygen to be alarming and wholly inadequate.

The CMS regulation addresses home oxygen providers' responsibilities and coverage policy after the 36-month rental cap including for oxygen  contents, maintenance, service, supplies, accessories, and repairs; treatment of traveling patients; and useful lifetime policy.

"Once again, CMS has discounted the important role that homecare providers play in the provision of care to Medicare patients on home oxygen therapy," said Tyler J. Wilson, president and CEO of the American Association for Homecare. "The guidance published by Medicare focuses primarily on the
oxygen equipment and does not account for the required range of services and the realities of providing quality oxygen therapy to Medicare beneficiaries who suffer from COPD and other lung diseases. We fear that this approach will jeopardize seniors' access to the level of care they require and have come to expect from their oxygen providers."

AAHomecare's concern stems from:

The requirement that oxygen providers must arrange continued care for patients who move out of a provider's service area. According to the rule, home oxygen providers that furnish oxygen equipment during the 36-month rental period must continue to furnish and maintain the oxygen equipment after the 36-month rental period during any period of medical need for the remainder of the useful lifetime of the equipment. If the beneficiary relocates at some time after the 36-month rental period but before the end of the reasonable useful lifetime of the equipment, the home oxygen provider must make arrangements for the beneficiary to continue receiving the equipment at his or her new place of residence. This responsibility is not transferred to another provider.

The treatment of routine maintenance and service of the oxygen system to ensure that it is working at optimal performance levels. The new guidance states payments will be made when the provider performs a routine maintenance and servicing visit for certain oxygen equipment  (concentrators and trans-filling equipment) following each period of continuous use of 6 months after the 36-month rental period ends. Payment will be equal to
only 30 minutes of labor for general maintenance and servicing of oxygen equipment.  Routine maintenance and servicing payments do not apply to liquid or gaseous oxygen equipment (stationary or portable) because the supplier should ensure that the tanks and cylinders are functioning properly at the time it is furnishing oxygen contents.

No recognition of costs associated with visiting patients who require episodes of unscheduled emergency services. CMS believes that it is not reasonable and necessary to make payments for repair or non-routine maintenance and servicing (including repair) of provider-owned oxygen equipment.

No payment for oxygen supplies required to keep the patient healthy and keep the equipment working properly once the 36-month cap on oxygen becomes effective.

CMS has indicated that the Agency will continue to provide additional program guidance over the next few months on specific policies and rules related to the implementation of the changes to Medicare payment for oxygen and oxygen equipment mandated by both MIPPA and the Deficit Reduction Act of 2005.

AAHomecare is also reviewing the payment prohibition on continuous positive airway pressure (CPAP) devices included in the 2009 Physician Fee Schedule final rule and will provide more information early next week.

The American Association for Homecare has published an excerpt of the oxygen rule as well as a summary on the front page of its website, www.aahomecare.org.

Oxygen cap details: They're on the way?   October 28, 2008
By Theresa Flaherty Managing http://www.hmenews.com/index.php?p=article&id=hm200810KQDkNj

WASHINGTON - CMS may begin issuing guidance on the 36-month oxygen cap by the end of the month, according to a recent e-mail from a CMS official to a provider.

In an Oct. 21 e-mail to CMS's Joel Kaiser, provider Rob Brant, president of the Accredited Medical Equipment Providers Association, asked: "Is it possible we may not have the oxygen guidance until November or December?" Kaiser's response: "We fully expect to begin providing guidance by the end of the month. I cannot make any guarantees or provide further details at this
time."

Starting Jan. 1, providers must stop billing Medicare for patients who have been on oxygen for 36 months. Without more information from CMS, particularly about service and maintenance, providers have struggled to make decisions about how to continue caring for capped patients.

Provider Tom Inman has mapped out his budget through 2011, with one big hole: reimbursement for service and maintenance.

"I know what I am losing every month on oxygen reimbursement," said Inman, president of Newport News, Va.-based Virginia Home Medical. "But I can't budget any of the reimbursement I'm going to get."

In addition to the service and maintenance fee, the industry wants to know how CMS expects providers to handle emergency services; whether it will allow providers to establish service contracts with beneficiaries; and how it wants providers to handle snowbirds or patients who move.

"This is cutting it very close," said Walt Gorski, vice president of
government relations for AAHomecare. "Suppliers need to know how to handle all of these circumstances as quickly as possible."

Adding to the overall stress: In October, there were reports that CMS was telling callers to its beneficiary hotline that equipment transfers to patients after 36 months. The Medicare bill passed in July that delayed national competitive bidding allows providers to retain ownership.

"We had patients telling us we were wrong, that they would own the equipment, not us," said Ed Erickson, general manager of Great Plains Homecare Equipment in North Platte, Neb. "It piqued our curiosity, so we called the hotline pretending to have a parent on oxygen and that's exactly what they told us."

The Durable Medical Equipment Competitive Bidding Program July 16, 2008

The above affects only Medicare beneficiaries in traditional fee-for-service in 10 competitive bidding areas, has been delayed.  Medicare beneficiaries may use any Medicare-approved supplier for Durable Medical Equipment.  If a beneficiary changed suppliers when this new program started (July 1, 2008), they can either continue to use the new supplier or choose another supplier.  The original DME payment rates in effect prior to July 1 are reinstated
retroactively.  All Medicare households in the 10 competitive bidding areas will be notified of this change directly in a letter from CMS within two weeks.
The DME Competitive Bidding areas are: (1) Charlotte-Gastonia-Concord, NC-SC, (2) Cincinnati-Middletown, OH-KY-IN, (3) Cleveland-Elyria-Mentor, OH, (4) Dallas-Fort Worth-Arlington, TX, (5) Kansas City, MO-KS, (6) Miami-Fort
Lauderdale-Miami Beach, FL, (7) Orlando-Kissimmee, FL, (8) Pittsburgh, PA, (9) Riverside-San Bernardino-Ontario, CA, and (10) San Juan, PR.Information on payment rates and claims processing will be communicated to DME suppliers in the coming days.
>More information on DME

Medicare changes worry patients, oxygen suppliers
By LARRY LIPMAN, Cox News Service  Mar 27, 08
>Medicare changes worry patients, oxygen suppliers

CMS looks to limit patient contact   Feb 4, 08
CMS's proposed changes to the DMEPOS Supplier Standards have raised some eyebrows among industry attorneys for what looks like a drastic attempt to reduce a provider's ability to market to Medicare  beneficiaries.
>>http://tinyurl.com/32fk3w

Medicaid Competitive Bidding
It could be as big a threat as Medicare competitive bidding and Florida legislators are leading the way.  Jan 22, 08
>http://www.hmetoday.com/issues/articles/2002-08_01.asp

HME ‘at stake’ in 2008
With the House of Representatives and the Senate eyeing cuts to home medical equipment.  Jan 22, 08
>>http://www.hmenews.com:80/index.php?p=article&id=hm200801EbidCW

Study Shows Oxygen Therapy for Medicare Patients at Home is Service-Intensive
Nearly three-quarters (72%) of the cost of providing home oxygen therapy to Medicare patients in their homes represent services, delivery, and other operational expenses that benefit patients, according to a comprehensive new survey of current costs by Morrison Informatics, commissioned AAHomecare.  Only about one quarter (28%) of the cost represents oxygen equipment.
More Information >

Competitive Bidding Final Rule (Oxygen Supplies and Equipment are #1)
"The final rule we are announcing today is focused on improving both service delivery and the quality of care, while getting savings for beneficiaries and taxpayers," CMS Acting Administrator Leslie V. Norwalk said in an official CMS statement. However, an analyst quoted in the April 2, 2007, issue of Congressional Quarterly said the new rule would lead to business closures and hurt-not help-Medicare beneficiaries.
More Information >

CMS Names Top 10 MSAs for Competitive Bidding
After much speculation, the long-awaited list of the first 10 metropolitan statistical areas (MSAs) is finally available from the CMS list posted at www.dmecompetitivebid.com.
More Information >

LTOT in COPD: Recommendations for Future Research: An NHLBI Workshop Report
LTOT prolongs life in patients with COPD and severe resting hypoxemia.  Although this benefit is proven by clinical trials, scientific research has not provided definitive guidance regarding who should receive LTOT and how it should be delivered.  Deficiencies in knowledge and in current research activity related to LTOT are especially striking in comparison to the importance of LTOT in the management of COPD and the associated costs. The National Heart, Lung and Blood Institute, in collaboration with the Centers for Medicare and Medicaid Services, convened a working group to discuss research on LTOT.
More Information >