CMS postpones announcement of oxygen cut

Sunday, December 19, 2004

December 20, 2004

BALTIMORE - CMS will delayed revealing its official reimbursement reduction for home oxygen therapy until the OIG clarifies the appropriateness of data used to calculate the cuts.
Providers have been bracing for cuts of 11% to 15% for stationary oxygen and about 7% for portable oxygen - reductions announced at an Open Door meeting last fall. Now CMS doesn’t expect the OIG to complete its review and release the results until Jan. 15.
Until then, CMS will suspend 2005 payments for home oxygen. The payment suspensions aside, industry leaders are taking heart in the delay, believing CMS now realizes that its survey of FEHBP pricing for home oxygen is skewed.
“We think this is definitely good news,” said Tim Pontius, chairman of AAHomecare, “because CMS is showing they want to get it right the first time. They’re not  going to simply throw a number at the wall and see if it sticks.”
In mid-September, AAHomecare and the OIG released similar reports that compared oxygen payment rates between Medicare and FEHPB plans. AAHomecare found virtually no difference between FEHPB pricing and Medicare while the OIG found grounds to justify reimbursement reductions of 10-20%.
The industry quickly took issue with the OIG’s methodology.
In the OIG study, “all the different plans were given equal weighting regardless of the number of enrollees, or the number of claims involved,” said Pontius. “Small plans in one part of the country were given the same weight as plans in suburban NYC that had 40-50 times the volume of claims.”
Providers also took exception to the OIG’s ignorance of the cost associated with refilling portable oxygen tanks. In CMS’s Dec. 15 notification about the delay, CMS acknowledged that Medicare does not pay for the contents of portable equipment. And therein may lie the rub.
CMS explicitly states that it’s reviewing data that involves reimbursement for portable oxygen, but makes no mention of a review of its methodology for comparing reimbursement for stationary systems. Pontius is encouraged nevertheless.
“The fact that they are holding all claims for oxygen and oxygen equipment indicates to me that they are going to look at the overall numbers,” he said.