CMS resumes oxygen reimbursement

January 17, 2005 WASHINGTON - Providers got a dose of good news last Thursday when CMS announced that it would reimburse them temporarily at the 2004 rate for home oxygen and services. That's a big switch from Dec. 15 when CMS said it planned to withhold 2005 oxygen claims until gathering additional information on which to base reimbursement cuts. CMS expected the OIG information by Jan. 15. In its Thursday announcement, CMS stated: “We now understand that we will not be receiving the OIG information by January 15, 2005; therefore, we have decided to stop holding oxygen claims and to begin paying claims with 2005 dates of service based on the 2004 Medicare fee schedule amounts. These are the rates that would have otherwise been in effect. Once the OIG information is received and the 2005 fee schedule amounts are calculated, all claims received with dates of service on or after January 1, 2005, will be paid using the 2005 fee schedule amounts. Claims with dates of service on or after January 1, 2005, that were paid using the 2004 fee schedule amounts will not be retroactively adjusted after the 2005 fee schedule amounts are implemented.” News of CMS's decision to not withhold payment relieves provider worry about cash flow. “My hat's off to all the folks who burned the wires to their congressmen,” said John Gallagher, VGM's vice president of government relations. “In my talks with CMS, they said they had been getting calls from lawmakers or their staff questioning why they were holding reimbursement and more importantly, what impact it was going to have on beneficiaries.” The Medicare Modernization Act requires that CMS reduce reimbursement effective January 1, 2005, for several home medical equipment items, including home oxygen and oxygen equipment. CMS is required to base payment on the percentage difference between median 2002 Federal Employees Health Benefits Program (FEHBP) amounts and Medicare amounts, to be calculated in a report by OIG. Last fall, AAHomecare shared pricing data with CMS and the OIG and expressed concern about statistical issues in oxygen calculations made by OIG.  In December, CMS announced that OIG needed to collect additional information before the FEHBP medians for oxygen and oxygen equipment are finalized. Initially, industry watchers speculated that the oxygen cuts could be 15% or more.  Comments last fall by CMS health insurance specialist Joel Kaiser's, however, indicated that CMS was leaning toward an 11% cut for stationary oxygen and a 7% cut for portable oxygen.  “We greatly appreciate all of the time and effort that CMS and OIG are devoting to refining this extremely important pricing information for home oxygen and equipment,” said Kay Cox, President and CEO of AAHomecare. “It's vital to use sound data and analysis for fair pricing so providers can ensure continued access to home oxygen for the Medicare patients who depend on it. It's also vital to ensure continuing reimbursement while CMS and OIG work on the calculations, so we appreciate today's announcement.”