CMS unveils average oxygen cuts for 2005

Sunday, September 26, 2004

September 27, 2004

WASHINGTON - Unless the industry somehow scuttles cuts based on FEHBP pricing, CMS will most likely reduce reimbursement for stationary oxygen in 2005 by 11% on average and by 7% on average for portable oxygen.

CMS Health Insurance Specialist Joel Kaiser presented that reimbursement scenario last week at CMS’ Open Door Forum. The 11% and 7% figures represent the average differences between Medicare and FEHBP pricing in all 50 states. CMS based those reductions on an OIG study issued two weeks ago entitled "Medicare Payment Rates for Home Oxygen." CMS officials are reviewing the OIG report and could still adjust make adjustments in oxygen reimbursement for 2005, Kaiser said.

Because the 7% and 11% figures are averages, the exact reimbursement applied to each state will vary. Some will be cut more, others less, depending on the difference between their Medicare and FEHBP pricing. No state will see an increase in reimbursement even if their average Medicare reimbursement is less than FEHBP, Kaiser said.

On the same day the OIG issued its report, AAHomecare issued a report that that found "virtually no difference" between payment rates for oxygen at Medicare and the FEHBP.

The Medicare Modernization Act passed in December 2003 mandated that on Jan. 1, 2005 CMS cut reimbursement in nine key DME categories based on FEHPB pricing.

Approximate average cuts in the other categories are: 14% for nebulizers (EO570); 13% for hospital beds (E0260); 5% for power pressure mattresses (EO277); 3% for lancets (A4295); 2% for test strips (A4253); 2% for K0011 power wheelchairs; and 3% for K0001 standard manual wheelchairs.

The HME industry is pushing legislation (H.R. 4491) that if passed would repeal reimbursement cuts based on FEHBP pricing. So far, 50+ representatives have signed the legislation. Chance of that bill passing this year appear slim. However, if enough representatives sign the bill, CMS could bend to their political will and delay implementing the cuts, say industry watchers.