Docs to CMS: Pay more for liquid

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Wednesday, June 30, 2004

YARMOUTH, Maine - As CMS begins to implement new reimbursement policies for home oxygen, physician and patient groups are quietly calling on CMS to explore the possibility of a shift in reimbursement from modality neutral to modality specific.

In other words, the groups would like to see CMS pay more for liquid oxygen systems that feature attractive lightweight portable units, like Helios, and less for oxygen concentrators.

“Any cut in oxygen payment in a modality neutral environment will likely have an adverse effect on access to the more expensive lightweight ambulatory systems,” said a spokesman for a physician group that recently brought the matter to the government’s attention.

The groups are concerned that further cuts to oxygen reimbursement, whether per the oxygen fee schedule cut mandated by the Medicare Modernization Act (MMA) or through the competitive bidding mechanism in 2007, will create an even greater incentive to keep patients on oxygen concentrators.

“The trick is to come up with a payment system that pays the right amount, so there is a revenue neutral incentive to putting people on one system versus another,” said a spokesman for another physician association. “That’s easier said than done.”

A move from modality neutral to modality specific would stimulate vast changes in the way oxygen suppliers do their business. Last year, CMS paid $1.57 billion for oxygen concentrators and $109 million for liquid stationary systems, a ratio which suggests that for every liquid system currently in the field there are 15 concentrators.

Representatives from physician and patient groups recently met with the OIG to express concerns about access to lightweight portable liquid systems. The OIG is working on an analysis of home oxygen reimbursement that CMS will use to make a reimbursement cut per the MMA.

“We think patients are being denied access, and we felt a modality specific payment system was worth consideration in OIG’s discussion of how to change payment rates,” said the second spokesman.

As evidence for their contention, the groups point toward a 2002 report on competitive bidding in Polk County Florida, which showed that the number of new users receiving portable oxygen declined by 34% under competitive bidding.

Tim Pontius, the new chairman of AAHomecare and president of Young Medical Equipment in Toledo, Ohio, doesn’t believe that patients are having trouble with access to the new lightweight portable systems.

“Show me that on a consistent basis that there are reaches of this country where patients don’t have access to ambulatory support now,” said Pontius. “I would challenge that that study cannot be produced.”

Indeed, the largest needs assessment survey on COPD ever conducted found that clinicians believed their patients had no difficulty with access to the new, lightweight portable systems (See related article on page ___).

In the Balanced Budget Act of 1997, Congress granted CMS the authority to establish “separate classes” and separate…payment rates” for oxygen. The same legislation also mandates budget neutrality. In other words, if rates for liquid go up, by statute the rates for concentrators must go down.

That, said Pontius, would negatively impact the provision of quality service.

“It would almost guarantee that any company that’s accredited and licensed and certified and has high regulatory costs isn’t going to be able to participate,” he said.

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