'Herculean effort' tempers oxygen cuts

Sunday, November 5, 2006

WASHINGTON - CMS issued a final rule Nov. 1 on how it will pay for oxygen equipment and services beginning Jan. 1, 2007, and by most accounts it could have been a lot worse.

"It's a little bit status quo," said one industry insider. "All of this work not to lose ground, just to stay virtually where we are. It requires a Herculean effort, but that is what you have to do."

Under the final rule, reimbursement will look like this:

During the 36-month rental period, Medicare will reimburse providers $198.40 a month for a stationary concentrator and $31.79 for portable add-ons. The draft rule proposed paying $177 a month for stationary and $32 for portable. Currently, CMS reimburses about $200 for stationary and $32 for portable. Following the cap, when ownership of the equipment transfers to the beneficiary, CMS will cease payment for stationary oxygen but pay providers $77.45 a month to fill portable cylinders.

While the final rule changes reimbursement for traditional technology only slightly, portable concentrators and homefilling units get, comparatively, a sizeable boost. For these units, the final rule increases reimbursement to about $250 a month from about $220. CMS officials hope the additional reimbursement will provide incentive for providers to offer this advanced technology to patients. However, following the cap, providers will receive no additional payments.

"It's good from our perspective because the administration realizes the cost effectiveness of these new technologies," said Cara Bachenheimer, vice president of government relations for Invacare, whose HomeFill owns a big share of the transfilling market. "We're pleased."

Despite the relatively benign payment changes, the industry still has its work cut out for it. It must continue efforts to prevent additional cuts and lobby to eliminate the oxygen cap and/or to nix the transfer of ownership of the equipment to the patient following the cap.

The final rule address issues related to the 13-month cap on DME and the 36-month cap on oxygen.

The following is a portion of the final rule:

Maintenance and Servicing and Replacements

* Medicare has traditionally paid for reasonable and necessary maintenance and servicing for beneficiary owned items. CMS will continue applying these policies also to beneficiary owned oxygen equipment. All reasonable and necessary maintenance of beneficiary owned capped rental or oxygen equipment which must be performed by authorized technicians would be covered.
* For the final rule, CMS will make payments for general maintenance and servicing visits every six months, beginning six months after ownership, in addition to reasonable and necessary repairs, for beneficiary-owned oxygen concentrators and OGPE. Payment is limited to 30 minutes of labor based on carriers' rates.
* Payment for maintenance and servicing of beneficiary owned equipment (unless covered by a supplier's or manufacturer's warranty) will be based on the same method currently used for other beneficiary owned DME. Payment is currently made for parts and labor based on payment amounts established by the carriers. Some manufacturers of commonly used oxygen equipment offer full warranties that cover parts for up to five years.
* Medicare has also traditionally paid for loaner equipment while a beneficiary's equipment is being repaired. CMS will continue these policies as well for beneficiary owned oxygen equipment and capped rental items.
* There will be no general maintenance and servicing payments for beneficiary-owned liquid and gas equipment; however, there will be one payment for pick-up and storage or disposal of liquid and gas equipment in the case when a beneficiary no longer medically needs it. CMS expects that, since the supplier is paid to deliver liquid and gas equipment every month to the beneficiary, the equipment will be in proper working condition and therefore additional general maintenance and service visits are not needed.
* Suppliers are responsible for replacement of beneficiary owned oxygen equipment or capped rental items for equipment that ceases to function due to the need for extensive repairs during the reasonable useful lifetime for DME, which is 5 years. This requirement would not apply in the case where replacement is covered under a supplier's or manufacturer's warranty.
* Separate payment for replacement of supplies and accessories (e.g. cannulas, tubing) will continue after ownership of the equipment transfers to the beneficiary.

Oxygen Classes and Payment Rates

* CMS established a new class and monthly payment amount for OGPE, which includes oxygen transfilling equipment and portable oxygen concentrators. , For the final rule, an OGPE add-on payment, applicable during the three-year rental period, will be made for these systems that eliminate the need for delivery and refilling of oxygen contents for portable systems. The OGPE add-on payment for 2007 will be $51.63. Payments for the new OGPE add-on will begin on January 1, 2007 for new and existing oxygen users.
* CMS also increased monthly payment amounts from approximately $20.77 to $77.45 for portable oxygen contents that need to be delivered for beneficiary owned liquid or gaseous oxygen equipment. Payments for the increased portable oxygen contents will be effective on January 1, 2007 for new and existing oxygen users.
* BBA provision requires payment changes to be budget neutral annually. To achieve budget neutrality for these rate changes, we adjusted Medicare oxygen payment rates for each year. As a result, the monthly payment amount for stationary oxygen equipment will decrease each year. For 2007, the payment rate for stationary equipment would be $198.40. The projected rate for 2008 is $198.40; for 2009 is $193.21; and for 2010 is $189.39. Budget neutrality requires that Medicare's total spending for all modalities of oxygen equipment, including contents, be the same under the proposed change as it would be without the change.
* Our budget neutrality calculations were based on an assumption that five percent of oxygen users will shift to use OGPE equipment. We will revise payment rates through program instruction under the methodology specified in the final rule based actual OGPE use and updated data on the distribution of beneficiaries using oxygen equipment.

Beneficiary Safeguards

* CMS established additional safeguards for beneficiaries now that beneficiaries will own their oxygen equipment and capped rental item. CMS is requiring that a supplier who furnishes rented oxygen equipment/capped rental to the beneficiary must continue to furnish that item throughout the whole rental period except in certain circumstances specified in the final rule.
* Suppliers may not switch out equipment at any time during the 36 or 13 month rental period unless (a) the item was lost, stolen, irreparably damaged, being repaired or no longer functions, (b) physician orders a different equipment and (c) beneficiary chooses to obtain a newer technology or upgraded item and signs an advanced beneficiary notice acknowledging his or her liability. In all cases, suppliers must replace the equipment with an equipment of the same or better value.
* CMS is requiring that the supplier disclose to the beneficiary its intentions regarding assignment of all potential monthly rental claims for oxygen equipment/capped rental DME items. CMS will post this information on a CMS or CMS contractor website(s) indicating (1) the percentage of beneficiaries for which a supplier accepts assignment and (2) the percentage of cases which the supplier accepted assignment during the beneficiary's entire rental period.
* In cases where a beneficiary moves, either temporarily or permanently outside the initial supplier's service area, CMS is allowing arrangements for another supplier to furnish the item on either a temporary or permanent basis.