OIG: Continue cutting oxygen reimbursement

Sunday, September 17, 2006

WASHINGTON - If the Office of Inspector General has its way, CMS won't stop at capping Medicare reimbursement for home oxygen therapy at 36 months.

In a cost study released last week, the OIG argued that, even with a 36-month cap, Medicare and its beneficiaries will continue to pay more than 12 times the purchase price for stationary concentrators. The basis for its claim: Based on the 2006 median fee schedule amount, Medicare will pay $7,215 over the course of 36 months for concentrators that, on average, cost $587 to purchase.

The OIG supports capping oxygen at 13 months, a provision outlined in President Bush's budget for fiscal year 2007.

"If Medicare rental payments for oxygen concentrators were limited to 13 months, the program and its beneficiaries would save approximately $3.2 billion over 5 years," the OIG stated.

To conduct the study, the OIG collected surveys from 150 beneficiaries who rented oxygen in 2004. It also collected information from suppliers, and during site visits with suppliers in California and Florida, observed operations, service practices and beneficiary relationships.

A coalition of 11 oxygen suppliers and manufacturers criticized the study's "limited scope, small sample selection and failure to consider critical patient services." The Council for Quality Respiratory Care pointed to an AAHomecare-commissioned study released in June that analyzed data from 74 suppliers who provide oxygen therapy to more than 600,000 beneficiaries. Its findings: Services make up 72% of the costs of providing oxygen.

The OIG acknowledged that, in its study, it focused on equipment costs. Overall, the OIG downplayed the services that suppliers provide. It stated that suppliers check concentrators, on average, only every four months--a frequency that exceeds manufacturers' guidelines.

The OIG "appears to have completely ignored services," the CQRC stated.

CMS agreed with the OIG's recommendations. However, the agency "expressed concern" that the savings estimate for the 13-month cap is too high "because it includes beneficiaries' savings and does not reflect payments for maintenance and servicing (and) potential shifts in utilization."