OIG to study capping O2 reimbursement

Sunday, November 6, 2005

WASHINGTON - On top of everything else providers are struggling with - a huge cut to the dispensing fee for neb meds, competitive bidding and a major overhaul of rehab reimbursement - the OIG now plans to conduct a study in 2006 that examines, among other things, the feasibility of capping reimbursement for oxygen concentrators.

"I think that could be the last straw for people who are already having problems with the cuts that have occurred this year in oxygen reimbursement," said industry consultant Allan Saposnick.

An OIG official told HME News last week that the study won't be finished until fall and will probably look at utilization - are beneficiaries receiving the services they are supposed to get - and whether reimbursement is too much. There has been talk, the source added, of capping reimbursement.

"These kinds of reviews tend to look at alternative payment policy," the OIG source said.

If CMS did cap reimbursement for oxygen concentrators, the financial hit to providers could be devastating. Rather than collecting about $200 a month for a concentrator for as long as a patient needs it (usually for life), the provider would collect that for 15 months. He would then get a twice-yearly maintenance fee of about $200. If the patient chooses the purchase option, the provider would collect $200 a month for only 13 months. Under that scenario, the beneficiary would be responsible for arranging service for his concentrator.

If CMS ever did cap oxygen reimbursement, a number of challenges would surface, all of them bad for beneficiaries, say industry sources.
First, providers would lose incentive to deliver ambulatory oxygen to patients. CMS reimburses about $30 a month for the delivery of ambulatory oxygen. That's hardly enough. With rising gas prices, it costs providers well over $50 per delivery of portable oxygen.

"In reality, the stationary fee is enabling people to have ambulatory oxygen," said AirSep President Joe Priest. "Thirty dollars doesn't cover a monthly delivery. Once the cap is reached, are providers going to keep delivering liquid? No way. Are they going to go out with cylinder oxygen? No way."

Additionally, if a patient chose to purchase the concentrator, there's no guarantee he'll maintain it properly.

"How will he know if its blowing oxygen or just air?" asked one provider.

What's more, to offset the cut, providers would most likely have to reduce or eliminate their clinical staff, said Sam Clay, president of Clay Home Medical in Petersburg, Va.

"We've got to stay in business, and you'd have to cut the clinical model to survive," Clay said. "A concentrator will become like a hospital bed. You will follow up to make sure the machine is working but won't be able to evaluate the patient."