Oxygen cap: Attorney asks, CMS answers

Sunday, September 9, 2007

FORT LAUDERDALE, Fla. - Earlier this year, healthcare attorney Lester Perling e-mailed CMS officials with a handful of questions about providing home oxygen therapy under the 36-month cap on Medicare reimbursement. "These issues have been swirling around the supplier community with differing opinions, even from carrier representatives that suppliers have consulted," wrote Perling of Broad and Cassel in Fort Lauderdale, Fla. Perling recently heard back from a CMS official. Here are his questions and CMS's answers:

Perling: Beneficiaries sometimes wish to change suppliers during the course of their 36-month benefit. It is my understanding that when they do so, they return their equipment to their old supplier and obtain new equipment from their new supplier. Is it correct that the new supplier will only be paid on an assigned claim for the number of months remaining in the 36-month period and then the title to the equipment will transfer to the beneficiary, even though the beneficiary has had the new equipment for less than 36 months?
CMS: Yes.

Perling: Assuming that the answer to the previous question is yes, in an unassigned claim, may the supplier bill the patient for its customary price for the equipment up front, and then the beneficiary would receive the number of monthly payments left in the 36-month period?
CMS: Yes.

Perling: It is unclear whether CMS considers an oxygen generating portable equipment (OGPE) to be an upgrade to a portable tank system, which would allow a supplier to give the beneficiary an ABN and collect an upgrade charge. Is an OGPE an upgrade to a covered item?
CMS: It is not an upgrade.

Perling: A beneficiary has an oxygen supplier from which he receives portable tanks but also wants to have an OGPE for travel or out-of-home excursions. Am I correct that when a claim is submitted to the carrier, whether assigned or unassigned, it would be denied as not medically necessary or reasonable as a duplicate service, so the supplier would have to obtain an advance beneficiary notice from the beneficiary? In that case, may the supplier collect the entire purchase price up front?
CMS: If the claim is submitted as a rental, it would be denied as not reasonable and necessary (as a duplicate service). If the claim is submitted as a rental and on assignment, section 1879 of the Act, limitation of liability is implicated, and the supplier would have to have provided the beneficiary with an ABN (or otherwise be able to show that the beneficiary knew or should have known that payment would be denied) in order to charge the beneficiary for the service. If the supplier gives an ABN, it can charge the beneficiary whatever it wants. If the claim is being submitted as a purchase, no ABN is required (irrespective of whether the claim is submitted on assignment). Further, the supplier may collect the entire purchase price up front, and the limiting charge provision does not apply because it does not apply to DME. Although no ABN is needed where the oxygen is being provided as a purchase, the supplier may wish to provide one to the beneficiary lest there be any question that the beneficiary chose a purchase instead of a rental.

Perling: When a beneficiary contacts a supplier with a prescription for medically necessary portable oxygen and selects an OGPE in the context of an unassigned claim, can a supplier charge the beneficiary and collect the full purchase price up front, although Medicare will pay the beneficiary on a monthly basis for 36 months so long as the oxygen remains medically necessary? If the item is no longer needed, or the beneficiary dies prior to the end of the 36 months, would the supplier be obligated to return any of the up-front fee collected and if so, how would this refund be calculated? May the beneficiary sign anything at the time of purchase waiving the return of the fee?
CMS: It is not clear to us whether this question deals with a purchase or the rental of oxygen. As noted above, Medicare does not make payment for the purchase of oxygen, and to the extent that this question pertains to a purchase, the supplier may collect the entire purchase price up front. No payment will be made to the beneficiary and if the beneficiary dies before the end of 36 months, or the equipment is no longer needed prior to the expiration of 36 months, there is no refund obligation. To the extent that this question deals with a rental, if the claim is not taken on assignment, the supplier may charge the full rental price up front, but if the beneficiary dies before the end of 36 months, or if the equipment is not needed prior to the end of such time, the supplier would have to refund the portion of the fee collected up front that represents the unused equipment. We do not believe it would be effective for the beneficiary to sign a statement allowing the supplier to charge for services not provided.