Oxygen cuts leave providers gasping for air

Sunday, October 31, 2004

WASHINGTON - Upon learning that CMS may cut reimbursement for stationary oxygen by an average of ll% and by 7% for portable oxygen, providers, for the most part, just shook their heads. You could almost hear them wonder: What will they come up with next?

“I hope I’m not naive, but I can’t believe that they can do those kinds of cuts and expect patients to still have the access they have today,” said Mark Hanley, CEO of O2 Science in Tempe, Ariz. “We expected to take a hit on respiratory meds, but with oxygen on top of that it’s a double hit. I think it will do a lot of damage to a lot of companies.”

The oxygen cuts reflect the average difference between what Medicare pays for home respiratory services and what Federal Employees Health Benefit Plans pay. The Medicare Modernization Act mandated that CMS

bring Medicare’s reimbursement for oxygen and other key items of DME in line with FEHBP reimbursement. AAHomecare claims the comparison is faulty because FEHBP programs typically serve a younger, healthier patient base. Additionally, in its own study, AAHomecare reported that the reimbursement difference between FEHBP and Medicare is negligible.

“I don’t know what the heck is going to happen,” said Dennis Trach, regulatory compliance officer at Associated Healthcare in Amherst, N.Y. “If people aren’t scared they are stupid.”

While many providers are scrambling to see where they can cut costs to avoid reducing service, Binson’s Home Healthcare in Centerline, Mich., plans to grow through the reductions. Anticipating the cuts, the company set a goal for 2004 to grow its respiratory business by 20%.

“We’re maybe at 15% and putting the push on for the last three months,” said Brian Chambers, the company’s respiratory director, who hired a fourth salesperson this past summer. “It’s just too bad it can’t be 15% growth upon what you already have. We’re just trying to create the steady cash flow we are accustomed to.”

Jim McGrath, is president of Pulmonary Health Services, a family-owned company in Pittsburgh.

“We’re a small company and this hits the bottomline,” McGrath said. “I think our industry has been cut so much that you ask this time, where do you go from here.”

Ary Van Harlingen, has some ideas of his own about that. Can the industry absorb a 10% cut without changing the way it does business? He asks. No. So if the cuts go through, he’ll consider doing less charity work, and possibly realign his staff so that drivers make some of the visits normal assigned to respiratory therapists.

“I’ve been in the business 35 years and we have heard doom and gloom every five years about something that is going to kill the industry,” said Van Harlington, president of Shaw & Ott Medical Supplies in Mansfield, Ohio. “Somehow we’ll survive.”