Reporter's notebook: Medicare oxygen reimbursement tanked in 2009

Thursday, August 19, 2010

YARMOUTH, Maine - We recently requested a whole bunch of data from CMS for our annual State of the Industry report, and it has begun to trickle in.

The data below is DMEPOS fee-for-service allowed charges for the product categories that make up all of "Medical Equipment and Supplies."

                    2008                2009

Med/surge supplies:        $176 million            $202 million

Hospital beds:             $276 million            $244 million

Oxygen and supplies:        $2.8 billion            $2 billion

Wheelchairs:            $1.5 billion            $1.4 billion

Other DME:                $3.3 billion            $3.4 billion

O&P devices:            $2 billion            $2.2 billion

Respiratory meds:            $656 million            $588 million

Grand total:                $10.7    billion            $10 billion

The most interesting data relates to oxygen spending, which dropped by $800 million in 2009 compared to 2008, from $2.8 billion to $2 billion. Looks like the oxygen cap and the 9.5% cut, which took effect Jan. 1, 2009, played out the way CMS hoped they would.

If you think that's bad, check this out: Out of curiosity, I applied the 32% average reimbursement cut from Round 1.2 of competitive bidding to 2009 oxygen reimbursement. When you do that, oxygen spending drops from $2 billion to $1.36 billion.

Not pretty. I'm also quite sure that the bureaucrats at CMS have performed that simple calculation and are sitting around right now licking their chops. If you need one, that's a pretty good reason to support industry lobbying efforts in Washington D.C.

As you look at this data, the drop in oxygen sticks out like a sore thumb, but hospital beds took a noticeable hit, too (down $32 million). Wheelchair reimbursement dropped $100 million, from $1.5 billion to $1.4 billion. When we're talking billions, $100 million doesn't sound like a lot, but let's face it, that is some serious jack.

On the plus side, reimbursement for "Other DME," which includes mostly bent metal, I suspect, increased by $100 million, from $3.3 billion to $3.4 billion. Reimbursement for O&P devices also recorded a nice bump, from $2 billion to $2.2 billion.

Our annual State of the Industry report will run as a supplement in our December issue.