Scully may favor O2 thaw

Thursday, January 31, 2002

WASHINGTON - Although oxygen reimbursement has been frozen nearly solid since the Balanced Budget Amendment of 1997, industry leaders have new grounds for hope that CMS may be sympathetic to a real thaw. In recent meetings, CMS Administrator Tom Scully has led HME industry leaders to believe that he would not be opposed to a reinstatement of a cost of living adjustment (COLA) for home oxygen.

"In principle, he indicates that he does not believe (oxygen reimbursement) should be frozen indefinitely," said AAHomecare president, Tom Connaughton, who, together with Invacare CEO Mal Mixon, recently met with Scully. It was Connaughton's fourth meeting with Scully since the new administrator took office.

In 1997, the Balanced Budget Amendment cut reimbursement for home oxygen by 30% and rendered the entire DMEPOS fee schedule ineligible for annual cost of living increases. In 1999, the Balanced Budget Refinement Act raised oxygen reimbursement a smidgen (0.3%) for 2001. After carving that increase out, oxygen will realize a greater smidgen (0.6%) for 2002.

DMEPOS has fared better. Last July, in an acknowledgement that the 1997 cuts went deeper than intended, Congress restored the COLA by 3.7% plus an additional 3.28% to make up for an adjustment that had been intended for January 2001.

Oxygen was exempt from that boost, and no one is really sure why. Some believe the inclusion of an indefinite freeze on oxygen reimbursement in BBA '97 was a technical error. Connaughton said he believes that Scully believes that as well.

It's still unclear whether Scully's recognition of the oxygen freeze will result in any direct action. Hopes that he'll include a statement about oxygen in his annual budget statement last month were dim. But even if he doesn't propose a reinstatement of the COLA, Scully's expression of sympathy dulls the blade of deeper cuts.

"It's the first step in a long journey, and the first step is always hardest," said Invacare's Director of Government Relations Dave Williams. "This is it." HME