AAHomecare lays out vision for Medicare oxygen

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09/14/2009

The following letter from AAHomecare is of critical importance to all HMEs who provide Medicare oxygen. If you want to find out what oxygen reimbursement could look like in the future, read on. —Mike Moran

Open Letter to the Home Oxygen Community
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From Tyler Wilson
President, American Association for Homecare

September 14, 2009

The American Association for Homecare has worked for many months on the proposal to reform the Medicare home oxygen benefit.  The reform proposal is the basis for the legislation now being spearheaded in the House of Representatives by Congressman Mike Ross.

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Oxygen providers, the broader community of stakeholders, including physicians, clinicians and patient groups, CMS, and Congress itself, have all expressed concerns about the current Medicare oxygen benefit.  Taking a lead on reforming the benefit is the best way for the oxygen community to show ourselves as being responsive to these various concerns.  We have stepped up and framed the legislative solution and, importantly, created the opportunity for some long-needed stability for oxygen policy coming out of Medicare.

Among the guiding principles that AAHomecare has relied upon in working to craft an oxygen reform proposal:

Eliminating the 36-month cap;
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Gaining recognition under Medicare of the services provided to patients as part of the home oxygen benefit;
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Preventing further cuts to Medicare reimbursement for oxygen, which means putting forward a budget-neutral proposal that does not endorse taking any money away from the total allocation of Medicare dollars being spent on oxygen;
Providing some degree of transparency into the costs of providing home oxygen so that our critics at CMS and in Congress understand the true nature of the service and the surrounding infrastructure that responsive providers must have in place; and

Ensuring certain basic patient protections.

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With the discussions and compromise that came out of the August 18 meeting of oxygen stakeholders in Washington, the terms of the oxygen reform proposal were largely finalized.  Oxygen providers and groups representing physicians, clinicians, and patients worked through some very difficult issues and developed a proposal that seemed to satisfy the concerns of all the stakeholders.

Importantly, we were able to reach a compromise and get the results of that agreement to Rep. Ross who has agreed to make every effort to modify his original reform proposal before it moves further along in the House Energy and Commerce Committee.  AAHomecare has made a commitment to work with Rep. Ross in order to get the compromise provisions incorporated into his legislation.  The fact that we have a prominent House negotiator, like Rep. Ross, willing to advance the oxygen reform proposal presents a critical opportunity that the oxygen community cannot ignore.

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With last week’s introduction of the Senate Finance Framework on health reform, the importance of the Ross proposal should be all the more apparent.  The oxygen payment provision in the Senate Finance Committee Framework is projected to cut $1 billion from the Medicare home oxygen benefit over the next ten years.  That is on top of competitive bidding results — which the Framework document would impose more quickly on the rest of the country (non-bid areas) after Round One of bidding — perhaps even precluding the need for a Round Two.

As the health reform effort in the House and Senate moves forward, the Ross legislation will serve as a critical response to the very harmful provisions being proposed by the Senate Finance Committee.  Without the Rep. Ross legislation on oxygen in the final House health reform package, the oxygen community will be at the complete mercy of whatever final determination is made by Senate Finance negotiators.  Again, the Ross legislation would take no money out of the Medicare budget for home oxygen.  Senate Finance is proposing to cut $1 billion.  AAHomecare does not want to squander the opportunity we have with the Ross legislation.  We hope the rest of the oxygen community concurs.

After the August 18 meeting, one issue remained to be resolved regarding the Ross proposal.  The issue concerns repeal of the 36-month cap and how to allow Medicare to make reimbursement payments over 60 months (instead of 36) without costing Medicare money.  Otherwise, it would violate one of Rep. Ross’ key principles — that it must be budget-neutral and not require any cuts or additional spending by Medicare.  In order to spread 36 months of reimbursement over 60 months, the resulting monthly reimbursement must necessarily be lower.  The question is how the impact of that lower reimbursement should be apportioned among the various oxygen modalities.

Of course, this is only an interim issue (i.e. the reimbursement rates moving from a 36- to 60-month structure) because after the transition period, the new rate mechanism called for under the Ross proposal will take effect.  That new mechanism will have CMS determining rates based on cost surveys.

For the interim payment period, AAHomecare has recommended to Rep. Ross that the combined portable Medicare payment rate be 90 percent of the current 2009 allowable for that modality.  New technology would remain at the current 2009 level.  Once the 90 percent calculation is made for combined portable, concentrator-only rates would be determined in accordance with the Ross mandate that the entire payment system be budget-neutral.

The AAHomecare decision regarding this interim payment system is the most responsible recommendation and the one that best meets the needs given the various concerns expressed by oxygen providers across the ranks of the Association’s membership.  We have heard from many small, independent providers with many different opinions on this issue, and the foregoing recommendation is the option best suited given the different patient-mix profiles that exist within the HME sector.

During the long process of developing a reform proposal, AAHomecare has strived at every point along the way to recommend solutions and offer policy options that will protect oxygen suppliers and patients while also preventing more of the long string of cuts to oxygen reimbursement.  There are few perfect solutions to any of the issues that have surfaced, and rarely has the HME sector been unified in its thinking on any of these complex questions.

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Now, however, there is one concept that the entire oxygen community should be able to unify around and support: the Ross legislation presents a critical counter to the Senate Finance Framework proposal.  Rep. Ross’ budget-neutral legislation with no proposed reductions in the Medicare spending for home oxygen is the best option for fending off the draconian cuts, on top of competitive bidding, of $1 billion over 10 years being proposed by Senate Finance.

AAHomecare hopes that every HME company and every group representing stakeholders in the oxygen community will now join the Association in supporting the Ross legislation.

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There are many other challenges and threats facing the HME community. The American Association for Homecare will continue to work toward the best possible outcomes for HME providers and patients at every turn.

Tyler J. Wilson, President
American Association for Homecare (AAHomecare)

2011 Crystal Drive, Suite 725
Arlington, Virginia 22202
tylerw@aahomecare.org
www.aahomecare.org

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