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Cost & Effect
Oxygen has long been the bread and butter of the home medical equipment industry. For the moment, it still is. The question is, will oxygen be able to sustain its status as the product that carries the not-so-profitable items in your business?
The advent of the Deficit Reduction Act of 2005 is certain to change the way the HME provider community deals with Medicare home oxygen patients. Although there are many more questions than answers, it is time to examine the change and its impact on your business, specifically intake.
WHAT WE KNOW
As it stands, the DRA will cap all oxygen reimbursement at 36 months. All patients started a new count beginning Jan. 1, 2006, whereby every oxygen patient began as month one in the 36-month counter. Your software should be counting every month from here on out to determine when 36 months comes up. This is true for new patients as well as old. After 36 months, the patient will own their oxygen equipment.
Until January of this year, oxygen could be rented as long as the medical need existed. Pursuant to Medicare regulations, this meant rent ad infinitum, or until the patient switched to another provider, another insurance or passed away. The typical oxygen patient — Medicare age with chronic obstructive pulmonary disease — will continue to need oxygen for the duration of his or her life. The average length of stay on home oxygen is characteristically between two and five years.
What does this all mean? What we know at this point is that Medicare will pay for “reasonable and necessary” maintenance and servicing (i.e., parts and labor not covered by a supplier's or manufacturer's warranty) of beneficiary-owned equipment (including oxygen concentrators). It appears, therefore, that you will not obtain additional revenue from maintenance and servicing beyond what is necessary.
The real question is, what is “necessary?” Until this is clarified, providers are left in a state of limbo.
WHAT WE NEED TO KNOW
Now that Medicare will cease payment after 36 months, there are many questions needing immediate answers from CMS.
