The Importance of Service

Tucked away in committee report language accompanying the CHAMP (Children's Health and Medicare Protection Act of 2007) bill, is a mandate for the Department of Health and Human Services to conduct a study to examine the services provided to beneficiaries as part of the home oxygen therapy benefit.

This language is a critical next step for policy makers as they assess whether the Medicare program pays appropriately for home oxygen.

Take note of a few facts. Oxygen is under scrutiny by Congress, the Office of Inspector General, CMS and others, based upon the ill-founded but deep assumption that Medicare pays too much for this benefit. (Never mind the connected fact that those misperceptions are based on a comparison of the acquisition cost of a concentrator to the monthly payment amount).

For years, the industry has told Congress about all of the services that we provide to oxygen beneficiaries and how critical these services are to ensure compliance. And we have done a notable job in demonstrating the real service costs incurred in providing home oxygen therapy.

A 2006 Morrison Informatics study, sponsored by the American Association for Homecare, demonstrates that equipment acquisition is only 28 percent of a supplier's “total delivered costs,” and that 72 percent of costs are attributable to services, claims filing, normal business operation costs, etc.

Members of Congress, however, will never make significant policy decisions based on an industry-funded study. A government-backed study is necessary if federal policy makers are to recognize the value of these services — and then make a decision to pay for them.

The good news here is that the drafters of this language understand there is a real need for services when a frail senior requires oxygen, that oxygen is not “just an equipment benefit.” This is a huge step forward.

Their next questions are what those services are, which services provide value and how much they reasonably cost providers. As an industry, we describe the “bundled payment amount” that is akin to a capitated payment amount, and under which the consumer can expect to receive all necessary services. But the prudent payers on Capitol Hill want to get into the details, understand what is value-added, and then pay appropriately.

The conference report language asks HHS to assess six related questions related to oxygen services. Following is the full text of the report language: