O2 Oh, My

“Oxygen” is the word that's on everybody's lips these days in the respiratory sector of the home medical equipment industry. Oh, sure, there are other things going on — a boom in the sleep market and the slashing of reimbursement for nebulizer medications, for instance.

But it's oxygen that has center stage in the respiratory world right now. That's because the government is not only cutting oxygen reimbursement, it is changing the model for reimbursement.

The Deficit Reduction Act, which was signed into law in February, among other things stipulates that oxygen no longer falls into a rental-only category, which allowed providers to continue providing and servicing equipment as long as the beneficiary met the criteria for Medicare coverage. Instead, oxygen is now treated as a capped rental. After 36 months, the beneficiary will own the equipment — and have responsibility for its maintenance and service.

Even more than the drastic 30 percent oxygen reimbursement cuts of nearly a decade ago, this newest government move has sent shockwaves through an already jittery industry. Indeed, three lawsuits challenging the DRA's constitutionality have been filed.

The anxiety has been exacerbated by President Bush's proposed 2007 budget, which calls for reducing the capped-rental timeframe to 13 months.

The situation has seriously stymied HME providers, who are wondering how the changes will actually play out.

In a CMS document issued April 28, the agency explained that, once the equipment title is transferred, Medicare will continue to pay for “reasonable and necessary maintenance and servicing” of beneficiary-owned portable and stationary systems. But so far there are no more details.

“I think the entire industry is concerned by recent legislation and proposed legislation that forces everyone to rethink patient care and service,” says Len Serafino, vice president, eastern division sales, for Chatsworth, Calif.-based Chad Therapeutics.

“We don't know what providers will be paid or how they will be paid for equipment maintenance after 36 months, and we don't know what CMS considers ‘reasonable and necessary’ maintenance or service. But I think the overriding concern is, or should be, what will happen to these patients.”