Provider Reaction Mixed on 2005 Home Oxygen Fees

BALTIMORE--Providers who had braced for big reimbursement cuts expressed quiet relief last week when Medicare announced it is reducing home oxygen fees by an average of less than 9 percent. Last year, an HHS Office of Inspector General report had recommended cuts of up to 20 percent.

"We prepared for the worst, and we're pleasantly surprised," said Rebecca Olson, sales manager for Oxygen One, Wakesha, Wis. The independent provider had planned for severe oxygen cuts--anywhere from 10 to 30 percent, Olson said. "I would rather [the government] not cut [oxygen rates] at all, but realistically, if they're going to make the cuts, they're at least small and not across the board," she added.

Based on location, however, not all providers are quite as happy. Don White, president of Amherst, N. Y.-based Associated Healthcare Systems, called the 12 percent average cut in New York "pretty substantial. It's 2 percent over what I had expected," said the long-time provider. "I had already made adjustments to account for a 10 percent cut."

MMA-Mandated Cuts
The Medicare Modernization Act requires CMS to bring oxygen reimbursements in line with median Federal Employee Health Benefits Plan pricing as determined by the OIG. But because the OIG analysis was delayed by several months, CMS has been paying 2005 oxygen claims at 2004 rates.

When the OIG issued its final report last Wednesday, CMS immediately posted the 2005 fee schedule. The agency estimates that the average rate reduction is 8.6 percent for stationary oxygen and 8.1 percent for portable units. Actual fee cuts, however, vary by state. The new monthly payment amounts for the states range from $194.48 to $200.41 for stationary oxygen and from $30.57 to $32.08 for portable equipment.

Reimbursements in states with the highest Medicare fees came down by the highest percentage; Hawaii, for example, will be hit with a 25 percent cut for stationary oxygen and a 28 percent cut for portable systems, and New York and Alabama providers will take a 12 percent cut on stationary systems and a 10 percent cut for portables.

Cuts are lighter in states where current fees are closer to FEHBP median pricing, and states with fees already at or below the FEHBP median price will see no changes.

The new fees will be implemented by the DMERCs "as soon as possible and by no later than April 8," according to a CMS statement. 2005 claims submitted before the fees take effect will be paid at 2004 rates and will not be retroactively adjusted. But claims submitted after the fees are implemented will be paid using the new fee schedule amounts, the agency said.