ALEXANDRIA, Va.--A new analysis commissioned by the American
Association for Homecare disputes the findings in a recent HHS
Office of Inspector General report on home oxygen.
The analysis from Mechanicsburg, Pa.-based Morrison Informatics
said that the recommendations in the OIG report--including a
13-month cap on home oxygen rental--are based on "limited and
inadequate data" about the actual costs of providing home oxygen
therapy to Medicare beneficiaries. An earlier study from Morrison,
also commissioned by AAHomecare, found that services account for
the lion's share of costs in providing home oxygen at 72 percent
(see
target="_blank">HomeCare Monday, July 10).
According to the health care consulting firm, the OIG report
considers only the costs of oxygen concentrators, which understates
actual costs. "The narrow scope of the OIG report results in
information that is neither accurate nor complete, and its findings
should not be used for determining Medicare home oxygen
reimbursement policy," AAHomecare reported in its newsletter last
week.
The analysis noted other problems, including:
- Methodological Concerns
--The OIG report only examined selected costs associated with home
oxygen therapy and therefore cannot justify a recommendation to
reduce the payment period from 36 months to 13 months. The costs of
oxygen equipment comprise only 28 percent of home oxygen providers'
total costs.
--The report did not study a statistically valid sample of
beneficiaries to project the results over the entire Medicare
population.
--The OIG's savings estimate using a 13-month capped rental period
is not accurate since it does not reflect payments Medicare would
have to make to reimburse providers for services currently covered
in the monthly, bundled payment rate, and it includes savings that
would not be scored by the Congressional Budget Office and CMS
Office of the Actuary as cost savings to Medicare.
--The OIG report stated that most non-equipment service costs were
not studied by the OIG, and CMS acknowledged the same in its
comment letter to the OIG. So the OIG savings estimates do not
account for costs that Medicare will incur and the estimates
require adjustment, as recommended by CMS. - Invalid Comparative Data
--The OIG's repeated use of 36 months of total reimbursement is
inappropriate because this represents only 22 percent of all
patients, not the average patient length of stay of 18 months, and
therefore does not provide a valid comparison of Medicare
reimbursement to the average cost of oxygen concentrators that was
cited.
--The Veterans Administration's model cited by OIG is completely
different than the Medicare model. Once all comparative costs
incurred by the VA are accounted for, its payment levels for home
oxygen therapy approach an acceptable range of Medicare's payment
levels. - Reimbursement Cuts Are Already Underway with Savings
Yet to be Realized
--The OIG report did not account for the financial savings
attributable to the Medicare Modernization Act of 2003, which
mandated two reimbursement reductions for oxygen: the Federal
Employees Health Benefits Plan median pricing adopted in 2005,
resulting in an 8 percent savings, and competitive bidding,
scheduled to begin in 2007, for which CMS projects 10 percent
savings. Nor did OIG account for savings attributable to the
Deficit Reduction Act of 2005, which will begin to be realized in
2009.
--Establishing a 13-month maximum reimbursement/rental period for
home oxygen, when added on top of a series of statutory and
administrative reimbursement cuts already undertaken or
contemplated, would harm vulnerable beneficiaries.
