Home Health & Hospice Week

CMS orders suppliers to furnish services for two years with almost no pay.

Oxygen suppliers knew it was going to be bad, but not this bad.

Suppliers cheered when Congress repealed the ownership cap in the Medicare Improvements for Patients and Providers Act of 2008, but it turns out the move is costing them two years of payments. In the physician payment final rule with comment period the Centers for Medicare & Medicaid Services issued in the Nov. 19 Federal Register, CMS dashes the industry's hopes for fair payment after the 36-month mark for oxygen equipment.

Oxygen suppliers will retain ownership of the equipment after 36 months, but the only Medicare reimbursement they'll receive for it is a six-month routine servicing payment every six months, and that's only in 2009. The payment is only for 30 minutes of labor, points out the American Association for Homecare. That amounts to about $30, says the National Association for Indepen-dent Medical Equipment Suppliers.

That means oxygen suppliers have to pay for emergency services, supplies, accessories, repairs, and more out of their own pockets for the equipment's Medicare-determined life -- two more years after payments end at 36 months.

CMS's theory is that suppliers will make enough money off the equipment in its first three years to balance out the last two years of non-payment. CMS also bases the policy on the fact that, according to a 2006 HHS Office of Inspector General report, only 22 percent of beneficiaries use oxygen for more than 36 months, the National Association for Home Care & Hospice points out.

Oxygen suppliers will receive payments for oxygen contents, CMS notes. But those rates will be cut 9.5 percent in accordance with MIPAA, notes member service organization VGM.

There's more: Suppliers aren't off the hook if their clients move to another area. After 36 months, suppliers must subcontract with a supplier in the patient's new location to service the patient.

If the patient moves close to the end of the 36-month payment period, the patient is responsible for finding another supplier to pick him up for the remainder of his cap.

That is already proving hard for patients to do, reports NAIMES. Suppliers are not willing to take on two years of financial burden for a few months of payments before the limit takes effect.

Before CMS issued its rule, suppliers thought they would be able to discontinue their oxygen patients' service if the payment rates were too low. But CMS now requires suppliers to service those patients for whom they've received oxygen payments with no opportunity to end the relationship.

More clarifications: Suppliers can't charge patients for equipment or services, including pick-up or disposal of oxygen tanks, CMS says in a new MLN Matters article. Temporary breaks due to hospital stays or other reasons don't restart the 36- month payment clock, CMS adds.

However, the patient switching to a new kind of equipment does restart the payment clock, Waterloo, Iowa-based VGM believes. A physician must prescribe the switch. And small changes that don't necessitate new equipment, like "just an increase in liter flow," won't qualify, VGM says.

"Once again, CMS has discounted the important role that homecare providers play in the provision of care to Medicare patients on home oxygen therapy,"

AAHomecare's Tyler Wilson says in a release. "The guidance published by Medicare focuses primarily on the oxygen equipment."

"The current Medicare oxygen policy is seriously flawed and changes are needed in order to make the oxygen benefit more focused on patients and the services they require," Wilson adds.

Many oxygen suppliers, particularly smaller ones, will be forced to opt out of Medicare business or they will have to close altogether, predicts NAIMES's Wayne Stanfield. The policy is "devastating."

Bright side: One piece of good news from CMS is that the five-year clock will start over in January for patients who have been on service that long. For some suppliers, "as much as 25 percent of their patients scheduled to cap in January can be restarted," NAIMES points out. "This should soften the blow somewhat.

"Suppliers and their reps are lobbying Congress for changes to the policy, although chances for success look slim in the lame duck session.

Some suppliers are still hopeful that CMS will soften some of the rule's provisions. Although it's a final rule, there is a 30-day comment period. "We believe stakeholder comments will mitigate this issue to some degree," VGM says of the out-of- area provisions. All suppliers should submit comments on the rule, experts urge.