Medicare Compliance & Reimbursement

Senate interest in 13-month cap proposal dwindles.

Sen. Charles Grassley's (R-IA) recent pledge to drop consideration of a 13-month rental cap for oxygen equipment has oxygen suppliers and manufacturers cheering.

The 13-month cap proposal, included in President Bush's budget for fiscal year 2007, had garnered support from Grassley and others in the wake of a report from the HHS Office of Inspector General (OIG) released in September. The news of Grassley's shift on the cap question came of Sept. 26.

In the report, "Medicare Home Oxygen Equipment: Cost and Servicing," the OIG argued that, even with a 36-month cap, Medicare and its beneficiaries will continue to pay more than 12 times the purchase price for stationary concentrators.

Based on the 2006 median fee schedule amount, Medicare will pay $7,215 over 36 months for concentrators that, on average, cost $587 to purchase.

"If Medicare rental payments for oxygen concentrators were limited to 13 months, the program and its beneficiaries would save approximately $3.2 billion over 5 years," the OIG stated.

The Council for Quality Respiratory Care, a coalition of 11 oxygen suppliers and manufacturers, criticized the study's "limited scope, small sample selection and failure to consider critical patient services."

Study Backs Up Industry Claims

The group pointed to an American Association for Homecare-commissioned study released in June that analyzed data from 74 suppliers who provide oxygen therapy to more than 600,000 beneficiaries. Services make up 72 percent of the costs of providing oxygen, the study found.

Grassley has "heard from his constituents" regarding his comments relative to the OIG report supporting capping oxygen reimbursement at 13 months, announced Invacare CEO Mal Mixon Sept. 26 during Medtrade.

To conduct the study, the OIG collected surveys from only 150 beneficiaries who rented oxygen in 2004. It also collected information from suppliers, and during site visits with suppliers in California and Florida, observed operations, service practices and beneficiary relationships.

Senator Grassley and the Senate Finance Committee were considering using the $6.5 billion savings (estimated by the CBO should oxygen equipment reimbursement cap at 13 months) to offset the "doc fix," according to John Gallagher, of Waterloo-IA based VGM Group. As of Jan. 1, 2007, physicians are scheduled to receive a 5.1-percent reduction in Medicare reimbursement. The Senate Finance Committee proposed to eliminate the cut via the savings realized from the additional oxygen cap.