Find out how CMS threw oxygen equipment firms a curve ball in its final 2009 physician payment regulations by implementing recently-enacted statutory language in a way that reduces reimbursement.
Manufacturers had praised the statutory language when it was enacted last summer, but now say they are disheartened.
The rule that was issued by CMS Oct. 30 as part of the physician fee schedule is the government's latest effort to trim Medicare expenditures in the oxygen area, which account for more than one-third of the program's durable medical equipment charges. The regulation, which takes effect Jan. 1, forces on suppliers greater financial responsibility for maintaining the equipment during its useful life.
Post-Rental Payment Policy Disappoints
Manufacturers and suppliers of equipment including oxygen concentrators, regulators, nebulizers, containers, masks and tubing had been anxiously waiting for guidance on post-Jan. 1, 2009 Medicare payment policies. The date is significant because the Deficit Reduction Act of 2005 imposed a three-year rental cap on oxygen equipment beginning the first day of 2006.
Prior to the DRA, the equipment could be rented to beneficiaries indefinitely in return for Medicare-covered rental payments. The legislation cut off a supplier's ability to collect rental payments after three years and required ownership of the equipment to be transferred to the patient.
Manufacturers cried foul, highlighting the substantial payment cuts that would result (1"The Gray Sheet" July 16, 2007, p. 9). They warned that transferring ownership to beneficiaries was dangerous because it would require often frail patients to manage the servicing and maintenance of their own equipment.
But when the Medicare Improvements for Patients and Providers Act was enacted in July, the oxygen industry was encouraged. The bill still limits the rental period to 36 months, but repeals the mandate to transfer ownership to the patient.
At the time, Peter Kelly, chairman of the Council for Quality Respiratory Care, which represents manufacturers and suppliers, praised Congress "for its commitment to correcting flawed policies and ensuring quality of care to 1.4 million Americans who depend on home oxygen therapy."
Following MIPPA enactment, industry engaged policymakers and waited for final word on how equipment use costs would be reimbursed after the three-year rental periods end.
The results, as laid out in the fee schedule, caused CQRC "extreme concern and disappointment," according to an Oct. 31 statement.
CMS Changes Tune With Supplier Ownership
Under the original DRA provisions, CMS said it planned to pay for both routine and unexpected equipment maintenance following the three-year rental period "in keeping with the longstanding Medicare policy to pay for maintenance and servicing for [durable medical equipment] that is owned by the beneficiary."
But with the MIPPA revisions, the agency amended that policy. CMS now says it will not pay for "non-routine" maintenance, defined as extensive work requiring a skilled technician.
"Given that the supplier owns the equipment, we believe that the supplier should be responsible for maintaining their equipment in working order as they did during the 36-month rental period," the final rule states.
The agency cites data that oxygen products are "generally dependable" and typically not in need of serious maintenance in the first five years. It also points to a 2006 government report finding that only 22% of Medicare beneficiaries use oxygen equipment for three years or more, making it rare for a supplier to be faced with the need for unexpected maintenance.
CMS said it will cover routine, periodic, 30-minute-or-less, in-home inspection and maintenance visits in 2009, but may reconsider that policy going forward.
MIPPA also requires oxygen firms to furnish equipment to a beneficiary "during any period of medical need for the remainder of the reasonable useful lifetime of the equipment."
The agency interprets the provision to require suppliers to arrange for patients to continue to receive equipment components and maintenance during the "reasonable useful lifetime," which CMS estimates to be about five years, even if the patient moves out of the supplier's service area during that period.
Further, if a patient experiences a "break" in medical need for oxygen equipment and then needs the equipment again, the supplier is required to provide it without expectation for a rental payment as long as the device is still within its useful lifetime.
The statute "does not provide any exceptions to the requirement that the supplier continue furnishing the equipment during any period of medical need," the rule affirms.
Regulation Is Blind To Needed Services - Industry
According to the American Association for Homecare, these regulatory provisions are "alarming and wholly inadequate."
The rule "focuses primarily on the oxygen equipment and does not account for the required range of services and the realities of providing quality oxygen therapy to Medicare beneficiaries," said Tyler J. Wilson, CEO of AAH. "We fear that this approach will jeopardize seniors' access to the level of care they require and have come to expect from their oxygen providers."
Both AAH and CQRC point out that the rule does not support suppliers' need to respond to patient-generated requests for clinical or equipment-related emergency services.
According to CQRC, "CMS is undervaluing the important role that home oxygen providers can and do play in preventing costly beneficiary emergency room visits, acute care admissions and avoidable physician intervention."
Although the fee schedule is a final rule, CMS will accept comments on this and other provisions that involve implementation of MIPPA because the law was enacted after the proposed fee schedule was put out in June. The agency will respond to the comments in a "subsequent final rule," according to a physician fee schedule fact sheet.
- David Filmore
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