Less than two weeks after releasing a report urging Congress to “consider reducing home oxygen payment rates,” the Government Accountability Office (GAO) has released a second report this week again calling for cuts to Medicare reimbursement for oxygen.
The report, “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue,” states that despite programs such as competitive bidding, which have reduced oxygen payment by 32 percent in Round One’s nine CBAs, the benefit could stand more cutting.
The report is the first of a series of annual reports that identify programs, agencies, offices and initiatives to eliminate duplication and other areas for cost savings. The GAO is now required to provide the reports per statute.
The full report can be downloaded at http://www.gao.gov/new.items/d11318sp.pdf.
Two key passages from the report:
“In 2009, Medicare spent $2.15 billion to provide home oxygen for beneficiaries with conditions such as chronic pulmonary disease. GAO reported more than a decade ago that Medicare payment rates for home oxygen were significantly higher than those of the Department of Veterans Affairs, and the HHS Office of Inspector General has reported several times that oxygen payment rates were excessive. Congress has reduced or limited payments several times most recently in 2009. However, according to GAO’s analysis, payment rates remain higher than those of some other national payers. Additionally, the average monthly Medicare payment for home oxygen per beneficiary in 2009 was up to 44 percent higher than suppliers’ overall costs. Nearly all beneficiaries who receive home oxygen use a stationary oxygen concentrator and about two-thirds also use portable oxygen equipment. Although portable oxygen equipment typically requires refills, stationary concentrators do not. However, Medicare’s bundled payment for stationary concentrators includes a payment for oxygen refills. Consequently, in 2008, in about one-third of instances in which Medicare paid for a stationary concentrator, it was also paying for oxygen refills that were not provided.”
“GAO suggested in January 2011 that Congress consider reducing Medicare home oxygen rates to align them more closely with the costs of supplying home oxygen. Congress has required the Secretary of HHS to institute competitive bidding for home oxygen and other durable medical equipment. Prices from the first round of competitive bidding took effect in nine geographic areas in January 2011. According to CMS, the bid prices for home oxygen and other durable medical equipment for 2011 are 32 percent less than Medicare paid in 2010. However, this payment reduction will result in a payment reduction only in the nine geographic areas. In 2011, the process to expand competitive bidding to an additional 91 areas is expected to begin. Eventually competitive bidding is expected to expand beyond these first 100 areas. Certain geographic areas, such as rural areas, are exempt from competitive bidding until 2015. It will be several years before competitive bids affect Medicare payments for home oxygen nationwide. Therefore, GAO continues to believe it would be appropriate for Congress to consider reducing Medicare home oxygen payment rates.”