Invacare Speaks Out Against FY 07 Budget Proposal to Sharply Reduce Home Oxygen Therapy Benefit

ELYRIA, Ohio — On Feb. 6, President Bush announced his Administration's FY 07 budget proposal, including a Medicare proposal that would reduce Medicare spending over the next five years by $36 billion. Bush's proposed Medicare package includes $7 billion in proposed cuts for durable medical equipment (DME). The proposal would limit Medicare rental payments for home oxygen therapy to 13 months. Almost 20 percent of the Medicare cuts would come from a benefit that accounts for approximately 2 percent of Medicare program expenditures.

In response to the budget proposal, Mal Mixon, chairman and CEO at Invacare, said, "The Administration's budget proposal to cut Medicare payments for home oxygen therapy would dramatically erode the quality of care for beneficiaries who rely upon home oxygen therapy. Home oxygen therapy sustains life for the approximately 1 million seniors who rely upon the therapy."

The Administration's FY 07 budget proposal for Medicare payment for home oxygen therapy builds off a controversial provision Congress recently included in the Deficit Reduction Act of 2005 (DRA). The DRA provision limits rental payments for home oxygen therapy to 36 months, passing ownership of the oxygen equipment on to the beneficiary from that point forward. How beneficiaries receive ongoing care, maintenance, service and repair services beyond 36 months is unclear. The Administration's FY 07 budget proposal would limit monthly payments for home oxygen therapy to 13 months, further jeopardizing beneficiary access to quality care and services.

Invacare listed many reasons why the proposal spells bad news for the industry. Among these reasons is the limiting of the Medicare home oxygen therapy benefit after 13 months. Virtually every beneficiary requiring home oxygen to sustain life will suffer dramatic benefit reductions because Medicare beneficiaries are on home oxygen therapy for an average of 26 months, said the company. Once ownership of the equipment transfers to the beneficiary, home oxygen providers will no longer have a relationship with the beneficiary. The beneficiary will then be responsible for obtaining necessary services to ensure the equipment continues to operate properly, making sure the oxygen purity levels are appropriate and that regular maintenance is performed, and getting the necessary accessories and supplies, such as cannulas and tubing.

In addition, the proposal would limit beneficiaries' access to respiratory therapists. It is unclear how seniors will obtain necessary RT services once equipment ownership passes to the consumer, said Invacare. Also, in the event of an electrical outage, it is unclear how beneficiaries will obtain backup compressed oxygen tanks. Invacare projects that many beneficiaries will end up in hospital emergency rooms or will be admitted to a hospital where the daily cost exceeds $3,600 — well above the annual cost of home oxygen therapy, which is $2,784.

"Home oxygen therapy is the most cost-effective and clinical efficacious treatment available to those with COPD, and low blood oxygen and can be provided to a patient for one year at less than the average cost for one day in the hospital," said Mixon. "Oxygen is the only treatment or drug scientifically proven to extend the life of patients with chronic lung disease. Oxygen therapy also reduces the frequency of hospitalization."

Medicare and its beneficiaries are not paying for oxygen equipment; they are paying for home oxygen therapy, 24 hours per day, seven days per week, 365 days per year, asserts Invacare. Focusing attention on the relationship between the overall cost of providing therapy and the cost of a single component of its provision is a complete misunderstanding of how beneficiaries on home oxygen therapy receive care. The unplanned effect will transfer the burden of maintenance and repair of sophisticated oxygen technologies to the beneficiaries or caregivers and, therefore, the total management of their home oxygen therapy regimen. Invacare expressed concern that the dispensing and distribution of the prescription drug will go unmonitored and unregulated, presenting a serious risk to patient safety and care, and higher costs to the beneficiary and the system.

Invacare also cited opposition to the DRA capped rental payments for home oxygen therapy at 36 months that mandates that beneficiaries own the equipment at that time. Home oxygen payments have been drastically reduced over the last decade. The BBA of 97 produced a 30 percent cut in the home oxygen payment in conjunction with CPI freezes that are still in place today. The FEHBP cuts resulting from the Medical Modernization Act added another 12 percent cut in the home oxygen therapy payment.

"During deliberations on the Deficit Reduction Act of 2005, Congress already rejected an 18-month cap of rental payments for home oxygen therapy," said Mixon. "Similarly, Congress should reject this draconian proposal."

For more information on legislative issues effecting the respiratory market, check out the March issue of Home Health Products for "Respiratory Roundup."

This article originally appeared in the February 2006 issue of HME Business.

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