INSPIRATION! Washington Watch

The following column was published in the April 2006 Respiratory supplement "Inspiration!"

With the president?s signing into law of the Deficit Reduction Act of 2005 in early February, the home oxygen industry is faced with a dramatic shift in the way consumers will receive the products and services they need. The $39.7 billion savings package included cuts to Medicare and Medicaid programs, notably changing the continuous rental payment method for home oxygen to a "rent-to-own" payment method.

The new law will limit monthly rental payments for home oxygen therapy to 36 months. If a beneficiary has a medical need for home oxygen beyond 36 months, title of the equipment will transfer to the beneficiary. If the physician has prescribed portable oxygen, the supplier will continue to be paid the monthly portable "add-on" amount for as long as the medical need continues beyond 36 months. This new law is effective for oxygen rentals beginning after Jan. 1, 2006; for existing rentals, the 36-month count will begin no earlier than January 2006. Therefore, ownership transfer would not occur for any oxygen equipment before January 2009. The ownership transfer applies to both stationary and portable oxygen equipment. In addition, the law provides that the Centers for Medicare and Medicaid Services (CMS) can develop maintenance and service payments beyond the 36 months for oxygen equipment; parts and labor would be paid for when not under a manufacturer?s warranty.


In the event of an emergency, in the event of an electrical failure, how will that patient obtain access to necessary services to ensure access to home oxygen therapy?

There are a series of unfortunate things about this legislation, some more unfortunate than others. Most importantly, the statutory language is vague; leaving many questions unanswered. Many of the questions fall into the "what happens after 36 months?" category. The law answers none of these. CMS will have the task of interpreting the statutory language, and defining the nature and extent of payments that will be available after 36 months. Most importantly, for the frailest of home oxygen patients who do not have a portable oxygen system, the patient?s relationship with the oxygen provider will be severed. In the event of an emergency, in the event of an electrical failure, how will that patient obtain access to necessary services to ensure access to home oxygen therapy?

There is really no further information that enables us to understand how this new policy will operate after 36 months. According to a document on the House Ways and Means Web site, "The Medicare program will pay for service and repairs to beneficiary?s oxygen equipment as well as continue to pay for deliveries of oxygen." In a Feb. 28, 2006 Wall Street Journal article, the architect of this policy, Rep. Bill Thomas, R-Calif., was quoted as stating that after 36 months, the beneficiary "then could bargain for services — oxygen supplies and maintenance — separately on the basis of service price." This simply clouds the issue further. Is Rep. Thomas thinking that patients will bid for home oxygen therapy services and supplies after the 36 month cap?

Prior to the final passage into law of the 36-month cap, the American Lung Association (ALA) sent a letter to every office on Capitol Hill detailing a series of questions about what will happen to patients after 36 months. For example, the ALA asked: "Will the maintenance and service payments function like a service contract that ensures regular maintenance is performed on the equipment such as routine cleaning and replacement of filters? Or, will it be incumbent upon the patient and caregivers to manage the service of the equipment with the supplier reimbursed for each specific service or service call? After the 36-month rental period and ownership is transferred, will Medicare, as part of the servicing and maintenance, cover the routine replacement of humidifiers, nasal cannulas, tubing and other disposable equipment or will these costs be borne by the patient? After the 36-month rental and ownership is transferred, what happens if the equipment fails? Will it be replaced by Medicare? Will a new 36-month clock start? Or will the patient be required to purchase replacement equipment? After the 36-month rental and ownership is transferred, what will be the impact on the patient if the equipment manufacturer is no longer in business and replacement parts are needed? Will the patient be required to purchase replacement equipment? After the 36-month rental and ownership is transferred, who will provide the service and maintenance on the equipment if the original local supplier is no longer in business?"

These are extremely important questions that point out the serious deficiencies in this "rent-to-own" policy for home oxygen. More importantly, the questions come from an organization representing consumers, which will be the cornerstone of our ability to roll back this policy. The consumers and the clinicians — and their affiliated organizations — must speak out about the severe ill-effects of this policy.

President Bush added fuel to the 36-month cap fire by announcing that his FY 2007 budget proposal includes a provision that would reduce the 36-month cap to 13 months. Coming on the heels of the controversial 36-month cap on home oxygen therapy payments, this proposal is outlandish. Aside from the obvious arguments that consumers will suffer and that the proposal is based on a complete misunderstanding of home oxygen therapy, Congress already rejected this proposal when it rejected an 18-month cap in favor of the 36-month cap. In any event, in an election year, passing a Medicare package even close to the size that the president has proposed could prove Herculean. Nevertheless, we must shore up support from all allied constituencies — consumers, clinicians and providers alike — to make sure every member of Congress understands the implications of both the 36-month cap (to ensure we can get Congress to repeal this) and the proposed 13-month cap.

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

About the Authors

Mark Reilly is Director of Product Line Management for the LaCrosse and Danner footwear brands of Portland, Ore.

Shashi Gorur, ME, PE, is a senior process specialist with Paques ADI Inc. in Salem, NH, and has been working in the field of anaerobic granular sludge bed technology for more than 15 years.

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