A government study about the costs of providing oxygen therapy in the home is deeply flawed according to the American Association for Homecare (AAHomecare). Moreover, the further erosion of the oxygen benefit recommended by the report and by the Centers for Medicare and Medicaid Services (CMS) will put oxygen patients at even greater risk than they are already, says the association.
On Sept.14, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a study about the cost of home oxygen under Medicare. AAHomecare cited a 2006 study it commissioned from Morrison Informatics as a more accurate analysis of the costs of oxygen therapy provided in the home.
AAHomecare expressed appreciation for the visits the OIG made to oxygen providers, patients and referral sources. However, the OIG study does not reflect the full range of services provided to patients nor does it reflect the actual costs incurred in providing them. Moreover, the OIG looks at old cost data, from 2003. The Morrison Informatics study reviewed all current oxygen-related services for 2006.
The association cited several areas of concern regarding the OIG study:
The study focuses primarily on the cost of acquiring oxygen concentrators, which is a small fraction of the complete cost of providing oxygen therapy to Medicare patients in the home. (The Morrison study shows that equipment costs represent only 28 percent of the total cost of providing oxygen therapy.) The OIG study does not consider the full range of services and costs required in providing oxygen therapy.
OIG notes that other costs were not considered because they are included in the fee schedule amounts that are based on historical reimbursement levels of nearly 20 years ago. During recent decades, transportation, regulatory compliance, insurance and other costs have increased while oxygen reimbursement under Medicare has declined sharply.
The OIG study only asked for cost information about oxygen concentrators. The study should have looked at all types of oxygen modalities including liquid and the full costs of portable oxygen systems. It did not collect data about the acquisition costs for all of the portable tanks, regulators, oxygen conserving devices, cannulas, tubing, and other tangible equipment and supplies provided to home oxygen patients.
The report does not consider average delivery cost per patient, average miles driven, average customer service time, bad debt, or Medicare-required documentation and compliance costs. An accurate accounting of costs should acknowledge that health care reimbursements should factor in rent, utilities, insurance and other costs, which are considered in other health care sectors.
The OIG study gathered information only about new users of oxygen who began services in 2004 and who had no services previous to that year. Because COPD is a progressive disease, new users often start with nocturnal use only, while longer-term patients require more service.
The OIG presented data that suggests that all patients rent oxygen for 36 months. Their own data shows that 78 percent never reach the 36th month.
The 145 patients in the sample represent about one one-hundredth of one percent of the total beneficiaries using oxygen therapy at home.
The Morrison Study commissioned by AAHomecare earlier this year collected and analyzed data from home care providers that collectively serve more than 600,000 Medicare beneficiaries receiving oxygen therapy in their homes, which represents more than half of the Medicare population receiving oxygen therapy at home.
The study found that nearly three-quarters (72 percent) of the cost of providing home oxygen therapy to Medicare patients in their homes represent services, delivery and other operational expenses that benefit patients. Only about one-quarter (28 percent) of the cost represents oxygen equipment.
“It is time that CMS and Congress recognize that the services captured in this Morrison study represent the industry standard of care in the United States, regardless of the payer source of managed care — Medicaid and Medicare patients alike all require the same service categories,” commented Tom Ryan, chairman of AAHomecare and CEO of Homecare Concepts in Farmingdale, N.Y.
Congressional Action on Oxygen Issues
AAHomecare has endorsed the Home Oxygen Patient Protection Act, H.R. 5513, which was introduced in May by two physicians in Congress Rep. Joe Schwarz (R-Mich.) and Rep. Tom Price (R-Ga.) along with other members of Congress and its Senate companion bill, S. 3814, introduced by Sen. Pat Roberts (R-Kan.) and Sen. Jack Reed (D-R.I.). The bill would restore the Medicare treatment of ownership of oxygen equipment to that in effect before enactment of the Deficit Reduction Act of 2005 (DRA). A provision in the DRA forces oxygen users to assume ownership of and responsibility for the oxygen system they use after 36 months. The DRA policy change effectively severs the patient-provider relationship for home oxygen therapy, which raises numerous patient-safety concerns.
AAHomecare, the American Lung Association, and other patient and provider groups vigorously oppose the change in oxygen policy. Medical oxygen therapy at home costs an average of $7.62 per day under Medicare. The average hospital cost under Medicare is $4,603 per day.
“We believe that Congress inadvertently overlooked important patient and public safety concerns associated with home oxygen therapy, and that the new oxygen equipment ownership provisions may actually conflict with existing FDA regulations,” said Ryan. “A national Medicare policy that does not account for the many services associated with oxygen therapy shortchanges both the patient and the provider. As a result, up to a million Medicare patients who require medical oxygen may find breathing even harder than it already is.”
Ryan continued, “Home oxygen reimbursements under Medicare have been cut by nearly 50 percent over the past decade. This direction in policy will shrink and erode the nation’s home care infrastructure, which delivers high-quality, cost-effective care to a growing population of older Americans.”
In a letter to members of Congress earlier this year, American Lung Association President John Kirkwood said that the DRA provision raises many quality of care, continuity of care and patient out-of-pocket costs issues that may have significant impact on the lives of people with lung disease. “The American Lung Association is deeply troubled that Congress is acting precipitously without enough information to inform lung disease patients of the impact of these proposed changes,” Kirkwood wrote. “We urge Congress to ensure these changes will not adversely impact patient health, interrupt continuity of care or shift additional costs to patients and their families.”