AAHomecare: O2 Rates Will Bolster Reimbursement for Years to Come

Besides adding $650 million in reimbursements for oxygen suppliers over the next 10 years, the recent win should pay other dividends industry advocates say.

CMS’s recently announced fee schedule for oxygen reimbursement did not apply budget neutrality, and besides being an immediate boon to respiratory providers, the rates reflect a hard-fought advocacy win that the American Association for Homecare said will benefit providers for years to come.

Long Running Fight

Congress introduced budget neutrality as part of the Deficit Reduction Act, and CMS applied it in 2006 by lowering reimbursement for stationary oxygen equipment to offset the increased use of oxygen-generating portable equipment (OPGE). In 2019, CMS expanded that application to the entire oxygen product category.

The American Association for Homecare and industry advocates made convincing CMS to stop applying budget neutrality a legislative outreach priority for four years. The effort included driving lawmakers’ support for Congressional sign-on letters and co-sponsorship for multiple legislative packages to address the issue.

Last week, CMS published its April 2021 DMEPOS fee schedule, which included new oxygen rates that do not apply budget neutrality. The change resulted in 5 percent to 11 percent increases in oxygen products across the country, which go into effect on April 1.

“This is one of the most significant single measures to bolster reimbursement rates for an important segment of our industry in recent memory,” AAHomecare President and CEO Tom Ryan said. “This win validates our efforts to raise the profile of the HME community and our policy priorities on Capitol Hill and the persistent mindset needed to win on major initiatives.”

Benefits for the Long Haul

And that win will continue to pay dividends. The Congressional Budget Office has estimated the bill will result in an additional $650 million in Medicare reimbursements for oxygen suppliers over the next 10 years.

“We appreciate legislators’ support for the oxygen budget neutrality bill H.R. 8158 in the previous congressional session,” said Bill Guidetti, chairman of AAHomecare and president of Apria Healthcare’s East Division. “This bill was especially important to ensure that rural communities wouldn’t suffer even deeper cuts for oxygen services if policymakers didn’t continue to provide the 50/50 blended rates for rural areas.”

Looking more specifically at rates, the new differences between CMS’s April fee schedule and its adjusted January 2021 rates:

  • CBAs – 10 percent increase on average, ranging from 8 percent to 11 percent.
  • Non-Rural Areas – 5.1 percent increase on average; ranging from 4.9 percent to 5.4 percent.
  • Rural Areas – 4.9 percent increase on average, ranging from 4.7 percent to 5.2 percent

Guidetti added that the non-competitive bid area relief the industry received in the IFR, ESRD rule, 21st Century Cures Act, and earlier Covid-19 relief legislation “mitigated the O2 budget neutrality cuts in rural areas, but this legislation has permanently fixed the rural area reimbursement disparity we experienced in 2017.”

“A 10 percent increase in any HME category is something to celebrate,” said AAHomecare board member Josh Marx, the managing director of Sleep and vice president of Business Development for Medical Service Company. “While nobody will argue that CMS’ reimbursement model is fair and equitable, this is a win. I applaud Tom Ryan and the entire AAHomecare team for their daily persistence and focus on fairness for our entire industry.”

“We’re excited by this win for oxygen suppliers and patients,” Ryan said. “Now our attention turns to what’s ahead for reimbursement rates when the pending Final DMEPOS Rule is released. If we don’t see some meaningful increases for rates that are currently based in a bidding round from six years ago, the HME community is going to need to marshal an even stronger effort on Capitol Hill.”

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