Legal Speak

Be Prepared; We can’t ignore the 500-lb. elephant in the room

• By Asela Cuervo
• Sep 01, 2006

The oxygen patient has been the focus of the respiratory company’s attention. Providers, especially those that follow a clinical model, take great pride in the services they furnish to these patients. Over the years, this portion of the home care community has sought to distinguish itself on the basis of its commitment to managing the disease process rather than merely treating the symptoms. Providers have competed on the basis of their services and their willingness to work with others on the patient’s health care team. Policy-makers have not always acknowledged this commitment to service, but this was never a deterrent. Even when policy-makers reduced Medicare reimbursement for oxygen over the years, I was impressed by your commitment to your patients and your communities.

As we all know, the most significant changes to Medicare reimbursement for oxygen are unfolding now. Over the next several months, providers will see the shape that the Centers for Medicare and Medicaid Services (CMS) will give to Congress’ mandates under the Medicare Modernization Act (MMA) of 2003 and the Deficit Reduction Act (DRA) of 2005. These include the roll out of a national competitive bidding program, new quality standards for Medicare home oxygen providers, an accreditation requirement, and the implementation of the radical new (DRA) policy that forces Medicare beneficiaries to own their oxygen equipment after a 36-month rental period. Until just recently, providers had only the bare outline of the legislation passed by Congress and many questions about how CMS would implement the new laws. By the time this article is published, providers are likely to have a much better idea of what CMS intends to do.

Since last May, CMS has published a proposed rule on the implementation of a national competitive bidding program, a proposed rule on the implementation of the forced ownership provisions of the DRA, final quality standards, and a final rule on accreditation for DMEPOS providers. There are still many unanswered questions, and it is likely that there will continue to be significant questions until much later this year. Given past history, no one should be surprised if the questions linger into next year. For now, here are the highlights of the proposals, and the issues that still must be addressed.

Everyone should be aware that in May, CMS published a proposed rule on the implementation of national competitive bidding. The proposal did not address the biggest questions that providers have: Where will competitive bidding begin and what will be bid? The proposed rule did identify the factors that CMS will use in selecting competitive bidding areas and products. Not surprisingly, the potential for savings will drive the process. CMS will identify areas based on their utilization rates for DMEPOS items when compared to their Medicare beneficiary population. Similarly, CMS will bid products that have highest expenditures for the Medicare program. Using this criteria, it is likely that oxygen will be on the list.

The DRA included a requirement that the title to oxygen equipment transfer to the beneficiary at the end of 36 months. This new provision applies to anyone on oxygen as of December 31, 2005, beginning January 1, 2006. CMS is required to pay for oxygen contents for any beneficiary who continues to demonstrate medical necessity. As this article was going to press, CMS published a proposed rule on the DRA provisions. The proposal creates new reimbursement classes for oxygen equipment according to their technologies, and allocates the current monthly Medicare reimbursement for oxygen among the new categories.

Under the proposed rule, reimbursement for concentrators goes down during the 36-month rental period, whereas reimbursement for beneficiaries with both a concentrator and a “transfilling” system or a portable concentrator goes up. The proposed rule addresses equipment issues only; there is no discussion of the many clinical and support services that providers furnish their oxygen patients. Comments on this proposal will be due later this month and CMS intends to publish a final rule by the end of the year.

CMS published final quality standards in August. CMS received comments on the standards from 5,600 individuals and organizations. Based on the comments, CMS consolidated and streamlined many requirements. CMS also published a final rule on accreditation as this article was going to press. Now CMS can initiate the process of selecting accrediting bodies who will administer the standards. All providers will have to meet the quality standards through accreditation; however, unaccredited providers in competitive bidding areas will have the opportunity to be accredited first.

The pace of change is likely to pick up dramatically as the year draws to a close. Providers need to stay involved and informed if they are to succeed under these new models.

This article originally appeared in the Respiratory Management Sept/Oct 2006 issue of HME Business.