CMS Issues Final Rule on Oxygen

On Nov. 1, the Centers for Medicare and Medicaid Services (CMS) issued a final rule on payment for oxygen, oxygen equipment and capped rental items.

The rule establishes a separate payment class and monthly payments for oxygen-generating portable equipment (OGPE). CMS also created separate classes for oxygen contents for stationary and portable equipment. As a result the monthly payment for delivery of portable oxygen contents for beneficiary-owned tanks and cylinders will jump from approximately $20.77 to $77.45, effective Jan. 1.

The monthly payment amount for stationary oxygen equipment during the 36-month rental period increased from $177 in the proposed rule issued earlier this year to $198.40 (for 2007) in the final rule. To achieve budget neutrality, CMS plans to decrease the monthly payment amount for stationary oxygen equipment each year — $198.40 for 2008, $193.21 for 2009 and $189.39 for 2010. CMS assumes that 5 percent of oxygen users will shift to OGPE equipment.

Responding to public comments, CMS also clarified the language regarding the number of rental months, maintenance and servicing, oxygen contents and replacement of equipment, supplies and accessories. Some of those provisions include:

  • Continued payment for all reasonable and necessary maintenance of beneficiary-owned capped rental or oxygen equipment performed by authorized technicians.
  • Starting six months after ownership, payments for general maintenance and servicing visits every six months in addition to reasonable and necessary repairs for beneficiary-owned oxygen concentrators and OGPE. Payment is limited to 30 minutes of labor based on carriers' rates.
  • Elimination of general maintenance and servicing payments for beneficiary-owned liquid and gas equipment. Instead CMS will issue one payment for pickup and storage or disposable of liquid and gas equipment in the case that the beneficiary no longer medically needs the equipment. The fact sheet issued by CMS stated that "CMS expects that, since the supplier is paid to deliver liquid and gas equipment every month to the beneficiary, the equipment will be in proper working condition and therefore additional general maintenance and service visits are not needed."
  • Making suppliers responsible for replacement of beneficiary-owned oxygen equipment or capped rental items for equipment that ceases to function due to the need for extensive repairs during the reasonable useful lifetime for DME, which is five years. The requirement does not apply to replacement covered under warranty.
  • Separate payment for replacement of supplies and accessories (e.g. cannulas, tubing) will continue after ownership of the equipment transfers to the beneficiary.
  • An OGPE add-on payment, applicable during the three-year rental period, of $51.63 for 2007. Payments begin Jan. 1, 2007, for new and existing oxygen users.

"There has been a great deal of misinformation about whether Medicare will continue to cover supplies and services for oxygen equipment," said Leslie V. Norwalk, Esq., acting administrator for CMS, in a press release. "Be assured that beneficiaries will get the personalized support that they need."

Rita Hostak, vice president of government affairs, Sunrise Medical, expressed appreciationg for CMS's efforts to addressed the industry's concerns with the propsed rule. "While the final rule will still have a significant impact on our customers and the oxygen patients we all serve, CMS has attempted to recognize, within statutory constraints of budget neutrality, that increased funding levels for new technologies are critical to future innovation," she said. "Sunrise Medical is still concerned that Medicare patients who use oxygen remain at risk. National competitive bidding, the cuts from the Medicare Modernization Act, title transfer and (the) 36-month cap, combined with the OIG report on oxygen reimbursement recommending further reductions in payment from 36 months, create an uncertain environment for oxygen therapy services. Sunrise Medical is committed to continuing our efforts to educate policy-makers at CMS and in Congress about the consequences of these and any future changes to this valuable Medicare benefit."

To view the final rule, visit

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

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