What’s Stopping Oxygen Providers from Getting the Most Out of COPD Patient Care?
- By Elisha Bury
- Jul 01, 2007
Ask any oxygen provider to name the biggest challenge in the oxygen segment of respiratory and the obvious answer is reimbursement roadblocks.
Reimbursement changes have brought about the 36-month cap on oxygen and competitive bidding, which threaten the livelihoods of oxygen providers.
“A good or quality HME provider wants to give the patient what they need,” Bob McCoy, of Valley Inspired Products, says. “Yet many times what they need is beyond the HME’s ability to pay for that product or service.”
But that’s not the only thing tripping up providers. Daily operational challenges and meeting a standard for care are also creating some problems.
Much Ado About 36 Months
Equipment is not the most expensive part of providing oxygen therapy, comprising only 28 percent of the total costs, according to a Morrison Informatics study released last year. Service costs make up the other 72 percent, including services and operation (intake, delivery, maintenance, assessment, education, compliance and other costs).
Such is the basis for the debate on the 36-month oxygen cap, which bypasses service costs and turns the equipment ownership over to the patient at the end of the term. Patients, however, don’t have the skill or dexterity needed to service their own equipment.
HomeStar Medical Equipment & Infusion Services’ Ina Nechita worries about the implications of transferring equipment ownership to the user. “What are they going to do with it when they don’t need it anymore?” she questions. “We’re going to see it on eBay. We’re going to see it at yard sales.”
Nechita is also concerned about a break in service. For that reason, long-term oxygen patients are being encouraged to try in-home filling systems.
“By putting the home-fill system in there, it’s basically going to be something the patient can maintain the entire time without having us get involved or make deliveries and send tubing and supplies and such,” she says.
Caryn Plessinger, of Hub’s Home Oxygen, says her company is preparing to lose 33 percent of its reimbursement with the 36-month cap. She says the biggest challenge in the oxygen market right now is “being able to match the cost of what this new technology costs and matching that with what’s reimbursable so that we can still remain profitable and be able to still have clinicians on staff.”
One of the major unknowns with the 36-month cap is how providers will compensate. “The way it looks right now is that it will provide an incentive for providers to stop or to reduce services after the 36 months or stop them entirely,” says Peter Kelly, chairman of the Council for Quality Respiratory Care (CQRC). “That’s clearly not in anybody’s best interest — not in the provider’s, not in the patient’s, not in the taxpayer’s — because those are the sickest patients and, therefore, they’re going to end up in the emergency room with unplanned admissions.”
As for HomeStar Medical Equipment & Infusion Services’ business model, the company is being proactive. “We’re planning for it, but not all of our eggs are in one basket,” Nechita says. The company has expanded its orthopedic program and plans to sell retail pharmacy in the near future to reduce the impact of the loss.
The Competitive Challenge
Competitive bidding is causing smaller providers to fear for their livelihoods. After all, only 30 percent of winning bidders will be small providers. Even if a small provider wins, he or she will need to supply a large area with all oxygen services.
“The rules are confusing,” Kelly says. “Small providers are not organized to really dive into this and really understand it. The deadline is coming up soon. In my opinion, I think there’s going to be a lot of confusion and some chaos — a lot of chaos — that will result in providers similarly reducing services or stopping serving patients when it’s implemented.”
In fact, CQRC is collecting data that shows the impact of both the 36-month cap and competitive bidding on public companies. “It’s a pretty scary picture,” Kelly says. “It looks like, right now, a further 18.8 percent reduction in the reimbursement rate will come about as a result of the cap and competitive bidding.”
If that weren’t enough, the oxygen market is booming with portability options, but who’s paying?
“Stationary patients need less oxygen. It’s the ones that want to do any moving that you get expensive and complicated,” McCoy says. “Right now, we get 80 percent reimbursement for stationary systems and 20 percent for the portable — that’s completely backward.”
Many organizations and providers are working to achieve recognition on Capitol Hill. In addition to investing in advocacy efforts, Kelly urges providers to bid intelligently and educate themselves on the bidding process to stay afloat.
Keeping Up with the Day-to-Day
In the whirlwind of CMS changes, it’s easy to let daily operations fall by the wayside. Yet providers must still focus on the day-to-day tasks of operating a business.
Inogen’s Joe Lewarski says providers must separate their businesses into what they can control and what they can’t.
“You have to put a lot of energy in the things you can control: operational efficiency, inventory management, the staff you hire, the quality of the people you’re working with, the decisions you have to make about insurance companies that you may or may not choose to take because they’re paying you below your cost of goods,” he says. “From a more ground level, pragmatic perspective, it’s about finding a way to run your business as efficiently as possible.”
Ultimately, concentrating on these business efficiencies will help providers weather reimbursement challenges, especially for competitive bidding. Lewarski says the most critical thing is “understanding your cost of operations and being able to submit a bid that allows you to provide an appropriate standard of care and service but not put yourself out of business.”
Fight for a Standard of Care
McCoy charges providers to not lose track of the patients in the fight to get paid. “If you’re just figuring out how you’re going to get paid, you’re probably going to stop giving the patient what they need and focus in on what you need, which is going to make things worse,” he says.
Already, McCoy has seen a shift in the service component of oxygen delivery. “I see people just saying, ‘I’m giving you this non-delivery system because Medicare is not paying for it,’ ” he says. “They’re dropping it off and they’re never going to see the patient again. And it’s like, ‘OK, that’s not helping the patient very much.’ They could’ve gotten that equipment from Wal-Mart.”
Is Portability Coming at a Price?
Though portability is all the rage in today’s marketplace, Bob McCoy, of Valley Inspired Products, says every portable is delivering a different volume of oxygen on the same setting and it’s creating problems. He says that manufacturers must put as much effort into the therapeutic benefits of the product as they do the features of the product. “If you’ve got this very lightweight, very long-lasting portable that’s not oxygenating the patient, you miss one of the fundamental reasons that you’re giving oxygen,” he says.
McCoy argues that a 2 setting on one device differs from a 2 setting on another. In response to those differences, the AARC has been working with a standards organization to determine what that 2 setting should mean.
Inogen’s Joe Lewarski says that patients need to be titrated to the equipment they’re using. Lewarski argues that determining a standard for each 2 setting is impossible given proprietary technologies and that it’s not impacting treatment. He compares it to a water fountain.
“Let’s say it’s flowing at a gallon a minute,” he says. “You don’t drink a gallon. How much you drink would be a product of how many times you stuck your head down and how big a sip you took. If 10 of us were standing there and we all took different sips and different numbers of sips, we’d all take a different amount. That’s kind of what happens with these new devices is that each of the companies had to pick a number that they think will be the best number for the most patients.”
Certainly, patients should be aware of the discrepancies, Lewarski says, but the solution is to match the device to the needs of each patient.
This article originally appeared in the Respiratory Management July/Aug 2007 issue of HME Business.
About the Author
Elisha Bury is the editor of Respiratory Management.