Funding Focus

CMS' Oxygen Policy: Confusion, Chaos and Crisis

• By Kelly Riley
• Jan 01, 2009

The PAP policy changes that were handed down to the industry from the Centers for Medicare & Medicaid Services (CMS) were thought to be the worst thing since the six-point plan of the '80s. Then on Oct. 30 last year, the long-awaited oxygen guidelines were released. With less than two months to sort out the implications and updates being few and far between, the industry was once again in a tailspin.

Failure to comply with the new Draconian regulations comes with serious consequences. CMS warns: Suppliers that are found to be out of compliance with existing regulations and these new regulations are subject to significant administrative remedies, including removal of billing privileges.

Since the guidelines are so flawed, the industry does have a glimmer of hope for congressional relief. For that to happen, however, every respiratory provider must once again make calls, send letters and reach out to legislative officials to garner support.

In the meantime, providers need to make sure that staff members understand the new policy to ensure there is not an inadvertent lapse in compliance. Some points for focus include:

• The supplier is responsible for furnishing the same items and services after the 36-month period as they furnished during the 36-month period. If the respiratory provider was willing to provide, for example, a back-up cylinder or conserving regulator at no charge, he or she cannot start charging for such items once the payment caps.
• If the beneficiary relocates after the 36-month rental period, the supplier is required to continue furnishing oxygen and therefore must make arrangements for the beneficiary to continue receiving oxygen services at his or her new location until the end of the useful lifetime of the equipment. This is not required if the beneficiary moves before the 36-month cap.
• After the 36-month cap, the supplier is required to continue to provide supplies and accessories, such as humidifiers and tubing, for the remainder of the useful lifetime of the equipment. This is to be done with no additional payment.
• The useful lifetime of the equipment is determined to be five years from the time the equipment is first delivered to the patient, not the actual age of the oxygen unit. There is no requirement that brand-new equipment be delivered, but the equipment provided is expected to work properly for five years.
• The supplier is responsible for, and will not be paid for, non-routine maintenance, service and repair. CMS believes oxygen equipment is reliable, with five-year warranties generally available for top-selling brands. Therefore, only minimal maintenance, service and repair should be necessary during the first five years of use. There is no consideration for a patient calling at 2 a.m. with a concentrator alarming that in fact turns out to be a battery on the smoke detector.
• Regarding maintenance and service: Payment is available once every six months, beginning six months after the 36-month cap. As before, this is limited to two units of code E1340 and is currently in effect for 2009 only. The reimbursement amount will barely cover fuel costs for company vehicles.

Added to this news, many providers are doing the math and learning that the true cut to the fee schedule for many oxygen codes is not 9.5 percent, but well over 11 percent. Code E1390 for concentrators, for example, is listed on the 2009 fee schedule at an amount of $175.79, down from the previous amount of $199.28. CMS announced a lowered national fee of $193.21 before the legislation mandating the 9.5-percent reduction.

Codes for oxygen-generating portable equipment (OGPE) as well as content codes did not take a reduction. These codes include E1392, K0738, E0441, E0442, E0443 and E0444. This news should be carefully considered when choosing oxygen systems for ambulatory patients. It is crucial to calculate both the return on investment based on each equipment type and the clinical needs of the patient.

Also, analyze which patients have been on oxygen services for more than 60 months. As long as the patient agrees to an equipment update, the provider can deliver replacement equipment and begin a new 36-month rental period. At press time, CMS had not stipulated the requirements for new or revised CMNs or modifiers for billing or proof of patient agreement.

Now, more than ever, is the time to stay tuned to industry news, choose good business partners and know the metrics surrounding your customer base.

This article originally appeared in the Respiratory Management Jan/Feb 2009 issue of HME Business.