CMS DOES NOT LOOK AT FULL COST TO PROVIDE OXYGEN THERAPY

Medicare continues to not factor the true costs of oxygen therapy and the cost of the regulations that Medicare imposes on providers.

For a provider to deliver oxygen the cost are concentrator $575.00, oxygen tanks( avg 6 per week, but higher liter flows may use up to 20) $35.95 ea.,tank fills 3.95 ea tank, nasal cannulas 4 per month2 $1.00 ea, tubing 2 per month at $1.00 ea, connector $1.25 per month, delivery drivers time and paperwork for setup 1hr at 13.00 to 15.00 per hr, 15 pages of perwork for setup to meet criteria and regulations, gas,mileage and wear/tear on delivery van, cost of having someone on call 24/7 and overtime if called out after hrs or on weekend, cost of processing billing paperwork( we already have an order from physician but must have a CMN signed and returned with same info to bill Medicare), Billers time to submit and followup. Concentrator checks every six months, replace any equipment that has a problem, which is usually due to noncompliance on the patients side no matter how many times you reinstruct, taking out a washer for the regulator because they lost it when changing tanks, or tank keys to turn on the tanks, or delivering a tank to where ever they are at because they did not bring an extra tank. Then after 36 months reimbursed only for concentrator service at 2 units of 15.00 dollars at 80% because the patient cannot afford to pay their 20% share, once every six months. Also reimbursed for portable system at 80% of 72.00 per month, which at six tanks a week, plus supplies and delivery costs is about a 45% loss per month. We get the pleasure of after 60 months of breaking even or only losing 10%.Medicare does not reimburse for supplies and tanks during the first 36 months, which is the majority of the costs to provide service, so yes people are careful about where in the 36 month process they will accept a patient. Oh and I must not forget Medicare reimburses 60.00 bucks a month for 36 months for a portable oxygen concentrator this equals 2,160.00 dollars. The cheapest poc on the market costs 2600.00 dollars to the dealer, and this does not include shipping and cost of record keeping because we must be able to trace every piece of equipment we put out.

4 Responses to “CMS DOES NOT LOOK AT FULL COST TO PROVIDE OXYGEN THERAPY”

  1. Scott Lloyd said:

    Jul 31, 09 at 2:33 pm

    The 36 month cap constrains availability of the home oxygen benefit to Medicare beneficiaries. Although each oxygen supplier establishes their own policies, many companies will not take patients that have received home oxygen for 18 or more months. As an example, if a beneficiary decides to relocate outside their supplier’s service area after being on oxygen for 20 months, the original supplier is no longer obligated to serve the beneficiary. And it is unlikely any supplier in their new area will serve them. So the beneficiary may have to pay for oxygen out of pocket, may not be able to relocate or may choose to be non-compliant with their prescribed oxygen therapy. To the extent the supplier completely explains the issues related to the oxygen cap to the beneficiary, the supplier stands to be harmed. If a beneficiary realizes they may not be able to easily receive home oxygen when they relocate, they may steal their supplier’s equipment and take it with them when they relocate. This has happened to our company. Not only did we lose all the equipment for a transfill oxygen patient but it creates a liability for our company. The beneficiary has our equipment outside our defined service area. So we are unable to respond to their needs within the time frame established in our procedure manual and presumably their equipment is not receiving any maintenance. The 36 month oxygen cap also reduces the level of competition between suppliers. When a beneficiary has the ability to easily switch suppliers, each supplier has a financial incentive to exceed the expectations of the beneficiary. When the beneficiary does not have the ability to easily switch suppliers, the supplier’s financial incentive is limited to fulfilling their statutory requirements. For example, a beneficiary that has been on oxygen for 30 months realizes at 4:00 PM on a Friday they need portable cylinders to attend a family gathering. There is no financial incentive for the supplier to deliver those cylinders before their regular route the following week because most suppliers would not accept the beneficiary at that point in time. So the beneficiary must either miss the family event or attend the event without using their prescribed oxygen. If the beneficiary had revenue tied to them for their entire period of medical need, suppliers would have a financial incentive to exceed the beneficiary’s expectations no matter their request. Competitive bidding will limit access to new technologies for beneficiaries. Because contracts under competitive bidding will be for a three-year duration, suppliers will have a financial incentive to make the smallest possible capital expenditures for rental equipment. Under a three-year contract, the supplier must look to recoup the entire cost of the capital expenditure plus a reasonable return on their invested capital. Under the current environment (no competitive bidding), suppliers look to recoup the entire cost of the capital expenditure plus a reasonable return on their invested capital over the useful life of the equipment (i.e. five years). This longer utility period provides an incentive for suppliers to invest in new technologies (i.e. transfill oxygen systems, portable oxygen concentrators, etc.) which are useful to many beneficiaries.

  2. Ric Wren said:

    Jul 31, 09 at 2:33 pm

    Most of the years of my adult life I have been either providing home oxygen care or managing the service of home oxygen care to thousands of chronic respiratory patients in the comfort of their homes. Many of these same patients would otherwise have to be in an institution of some sort due to the fact that they have little additional family support to care for their disease. I don’t know why men and women in congress with such a high intellect can overlook the obvious services that are not only provided, but in many cases mandated through Medicare Standards, accreditation, respiratory care board and state licensure just to name a few areas of oversight. Congress and CMS have virtually stopped all the funds to support these needed services after 36 months of activity. The cost to continue these services don’t stop, they keep coming up every month. The delivery of cylinders to make the lives of the patients that require oxygen therapy don’t slow down and the overhead certainly doesn’t stop either. It is getting harder to assist patients to travel and almost impossible to find companies willing to take over the care of this vital service when a patient needs to relocate. We need for congress to focus on the needs of the million plus constituents on oxygen therapy that need their attention now.

  3. Corey Shenk - Vienna Medical (A Florida DME) said:

    Jul 31, 09 at 2:33 pm

    As an owner of a small DME company it is my job to keep the physicians, social workers and local health care facilities up to date on new regulations for their patients. For those of you who think there is no impact to patients please start calling the facilitators of care at these facilities. You will find many who already cannot find solutions ofr all of our elderly care patients and now this is a major setback for patients. The hospitals can’t find suppliers that will take certain patients directly due to the new 36 months cap. No one wants them. In addition, due to the lack of motivation to provide good customer care due to the way the cap is set up, we have patients and their families calling us all of the time wanting to switch to us but we can’t take them and have to say to them, “you are stuck with your provider due to the cap unless you want to pay out of pocket”. We had a patient that wanted to move from LA to FL but was in her 29th month. Do you think anyone would take her? NO WAY! So now she cant come live with her daughter who needs to take care of her and they don’t have the money to pay for oxygen each month. They don’t know what to do.

    Patients living in conditions that could be damaging to the oxygen concentrator are finding that suppliers are unable to provide the same level of service and/or replace concentrators on a regular basis, because Medicare payments for oxygen are insufficient.
    Patients being forced to pay out-of-pocket for oxygen service because of inability to find a willing supplier at a new location.
    As a supplier I want our government to watch the money and the fraud but what they have done and what they are attempting to do with competitive bidding could just put a lot of small business out of business and my staff of 13 people in Debary Fl. on the unemployment line.

    SOMEONE NEEDS TO STOP THIS MESS NOW!!!!

  4. Brent Bridges said:

    Jul 31, 09 at 2:33 pm

    Logistics alone will make this change impossible to continue to serve our community at the same level of care as we currently do.


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