Medicare 36 month Cap Rules

John Reed, EVP and COO, PRO2 Respiratory Services.

The 36 Month Oxygen Cap rules have introduced a number of issues and operational barriers to home oxygen providers, physicians and patients.

At some point, CMS needs to recognize that mandated service requirements contained in CMS’s own Supplier Quality Standards add significant costs to equipment providers well above the direct cost of equipment.

Reimbursement for CONTENT BASED OXYGEN SYSTEMS is less than the provider’s direct costs. The direct cost for a stationary liquid oxygen vessel and portable is approximately $1700 before considering the additional equipment costs (oxygen transfill vessel, box truck or a second stationary container for “milk can refills”). Add the provider’s cost of at least two deliveries per month at $25 per delivery, the cost of liquid oxygen contents for each fill at $40-75 per fill, the related disposable supply costs at more than $10 per month and the direct expense before other operating expenses is more than the current level of reimbursement.

Every patient with a portable gas oxygen system with at least 1 delivery per month costs the provider more than the established level of reimbursement for that system. Providers lose more than $100 per month in direct supply costs for patients who use at least 50 oxygen cylinders per month Providers lose more than $30 per month for patients using an average of 18 cylinders per month. Providers lose more than $15 per month for patients using an average of 6 cylinders per month.

Suggestion. Remove modality neutral reimbursement for consumption based oxygen delivery systems. Define coverage criteria for patient mobility requirements. Allow providers to determine modality using objective service criteria and patient lifestyle requirements.

Reimbursement for oxygen portability lacks appropriate rules definitions causing uncontrolled patient consumption. CMS has issued general statements in writing and verbally as to the amount of portable oxygen the provider is required to provide the patient. Providers are required to provide “all the portable oxygen the patient needs”, including portable oxygen for convenience trips like “bingo” and other activities not related to medical necessity. CMS also mandates delivery of replacement contents but does not define the number of deliveries or the frequency required within the payment rules. CMS does not define the minimum number of oxygen cylinders, cannulas, supply tubings or bubble humidifiers providers must dispense to patients.

Suggestion. Work with providers to determine a reasonable and clear definition of what the portable oxygen benefit covers. Identify minimum quantities or maximum quantities to help providers define specific service standards. Then align reimbursement to appropriate levels defined in the benefit.

Rules for snow-birds are poorly defined and add significant additional expense to the legacy provider. CMS assumes that the original provider of service is capable of continuing service to patients who travel outside the providers established service area.

Suggestion. CMS needs to define rules that allow suppliers to meet expenses for patients who travel beyond the company’s service area. Rules must include contracted supplier standards, including pricing and service requirements. Rules must include continuing reimbursement at the pre-cap levels for patients beyond the 36 month claim date to the legacy provider.

Rules for mandating a committed relationship between the provider and the patient for months 37-60 do not consider real life issues. CMS does not recognize that conditions exist between the patient and provider that should allow either party to discontinue the service obligation for oxygen supply beyond the 36th month. These conditions include:
1. Patients with willful disregard for their own safety or the safety of others (example: a liquid oxygen patient who continues to smoke while living in a high rise apartment)
2. Patients who are abusive to provider’s employees (example: a patient who sexually harasses an employee of the provider)
3. Patients who are abusive to the provider’s equipment or services (example, equipment that is not maintained as instructed by the provider or patients who request emergency services unnecessarily)
4. Patients who lodge excessive, false complaints against a provider to the medical community
5. Providers who are not licensed to serve patients that move outside the providers service area.
6. Providers who provide less than adequate service to patients

As a taxpayer, I too am concerned about waste and abuse of public funds and the spiraling cost of healthcare. Having worked as a home medical equipment provider for more than 25 years, I can attest to the fact that most providers are honorable, law abiding, service oriented professionals. As an informed consumer of home medical equipment, I have served family and friends during that time and have never considered the cost of our care or the co-payment requirements for them to be excessive or abusive.

Finally, I am most concerned about CMS’s willingness to initiate law without complete instructions for providers in advance of the law’s effective date. Many of the rules for the 36 month oxygen cap were finalized well after the January 1, 2009 start date.

In closing, CMS must begin to take advantage of the provider community’s willingness to participate in the development of reasonable, cost efficient standards of service that will maximize the value of Medicare funds while providing carefully considered care to patients at home.

One Response to “Medicare 36 month Cap Rules”

  1. Anonymous said:

    Jun 25, 09 at 2:34 pm

    I am an independent small DME owner in Kentucky and totally agree with your comments. Our company has sent petitions, letters,etc. to our officials in Kentucky and we get a standard response letter stating that they are following CMS guidelins in support of the ruling. To date there are some issues still unresolved when you contact CMS. If they cannot answer the providers questions, who can? This ruling was designed to weed out the small businesses and promote the larger corporations. What happened to the Social Security Law Section 1802 that states “Free Choice by Patient Guaranteed.” I am not going down without a fight!