It was all hands on deck this week after the nation’s most famous newspaper focused on supposed Medicare overpayment for medical equipment—primarily oxygen. “The article was a two-bit hatchet job, and not fair and balanced in any way,” said Tim G. Pederson [picture, right], ATS, CEO of WestMed Rehab Inc, Rapid City, SD, and Chair of AAHomecare’s Rehab and Assistive Technology Council (RATC).

The lengthy screed by Times reporter Charles Duhigg explored the thesis that oxygen providers are currently being overpaid by Medicare for products and services. The article points out that a typical setup, including 3 years of oxygen tank deliveries, can be bought from pharmacies and other retailers for about $3,500, or around $100 a month. “Despite enormous buying power, Medicare pays far more,” writes Duhigg. “Rather than buy oxygen equipment outright, Medicare rents it for 36 months before patients take ownership, and pays for a variety of services that critics say are often unnecessary. The total cost to taxpayers and patients is as much as $8,280, or more than double what somebody might spend at a drugstore.”

AAHomecare immediately shot back with a response, taking the Times to task for not exploring the true value of services, and making invalid comparisons to Internet pricing. “Unfortunately, both the New York Times article and federal policymakers have focused only on the equipment costs associated with home oxygen therapy rather than the complete therapy, which requires numerous services,” said AAHomecare officials via a letter to the Times. “The fundamental flaw in the New York Times article is the dangerously simplistic assumption that oxygen therapy delivered to Medicare patients in their homes should cost the same as the Internet or eBay price to buy the equipment only.”

Officials from the VGM Group called the article “hack journalism” and Wayne E. Stanfield [pictured, left] criticized the piece as unbalanced and uninformed. “The comments made in the first 10 lines make it clear that you do not understand the industry that was maligned in the story,” wrote Stanfield, president and CEO of the National Association of Independent Medical Equipment Suppliers (NAIMES) in a letter to the Times reporter. “Remember that the $1.8 billion figure you quoted as the expense of oxygen equipment kept more than one million Medicare patients alive last year.”

Speaking on behalf of the industry, the Times quotes Peter Kelly, president of Pacific Pulmonary Services, a large oxygen supply company. “It [the government] also gets an enormous number of other services that are keeping patients out of hospitals,” said Kelly in the Times article. “Those avoided hospital visits end up saving Medicare billions.”

Despite those favorable quotes, AAHomecare questions whether the Times set out to write a fair article. “Errors, omissions, and the use of unnamed sources to make unsupported claims in the New York Times article suggest that the reporter never intended to write an objective story,” said AAHomecare officials in their written response.

Other quotes from Congressional leaders such as Rep Fortney “Pete” Stark (D-Calif) [picured, right], chair of the House Ways and Means Subcommittee, indicate that the industry could be in for a rumble in the closing weeks of 2007. “It doesn’t seem sensible that a small industry should be able to manipulate the entire U.S. Congress into overpaying for oxygen,” said Stark in the article. “But that’s the world we live in now...All you have to do is pick up an equipment catalog or search for ‘oxygen device’ on eBay to figure out better prices than what we’re currently paying.”

While competitive bidding is mentioned favorably as a way to control costs, the article chooses not to explore ways to avoid fraud and abuse. For that difficult chore, providers such as Tim Pederson say it’s time to explore new methods. “What would be meaningful fraud and abuse action?” asks Pederson. “The most meaningful thing they could do is put every new provider on a 6-month prepayment review. Then they would be able to spot problem areas up front. If providers had to provide documentation before they got paid, I think it would be easier for CMS to spot fraudulent activity.” 

Thanks to the Internet, the ripple caused by the Times article could quickly morph into a tidal wave. Wayne Stanfield reminded NAIMES’ members of this fact, declaring that a Google search on “Charles Duhigg Oxygen Medicare” yielded 623 hits thanks to Web sites across the country picking up the story. "Visit the Web sites for the Home Oxygen Patients Association, Better Breathers Clubs, COPD Foundation, and other advocacy groups,” implored Stanfield, “and enlist their help locally to respond and dispel the false statements in the story.”

Over at the Pennsylvania Association of Medical Suppliers (PAMS), executive director John C. Shirvinsky served up another strongly-worded letter addressing the Times’ “apples to oranges” comparison of Internet providers to 24/7 service providers. In addition, Shirvinsky attacked the insinuation within the article that the HME industry wielded a powerful lobby in Washington, DC. “It is absurd for your reporter to create the illusion of power-broker status to the very small HME industry,” wrote Shirvinsky. “You should know full well that the overall public affairs budgets cited as part of your article fall below the individual compensation paid many of Washington’s top lobbyists.”

With the combined attention of the recent national public radio (NPR) broadcast, and a two-part DME fraud segment on NBC Nightly News next week (Monday and Tuesday)—the industry is definitely in the media cross hairs. Why all the scrutiny? Experts say it stems from year-ending Medicare legislation which has yet to be finalized. “They need a sacrificial lamb on the altar of effective government, and they have chosen us,” says Pederson. “But how much is enough? We’re less than 2% of health care spending. They are not going to find the pot of gold at the end of the rainbow in the HME industry.”