What are “reasonable and necessary” maintenance and service payments after 36 months? AAHomecare will be working closely withCMS to define what is appropriate.

In the weeks leading up to passage of the Deficit Reduction Act (DRA) in the House of Represent-atives on February 1, members of Congress heard from numerous home oxygen consumers and providers urging them to oppose the DRA because of the oxygen rental provision inserted into the legislation at the last minute. These communications made a big impact on Congressional offices. Some members told AAHomecare staff that they were unclear about the issue and wanted more information. Some were sympathetic to the concerns of their constituents and wanted to help de-feat the provision. Still others were less supportive, saying that consumers were being frightened by “incorrect” information from their oxygen pro-viders.

Building on the energy and momentum of the battle leading up to passage of the DRA, AAHomecare will seek repeal of the oxygen capped rental provision this year, but also prepare to fight a proposal to further limit the beneficiary’s ability to rent oxygen equipment. While the DRA reduces the rental period to 36 months, the President’s fiscal year 2007 budget proposal would set the limit at 13 months. It is not clear whether Congress has the appetite to debate Medicare cuts again so soon, having just survived the brutal DRA battle. No action is likely until after the November election in any case.

Nevertheless, later this year Congress will feel compelled to address the ongoing physician Sustainable Growth Rate (SGR) problem that will result in a payment reduction of 4.5% next January 1 absent Congressional intervention. To make physicians whole for another year, the key committees will be looking for offsetting reductions, which places HME, oxygen providers, and home health agencies right back on the table as potential offsets.

Some of the provisions of the DRA, such as the rental cap on home oxygen equipment and the home health reimbursement freeze, were in neither the House nor the Senate version of the legislation. They were added by conferees just hours before the final vote with no opportunity for members of Congress to review the language or consider the consequences to the beneficiaries who would be affected by it.

Oxygen equipment is critical to approximately 1 million Medicare beneficiaries who suffer from respiratory illnesses such as chronic obstructive pul-monary disease (COPD) and who require oxygen therapy for their long-term survival. Approximately 15 million Americans have been diagnosed with COPD, while an estimated 15 million more have undiagnosed COPD.

Home oxygen therapy is the most cost-effective and clinically effective treatment for those with COPD and other respiratory diseases. It is the only current treatment or drug scientifically proven to extend the life of patients with chronic lung disease. In 2002, there were 673,000 hospitalizations for COPD, with an average length of stay of 5.2 days. The average Medicare cost for 1 day in the hospital is $3,606, meaning the average hospitalization for a COPD patient topped $18,000. In contrast, the current average annual cost for home oxygen therapy is $2,784 per beneficiary, less than the cost of a single day in the hospital.

While the death rate from heart disease and stroke has fallen dramatically in the past 30 years, the death rate for COPD has risen by 163%. Long-term home oxygen therapy is the only nonsurgical therapy proven to extend the lives of COPD patients. It is cost-effective, clinically effective, consumer preferred—and in the best interest of the Medicare Trust Fund.

The DRA eliminates Medicare patients’ option to continue to rent some items of DME, including equipment used for oxygen therapy. Beneficiaries can and do regularly purchase many home medical devices for personal use, including oxygen technologies. However, more often, they choose to rent HME because renting allows for a continuing patient-provider relationship and professional maintenance of complex equipment.

The new oxygen payment policy provides that after a 36-month rental period, title and responsibility for maintenance and service for all home oxygen stationary and portable technologies will transfer to the Medicare beneficiary. As is true with many other medical therapies performed in conjunction with medical devices, the equipment cost is only a small fraction of the overall cost associated with the provision of home oxygen therapy.

In passing the DRA, many members of Congress were unaware that home care companies currently provide 24-hour, emergency on-call service to assist beneficiaries with trouble-shooting equipment problems and equipment failures, or that with the transfer of ownership to the patient, control over the dosage level also shifts to the patient, increasing the risk of self-medication to the patient’s detriment.

Section 5101 of the DRA states: “maintenance and servicing payments shall, if the Secretary determines such payments are reasonable and necessary, be made (for parts and labor not covered by the supplier’s or manufacturer’s warranty, as determined by the Secretary to be appropriate for the equipment), and such payments shall be in an amount determined to be appropriate by the Secretary.”

While there is broad language in the DRA regarding “payments for oxygen” (the oxygen itself) and “maintenance and service” after transfer of title to the equipment, as noted above, there are no specifics or assurances. In the Medicare system today, there are no codes or policies governing maintenance and services for oxygen technologies. The DRA provides no guidance for those service components currently required and incorporated into Medicare oxygen rules and payment rates, including all patient training, deliveries, disposable accessories, billing, clinical professional support, 24-hour emergency service, and equipment replacement.

Assuming the beneficiary continues to have a medical need for oxygen, Medicare would continue to pay for oxygen even though payment for the equipment is limited to 36 months. Medicare will pay monthly for oxygen and oxygen equipment according to the existing Medicare fee schedules for 36 months.

“Reasonable and necessary” maintenance and service payments after 36 months would apply to parts and labor not covered by a warranty and which CMS determines are appropriate for the equipment. The amount of the service and maintenance payment will be determined by CMS. AAHomecare will work closely with CMS to make sure CMS addresses questions that arise from this provision and ensure that the payment amount for maintenance and service is appropriate.

The new policy has an effective date of January 1, 2006. This date also applies to any beneficiary who was receiving home oxygen on or before December 31, 2005. For those on home oxygen as of December 31, Medicare will continue to make monthly payments for oxygen and for oxygen equipment for an additional 36 months beginning January 1, after which title to the equipment would transfer to the beneficiary.

The changes to home care policy in the DRA and proposed in the President’s budget are clinically and fiscally unwise given the value of home care for patients, families, and taxpayers. Home care is preferred by seniors, and home care is by far the most cost-effective setting for health care in America, as recognized by US Health and Human Services Secretary Mike Leavitt. AAHomecare chair Tom Ryan put it aptly in a letter to the Wall Street Journal on March 16: “Let’s put the rhetoric to work and strengthen home care rather than dismantle it.” DP

Ann Howard is director of federal policy for AAHomecare, Alexandria, Va. She can be reached via e-mail: ahoward@aahomecare.org.