Congressional Staff Gets the Lowdown on Home Oxygen Therapy
Anecdotes gave way to evidence when almost 50 Congressional staffers heard confirmation of what oxygen providers have known for a long time: More than 70% of the cost of providing home oxygen therapy to Medicare patients in their homes represents services, delivery, and other operational expenses. That means only about one quarter (28%) of the cost actually represents oxygen equipment. US Rep Tom Price, MD (R-Ga), along with Tom Ryan, chair of AAHomecare, and other speakers, presented the data compiled from a Morrison Informatics study sponsored by AAHomecare. “The study shows that, contrary to some perceptions, home oxygen therapy involves much more than a piece of equipment,” said Ryan.

“Congressman Price, who last month introduced the Home Oxygen Patient Protection Act (HR 5513) along with another physician, Congressman Joe Schwarz (R-Mich), called forced ownership of oxygen equipment mandated by the Deficit Reduction Act (DRA) ‘extremely short-sighted from a clinical and cost perspective,’” an AAHomecare statement said. “Price said oxygen therapy ‘helps one million home oxygen patients to breath easier, literally,’ and he described oxygen policy in Medicare as a ‘life and death issue.’”

During the briefing, Ryan conveyed the importance of the home care provider in supplying the services that are needed by the beneficiary. Ryan’s message was backed by a user of oxygen therapy, Vlady Rozenbaum, founder of a patient support group called COPD-ALERT. The briefing concluded with a presentation of statistics from the Morrison Informatics study, related by Malcolm Morrison of Morrison Informatics. “Further reductions in Medicare reimbursement for home oxygen as a result of the 36-month cap, the CPI freeze, and the effects of competitive bidding will be problematic for home care providers,” said Morrison, “and may jeopardize the home care oxygen services provided to Medicare beneficiaries.”

Sleep Market Projected to Grow
A Frost & Sullivan analysis of the sleep apnea diagnostic and therapeutic markets forecasts significant growth in each of these market niches. According to the research by Frost & Sullivan, revenue in the sleep therapeutic market is expected to pass the $1 billion mark by 2007 and pass $2 billion in 2012. (In 2005, market revenue was about $800 million.) The sleep diagnostic market is also predicted to grow from its 2005 rate of about $80 million to $120 million by 2012.

The report also broke down the therapeutic and diagnostic market segmentation. For therapeutic devices, flow generators make up 57% of the market while facial interfaces share 43%. For flow generators in this market, CPAP had a 70% share, bilevel devices had a 20% share, and Auto-PAP devices ranked at a 10% share.

Market segmentation of the diagnostic market was also dissected with clinical polysomnography devices sharing 81% of the market, while ambulatory devices had a 10% share, followed by screening devices with a 9% share.

Frost & Sullivan forecasts that as awareness of sleep apnea increases, more testing and therapy opportunities will arise.

Cosponsors Jump on the HR 5513 Bandwagon
Cosponsors for HR 5513, the Home Oxygen Patient Protection Act, are on the rise with five more members of the House of Representatives supporting the bill, bringing the total to 34. The bill restores the Medicare treatment of ownership of oxygen equipment to that in effect before enactment of the Deficit Reduction Act (DRA) of 2005. A provision in the DRA forces oxygen users to assume ownership of and responsibility for the oxygen system they use after 36 months. The new cosponsors are Representatives Tim Bishop (D-NY), Joseph Crowley (D-NY), Tim Murphy (R-Pa), Collin Peterson (D-Minn), and Steven Rothman (D-NJ).

Competitive Bidding Comments Submitted to CMS
AAHomecare Pushes for Revised Timeline; MedPAC Advises Against Rebate Provision

AAHomecare, stating that competitive bidding will be “a radical departure” from the current HME program, advised CMS to publish a revised timeline with more sensible dates for the implementation steps of the program. Besides addressing the timetable issue, the association also made recommendations related to basis for payment, competitive bidding areas (CBAs), criteria for selecting items, submission of bids, conditions for awarding contracts, terms of contract, and gap-filling methodology. The association also expressed concern about inadequate information on the issues of quality standards and the DRA oxygen provision.

In MedPAC’s submitted comments, the commission offered numerous suggestions including advising against implementation of the rebate program from competitive bidding. “A rebate program will complicate the design and administration of the program and possibly induce additional demand for DME, as well as raise the risk of fraud and abuse as noted in the proposed rule,” MedPAC’s letter stated. “The proposed rule would prohibit advertising of rebates, yet at the same time require a supplier provide rebates for all beneficiaries if any beneficiary received one.”

MedPAC also suggested the following in its comments:
• eliminate any automatic payment adjustment;
• define CBAs to be equal to metropolitan statistical areas at least for the first round of competition;
• allow physicians in CBAs to continue to supply the limited range of items currently allowed under law and not require them to bid; and accept bids that include some items with prices above the current fee schedule so long as the total bid would result in lower spending than the current fee schedule.