Back in the good ol' days, many suppliers provided travel oxygen services to their patients at no charge. Suppliers have asked what they can legally charge a Medicare patient for travel oxygen, and have received a variety of conflicting answers.

The following guidance was published in the Winter 2002 DMERC Medicare Advisory:

The oxygen fee schedule allowable to an oxygen supplier includes payment for both the equipment and oxygen contents. Medicare cannot pay two suppliers, even on a pro-rated basis, during the same rental month. During a rental month, if a beneficiary travels to another location and receives oxygen from a second supplier, Medicare will not make payment to the second supplier. If the second supplier were to receive payment from Medicare, Medicare would be making duplicate payments for the same service since payment for the oxygen received from the second supplier will already be included in the fee schedule allowable amount received by the beneficiary's primary supplier.

Recent information from CMS has clarified the issue about whether the patient's existing oxygen supplier can charge the patient when providing additional oxygen equipment for travel.

SCENARIOS AND SUPPLIER OPTIONS

1. Patient is renting a stationary oxygen concentrator and portable oxygen tanks from Supplier A, and is traveling for 2 weeks to a location far outside supplier A's service area.

   A) Supplier A can rent the patient a portable concentrator to take on their trip on an unassigned basis and charge the patient for the rental. In doing so, Supplier A must tell the patient that Medicare will deny payment for the portable concentrator as not medically necessary because it is considered a duplicate service item, and obtain a signed ABN.

   Lisa K. Smith

   B) Supplier A can tell the patient that they need to find a supplier at the destination (Supplier B) to provide oxygen services while there, and that the patient will be responsible for paying Supplier B.

   C) Supplier A can arrange for Supplier B at the destination to provide oxygen services to the patient while there, telling both Supplier B and the patient that the patient will be responsible for paying Supplier B.

   D) Supplier A can arrange for Supplier B at the destination to provide oxygen services to the patient while there, and Supplier A can agree to pay all, or part, of the charges of Supplier B for those services.

   E) Supplier A can sell the patient a POC. Since Medicare never pays for the purchase of oxygen equipment, it is a noncovered item and no ABN is necessary. CMS notes, however, that it may still be in the supplier's best interest to obtain an ABN to make the patient aware that Medicare will not pay for a purchase of oxygen equipment, and to make clear that the transaction is a purchase and not a rental.

2. Patient is renting a stationary oxygen concentrator and portable oxygen tanks from Supplier A and is traveling to a location outside Supplier A's service area, but within a distance that Supplier A is willing to travel to provide service for an additional charge.

   A-E) is the same as that shown under scenario number 1.

   F) Supplier could charge the patient an additional "out of area service charge" if the patient chooses to have Supplier A travel to the area the patient is visiting for service, rather than obtaining services from a supplier at the destination. In such an instance, Supplier A should probably bill the equipment on a nonassigned basis for that month.

3. Patient who is renting a stationary concentrator and portable oxygen tanks from Supplier A is traveling for 2 months to a location far outside Supplier A's service area.

   A) Supplier A can arrange for Supplier B at the destination to provide oxygen services to the patient while there. If Supplier A wants to be able to bill Medicare for any 1-month period when the patient will not be using the equipment provided by Supplier A, Supplier A must pay Supplier B for the oxygen service for that 1-month period. Supplier A can agree to pay all, or part, of the charges of Supplier B for the remaining periods, or Supplier A can require the patient to pay Supplier B for those periods of service.

   B) Supplier A can rent the patient a POC to take on their trip on an unassigned basis, and charge the patient for the rental. In doing so, Supplier A must tell the patient that Medicare will deny payment for the portable concentrator as not medically necessary for those 1-month periods in which the patient will also be using the oxygen equipment already in the patient's home—because it is considered a duplicate service item—and obtain a signed ABN. Supplier A should not bill Medicare for the stationary concentrator and portable tanks during any 1-month period when Supplier A knows that equipment will not be used by the patient.

   C) Supplier A can sell the patient a POC. Since Medicare never pays for the purchase of oxygen equipment, it is a noncovered item and no ABN is necessary. CMS notes, however, that it may still be in the supplier's best interest to obtain an ABN.

36-MONTH RULE

A final regulation changing Medicare's payment rules for home oxygen was published on November 9, 2006. Under the rule, title to oxygen equipment is transferred to the beneficiary after Medicare pays for 36 months of continuous use.

During the 36-month rental term, the provider must furnish the equipment until medical necessity ends, or the 36-month period of continuous use ends, whichever is earlier. However, this is not the case if oxygen becomes subject to competitive bidding; the beneficiary relocates to an area outside the provider's service area; the beneficiary elects to obtain equipment from a different company; or CMS or the carrier determines that an exception should apply in an individual case.

For rentals beginning January 1, 2007, oxygen equipment may not be replaced before the expiration of the 36-month term unless the provider replaces an item with equivalent equipment because the item was lost, stolen, or irreparably damaged, is being repaired, or no longer functions; the physician orders different equipment; the beneficiary chooses to obtain a newer technology item or upgraded item and signs an ABN; or CMS or the carrier determines that a change in equipment is warranted.

At the beginning of the rental term, the provider must advise the beneficiary if the provider intends to take assignment for all or a portion of the rental period. This is not binding on the provider. No later than 2 months before title will be transferred, you must disclose to the beneficiary whether you can continue to service the equipment after the transfer, and whether you can continue to deliver oxygen contents to the beneficiary after the transfer.

AFTER TITLE TRANSFERS

Title to tanks located in the beneficiary's home at the end of 36 months will be transferred to the beneficiary. Medicare will continue to pay for oxygen contents after title transfers. Beneficiaries may switch tanks out for refills.

Medicare will pay for routine maintenance and repairs every 6 months. Reimbursement is for labor, not to exceed 30 minutes. If the carrier determines that the equipment will not last for its useful life, then the provider must replace the equipment at no charge. The carrier determines the replacement cost on a case-by-case basis using information such as invoices.

When the beneficiary no longer needs the oxygen equipment, the provider may bill Medicare for picking up and storing or disposing of tanks, but not concentrators. There is no set fee; the provider submits a bill and documentation to the carrier. A manufacturer's warranty will transfer to the beneficiary at the end of the 36 months if the warranty is still in effect and is transferable. Title to backup equipment will not be transferred. Even though providers are not required to furnish backup equipment, they must nevertheless have a backup plan.

Lisa K. Smith, JD, is an attorney with Health Care Group of Brown & Fortunato PC, Amarillo, Tex. Smith is Board Certified in Health Law by the Texas Board of Legal Specialization, and represents DME companies, pharmacies, and health care providers throughout the United States and Puerto Rico. She can be reached via e-mail: .