KHN Morning Briefing

Summaries of health policy coverage from major news organizations

New Medicare Rules On Oxygen Suppliers Worry Patients

Complex new Medicare rules that seek to cut costs of home-oxygen therapy are confusing the more than one million people who rely on the federal insurer to pay for the coverage.

The Wall Street Journal reports that the new rules "underline how complicated and difficult it will be to control Medicare costs," a key part of President Barack Obama's efforts to cut Medicare and Medicaid costs to help pay for a health-care overhaul. Under the new rules, "which began to affect patients on Jan. 1, Medicare will pay suppliers at its prevailing rate for the first three years after a patient begins coverage. Suppliers are then required to continue providing oxygen services to patients for another two years, but at a sharply reduced payment rate. After that, patients are entitled to receive new equipment and Medicare will resume paying suppliers at the higher rate. The changes, aimed at trimming costs for Medicare, have created problems for some patients who want to find a new source for their oxygen... Some suppliers are balking at accepting new patients who are approaching, or have already reached, Medicare's new three-year limit on full payments. That's because the companies would have to provide oxygen services for the next two years without getting much payment." 

"The rule changes are part of broader efforts by Congress and the Centers for Medicare and Medicaid Services, or CMS, which oversees the federal insurance programs, to attack what is perceived to be waste and fraud among home-oxygen suppliers and other providers of so-called "durable medical equipment," which includes tools such as wheelchairs and walkers. The government is planning to restrict where patients may buy or rent medical equipment, by paying for devices sold only by approved suppliers. Medicare also has stepped up its efforts to root out fraud. Last month, the U.S. Attorney General's Office and the Department of Health and Human Services, which oversees CMS, announced they would form a new team to share data about suspicious Medicare billing patterns," according to the Journal.

"CMS says it expects to save about $220 million in the fiscal year beginning in October as a result of the new payment rules. Last year, Medicare spent $2.9 billion on home-oxygen therapy, out of the insurance program's total budget of nearly $500 billion," the paper reports. Meanwhile, oxygen suppliers are scrambling to adapt while others are protesting the new rules. For instance, the National Association of Independent Medical Equipment Suppliers is pressing Congress to reverse Medicare's three-year limit on full payments. Suppliers "say CMS is overly focusing on the cost of equipment and isn't accurately accounting for other expenses" (Merrick, 6/16).

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