Oxygen Equipment
Payment Rule Changes
CMS announced in late October a change in its Part B rules for paying oxygen equipment suppliers for supplies and maintenance. The change, which took effect on January 1, reportedly surprised and disappointed many DME suppliers. Medicare advocates also report that some suppliers have responded to the change by removing oxygen equipment from patients' homes, threatening access to needed care for some beneficiaries.
In the past, DME suppliers could rent oxygen equipment (e.g., concentrators, regulators, and nebulizers) indefinitely to beneficiaries and receive monthly rental payments from Medicare. With the Deficit Reduction Act (DRA) of 2005, however, Congress limited rental payments to 36 months and required that suppliers transfer ownership of the equipment to the patient. In the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008, Congress repealed the transfer of ownership rule but retained the 36-month limit on rental payments. While the law made clear that the suppliers would own the equipment after 36 months, the question of how Medicare would pay for supplies and maintenance after 36 months remained open.
In the November 18, 2008 Federal Register, CMS responded with a new payment policy that, in effect, says to suppliers that Medicare has paid you enough through 36 months of rental payments to furnish the equipment, supplies, and maintenance to your patients for up to five years. The final rule requires suppliers to provide oxygen equipment, related supplies such as mouthpieces and tubing, and maintenance for two years after the 36-month rental period ends without additional Medicare payments for periodic maintenance. Medicare will, however, continue to pay for the contents of oxygen tanks and cylinders after the 36 months. It also will make semi-annual payments in 2009 only for routine maintenance and servicing of oxygen concentrators or transfilling equipment.
In its discussion of the new rules, Medicare explained that it is not reasonable and necessary to pay for non-routine maintenance and servicing of oxygen equipment for supplier-owned equipment, because the equipment requires minimal maintenance and servicing during the first five years of use, and because five-year warranties are available from the top equipment manufacturers. CMS prepared a new Q&A fact sheet on the topic for general audiences.
