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The Centers for Medicare & Medicaid (CMS) issued a new directive (Transmittal 461) to its Medicare Administrative Contractors for payment for oxygen equipment and services[i] on March 20, 2009. The Directive, effective July 6, 2009,[ii] furthers the implementation of Section 144(b) of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), Pub. 110-275 (July 15, 2008). MIPPA provisions on oxygen ownership and payment are effective January 1, 2009.  Regulatory implementation was delayed by the Obama Administration as part of its review of regulations from the previous Administration.

Background

Medicare provides coverage of home oxygen therapy under the Part B Durable Medical Equipment (DME) benefit if certain medical pre-conditions are met.[iii] This coverage includes the rental of oxygen delivery systems.[iv] 

Under rules that became effective on January 1, 2006, Medicare pays for stationary and portable oxygen equipment for a 36-month capped rental period.  Under the Deficit Reduction Act (DRA) of 2005, ownership of the oxygen equipment was transferred to the beneficiary at the end of the 36-month period.[v] Section 144(b) of MIPPA repealed the transfer of ownership provision applicable to oxygen equipment created by the DRA.[vi]  The bottom line is that the supplier continues to own the equipment after the 36-month capped rental period.7 

Suppliers participating in the Medicare program are paid over a 36-month period for furnishing a beneficiary's oxygen and oxygen equipment needs for up to five years.  The supplier is required to continue to maintain the oxygen equipment and is to furnish the equipment and any necessary supplies and accessories during this five-year period at no additional cost to the beneficiary.  For beneficiaries who use oxygen tanks or cylinders that need delivery of gaseous or liquid oxygen contents, Medicare will continue to pay each month for the delivery after the 36-month capped rental period.[vii]

At the end of the five-year period, the obligation of the supplier to furnish the oxygen and oxygen equipment ends.  The beneficiary may elect to obtain replacement equipment from any Medicare-certified contract supplier serving the area in which the beneficiary resides. A new 36-month payment period and five-year supplier obligation period starts at the end of the initial five year period.

Medicare's monthly rental rate covers the beneficiary's oxygen equipment and necessary supplies and accessories such as tubing or a mouth piece, oxygen contents, maintenance, servicing, and repairs. Medicare pays 80% of the rental amount, and the Medicare beneficiary is responsible for any unpaid Part B deductible and the remaining 20% of the rental amount.[viii] Medigap policies A –J pay the 20% cost-sharing. Note that these payment rules apply to traditional Medicare.  Medicare Advantage plans have their own rules concerning payment and cost-sharing for oxygen and supplies.  Some plans require beneficiaries to pay more than 20% cost-sharing; some plans continue to impose a 20% cost-sharing even after the 36-month capped rental period under traditional Medicare.

Transmittal Number 461 – Payment for Maintenance and Service after 36-Months

Effective July 1, 2009, for oxygen equipment and services furnished during calendar year 2009, it is reasonable and necessary to make payment for periodic, in-home visits for suppliers to inspect certain oxygen equipment and provide general maintenance and servicing after the 36-month rental cap has been reached. Information about the continuation of these payments will be provided by CMS on or after January 1, 2010.[ix] The CMS transmittal applies to oxygen equipment under health care Common Procedure Coding System (HCPCS) codes numbers E1390, E1391, E1392, and K0738.[x]  Payment may be made to suppliers for maintenance and servicing of oxygen equipment no more often than every six months, beginning six months after the 36-month rental cap (as early as July 1, 2009, in some cases) has been reached.[xi]

Under the new rule, for all oxygen equipment furnished after the 36-month rental cap, the supplier is responsible for performing any repairs or maintenance and service necessary to ensure that the equipment is in good working order for the remainder of the reasonable useful lifetime of the equipment.  Servicing includes replacing necessary parts in order for the supplier-owned equipment to continue to function appropriately.  Payment is not to be made for repairs or maintenance and services, other than the maintenance and servicing payment provided by CMS.  Suppliers may not charge beneficiaries for any repairs or parts or for servicing the equipment that is required during the remainder of the reasonable useful lifetime of the oxygen equipment.[xii]

Note, for 2009 only, if the beneficiary uses an oxygen concentrator or uses trans-filling equipment (a machine that fills portable tanks in the home), Medicare will pay for routine maintenance and servicing visits every six months, starting six months after the end of the 36-month capped rental period.[xiii]

CMS' Consumer Alert on Oxygen Equipment and Supplies

On December 17, 2008, CMS, through its Office of Public Affairs, announced several important rules regarding oxygen and oxygen supplies:

• Beneficiaries should continue to receive the oxygen and oxygen supplies that they need;

• Medicare is required to make 36 monthly payments to oxygen equipment suppliers;

• Suppliers must continue to provide beneficiaries with properly functioning oxygen equipment and associated supplies after the 36th month (three-year) payment period;

• The supplier is required to perform any repairs or to provide replacements at no cost to beneficiaries until the beneficiary has used the equipment for five years;

• After five years, the supplier may replace the equipment, but a new 36-month rental period will begin at that time;

If a supplier refuses to comply with these rules, the beneficiary should notify CMS immediately by calling: 1-800-Medicare (1-800-633-4227) or, for users of TTY, 1-877-486-2048.[xiv]

Service for Oxygen Equipment for Persons Outside their Home Geographic Area

Persons who travel outside their home geographic areas for extensive periods of time (several weeks or more at a time) or who relocate should ask their current supplier for assistance in finding a supplier in the area where they visit extensively or in the area in which they have relocated.  This can get tricky as the initial supplier has been paid for furnishing the necessary equipment and for servicing it for five years.  Beneficiaries may find that some suppliers are unwilling or slow to meet their maintenance and service responsibility when the beneficiary is no longer in the area in which the supplier does business.[xv]  The supplier may choose to make arrangements with a supplier in the beneficiary's new area to provide necessary maintenance and service, but, as described above, otherwise remains responsible for the maintenance and service functions for which the supplier has been paid.  Beneficiaries who encounter problems with their suppliers in making such arrangements should call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048.

Competitive Bidding

Competitive bidding is a concern for many suppliers of durable medical equipment, including oxygen equipment.  CMS continues to effectuate cost-containment steps and provisions that have been enacted over the years, and containment of costs for oxygen and oxygen equipment are part of that overall effort.  Specifically, oxygen and oxygen equipment are included in the constellation of services on which suppliers must bid in order to become Medicare-certified contract suppliers of durable medical equipment. (See the February 26, 2009 Weekly Alert for a discussion of the competitive bidding process for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS), including the geographic areas involved.).[xvi]

Conclusion

Many beneficiaries are frightened by supplier uncertainty.  Suppliers are concerned about payment for and maintenance of oxygen and oxygen equipment, particularly as CMS implements the various new requirements discussed in this Alert.  Beneficiaries and their advocates should contact CMS if they have questions about supplier representations or if they have difficulties getting necessary equipment, supplies, or supplier assistance.

For further information, contact attorney Alfred J. Chiplin, Jr., Esq., (achiplin @ medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (202) 293-5760.