Important Alert for Medicare Patients Who Use Supplemental Oxygen

Beginning January 1, 2019 changes will occur to how the Centers for Medicare and Medicaid Services (CMS) will pay oxygen suppliers for delivering supplemental oxygen and oxygen equipment to patients. During this time, CMS will suspend its current payment system, known as competitive bidding.

The COPD Foundation is concerned that this change may have an impact on people who use supplemental oxygen and we are standing by to hear from you about your concerns, so that we can reach out to CMS. We are coordinating with fellow patient and healthcare professional organizations on this important access issue.

Please email statecaptains@copdfoundation.org or call 1-866-316-COPD (2673) Monday-Friday between 9am-6pm if you are experiencing any problems as a result of this change or if you have been contacted by your patients or suppliers about required changes to their prescriptions. We want to understand the issues and make sure that we are communicating these problems to decision makers in an expedient way.

If you are a current liquid oxygen patient and have been told by your supplier that you will no longer receive liquid oxygen, please ask for documentation and save any letters or emails you may have received from your suppliers. If this occurs, you should also immediately reach out to your doctor’s office to assist you in managing the potential impact of this change and to help you seek potential solutions from other suppliers in your area.

More Detailed Background Information

Supplemental Oxygen: Changing Medicare DME Reimbursement Policy Could Impact Patient Access

Starting January 1, 2019, the Centers for Medicare and Medicaid Services (CMS) will suspend the Medicare competitive bidding program for Durable Medical Equipment (DME), including supplemental oxygen, for at least 18-24 months while they redesign the bidding process. How this “gap” in competitive bidding contracting for DME products will impact patient access to supplemental oxygen – particularly liquid oxygen – remains to be seen, but provider and patient groups are concerned that patient access to supplemental oxygen could further erode during the competitive bidding “gap” period.

What is Competitive Bidding?

Prior to competitive bidding, CMS paid for DME products based on a fee schedule that used industry provided information to set schedule rates. In 2009, Congress changed the system to one in which DME suppliers bid on multiple items and services within a product category, with the winning bidder contractually obligated to provide all the products covered in their contract within a defined regional area. For oxygen DME suppliers, this meant the winning bid was obligated to provide all types of oxygen equipment, including liquid oxygen systems. Competitive bidding was gradually rolled out to defined regions throughout the country, with rural areas largely excluded from the bidding and contracting process. However, in recent years, the fee schedule for rural area suppliers has been adjusted to reflect similar drastic reductions in reimbursement under competitive bidding.

How Has Competitive Bidding Changed Patient Access to Supplemental Oxygen?

While competitive bidding has been very successful in reducing Medicare DME spending, it appears to have significantly reduced patient access to liquid oxygen systems. In 2010, the first year of competitive bidding for DME oxygen, there were 40,938 Medicare beneficiaries using liquid portable oxygen systems. By 2016, that number has dropped to 8,141. A similar decline was seen in stationary liquid oxygen systems with 32,220 in 2010 declining to 5,948 in 2016. There has been no change in clinical practice or respiratory disease patterns that would explain such a dramatic reduction in liquid oxygen. The obvious explanation is that DME companies are trying to adjust to lower reimbursement rates by reducing access to the most expensive type of supplemental oxygen – liquid oxygen.

Additional patient reported impacts since the implementation of competitive bidding have included reduced delivery frequency, limited numbers of portable tanks, service and education challenges and more.

DME companies under contract with CMS in a competitive bidding area are contractually obligated to provide the oxygen system that is prescribed by the physician liquid oxygen systems. Despite this contractual obligation, there is abundant anecdotal evidence that DME companies are trying to save money be not fulfilling prescriptions for liquid oxygen systems.

What Does the Competitive Bidding “Gap Period” Mean?

For 2019 and 2020, all current competitive bidding contracts will expire and CMS will not engage in any new contract for two years. During the “gap period”, CMS will allow any DME company willing to accept Medicare payments to fulfill DME prescriptions. There will no longer be any contractual obligation for DME companies to supply prescribed liquid oxygen (though that contractual obligation was of dubious value to Medicare beneficiaries because it relied on a challenging enforcement process). Some DME industry representatives have predicted that even more DME companies will stop providing liquid oxygen systems.