Home oxygen providers fearless of GAO’s call for standards

By MATTHEW HAY

HHBR Washington Correspondent

WASHINGTON – Home oxygen providers believe they have little to fear from the General Accounting Office’s (GAO; Washington) recent findings that development of service standards for home oxygen suppliers should be a priority of the Health Care Financing Administration (HCFA; Baltimore). "It is about time that HCFA got around to issuing standards for home oxygen equipment suppliers," said Erin Bush, the associate director of government relations for the Health Industry Distributors Association (HIDA; Alexandria, VA). "We have been working toward more realistic standards ever since we held a consensus conference on this issue in 1996."

The GAO study, "Access to Home Oxygen Largely Unchanged, Closer HCFA Monitoring Needed," concluded that HCFA has failed to take the steps it should to assess and ensure access to home oxygen. The GAO noted that in November 1997 it recommended that HCFA monitor trends in beneficiary access to various types of home oxygen equipment, restructure the modality-neutral payment, if necessary, and educate prescribing physicians about their right to specify the home oxygen systems. But the GAO said HCFA has made only "modest beginnings" in meeting these recommendations, even though most of them are mandated by the Balanced Budget Act of 1997 (BBA).

As the GAO also noted, in addition to slashing Medicare rates for home oxygen by a stiff 25% in January 1998, followed by another 5% in January 1999, the BBA called on HCFA to establish service standards for Medicare’s home oxygen benefit. But HCFA has yet to meet that requirement.

The reason for HCFA’s delay, said HCFA watchers, is that the agency’s resources have been sapped by other priorities, notably Y2K computer modifications. "This has just not been a priority, even though Congress and (the) GAO have repeatedly asked them to do it," said one observer. "They are caught up with Y2K computer updates, as well as blunders they made with other parts of the BBA, including the Medicare Plus Choice program."

The agency told the GAO it plans to publish new service standards that will apply to all durable medical equipment providers in the next few months, followed by specific service standards for home oxygen.

Even if this comes about, health care attorney Michael DeCarlo, of the Washington-based firm Dickstein, Shapiro, Morin & Oshinsky, suggested service standards might have only marginal impact. "Service standards might be a red herring’ as far as what is really needed in the industry," said DeCarlo, who pointed to significant changes in home oxygen technology that are reducing the number of visits required. "The industry is already making fewer visits, and manufacturer recommendations are stretching those visits out as well."

The GAO’s findings appear to confirm that assessment. "As the technology of concentrators continues to improve," the GAO reported, "oxygen concentrators have been slowly replacing stationary liquid systems." The GAO noted that Medicare claims for the first half of 1998 showed a decrease in the proportion of Medicare patients using the more costly stationary liquid oxygen systems, and it said this decline has been a consistent pattern since 1995.

The GAO also looked at beneficiary access to home oxygen in light of the reimbursement cuts imposed by the BBA and concluded that the reduction in Medicare payment rates have not had a major impact on access. "Preliminary indications are that access to home oxygen equipment remain substantially unchanged, despite the 25% reduction in Medicare payment rates that took effect in January 1998," said the GAO. As evidence, the agency pointed out that the number of Medicare beneficiaries using home oxygen, which has been on the rise since 1996, appeared to increase in 1998.

The GAO’s contention appears to be bolstered by the recent performance of several major respiratory companies. "Obviously, there was enough profit margin for companies to make their deliveries more lean and still post a significant profit," said one industry observer, who pointed to large quarterly profits recently posted by some of the country’s largest respiratory therapy companies.

The GAO said its findings were also bolstered by hospital discharge planners who told the agency that access has not been a problem, even for Medicare beneficiaries that require more expensive equipment. In addition, the GAO reported that suppliers accepted the Medicare allowance as full payment for over 99% of the Medicare home oxygen claims filed for the first half of 1998.

HIDA’s Bush did take issue with some of the GAO’s findings, however. For example, she noted that the agency only examined the first two quarters of 1998, immediately after the 25% reduction took effect, and before the additional 5% reduction kicked in earlier this year. "The pinch had not really yet been felt," she argued. Moreover, Bush said that delivery technicians may increasingly be assuming a role previously performed by more experienced respiratory therapists.