Providers and Medicare battle: who owns home oxygen equipment?

A new Medicare rule limiting payments for oxygen providers is prompting an aggressive lobbying campaign by the industry, and unintended consequences for patients, the Cleveland Plain Dealer reports:

"Government auditors say the industry charges Medicare 'outrageous' rates when beneficiaries rent $600 machines that purify oxygen in normal air and require little maintenance. The companies are earning about $7,000 for the 36-month period, and generating huge profits, but see the next two-years as unfair. Medicare says the payment covers five years of service, but is dispersed over three years. In an attempt to cut Medicare costs that government auditors said were outrageously generous, Congress set a 36-month limit on paying for oxygen in patients' homes, starting in 2006. Most patients use oxygen concentrators -- machines that take in ambient air and purify it for people who need oxygen. The concentrators were to become the property of patients after 36 months. But battered by a related lobbying campaign, Medicare changed the rules in 2008 so that the rental companies still owned the equipment after 36 months. The companies had to continue to provide it to the same patients for another two years if medically necessary -- without additional payment except for a six-month service fee."

One company, Halsom Home Care of Centerville, Ohio, informed patients that the company would "have to pick up the oxygen equipment you have been using," because of Medicare's changed rules, and that they'd be lucky to find an alternative provider. In fact, "Patients who want to change providers, or who have moved, cannot find companies willing to take them. That's because Medicare has already paid one provider for 36 months, so a new provider would not get paid for the remaining two years," the Plain Dealer reports.

"If nothing changes, oxygen providers say they expect to see pronounced problems next winter, when so-called snow birds flock to Florida. By then, just about everyone who was on oxygen in 2006 will have hit the payment cap," the Plain Dealer reports. "And [Medicare] says if that happens, it wants to know -- because, it says, it will signal that the providers are not [playing] by the rules" (Koff, 7/8).