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The article contends that Medicare vastly overpays for medically prescribed oxygen therapy delivered in the homes of Medicare beneficiaries and that Internet pricing of oxygen equipment is a more realistic barometer of what Medicare should be paying for oxygen therapy. Medical oxygen is a prescription drug that is highly regulated by the FDA. The typical Medicare beneficiary on home oxygen therapy is an elderly patient who suffers from chronic obstructive pulmonary disease (COPD).
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The American Association for Homecare welcomes a genuine debate about appropriate Medicare payment policy for oxygen therapy. In fact, the Association and companies providing oxygen therapy have been working for more than a year to design alternatives to existing Medicare oxygen policy for Congress to consider. Unfortunately, both the New York Times article and federal policymakers have focused only on the equipment costs associated with home oxygen therapy rather than the complete therapy, which requires numerous services. Based on this misleading perspective, which is divorced from the realities of serving the Medicare population and COPD patients in particular, Congress has enacted numerous cuts to oxygen over the past decade, reducing Medicare payment rates for oxygen therapy by nearly 50 percent. Moreover, oxygen payments are scheduled to be reduced by an additional 19 percent over the next two years because of previous legislation, regardless of congressional action this year.
The fundamental flaw in the New York Times article is the dangerously simplistic assumption that oxygen therapy delivered to Medicare patients in their homes should cost the same as the Internet or eBay price to buy the equipment only.
The reality of serving this population is very different. A 2006 study by Morrison Informatics gathered and analyzed data from homecare providers that collectively serve more than 600,000 Medicare beneficiaries receiving oxygen therapy in their homes. That number represented more than half of the Medicare population receiving oxygen therapy at home. The study found that nearly three-quarters (72 percent) of the cost of providing oxygen therapy to Medicare patients in their homes represent services, delivery, and other operational expenses that benefit patients. Only about one-quarter (28 percent) of the cost represents the oxygen equipment itself. These service costs have not been factored in to any of the government sanctioned studies.
The article discusses lobbying expenditures by the home oxygen therapy industry. Lobbying expenditures by the home oxygen therapy sector is a tiny fraction of the total expenditures by pharmaceutical companies, hospitals, and physician groups that seek to influence Medicare policy by lobbying Congress.
It is worth noting that all home medical equipment spending by the federal government is less than two percent of all Medicare spending. Long-term oxygen therapy reduces hospital admissions. The average daily cost for home oxygen therapy in approximately $7.60 in Medicare, compared to average of more than $4,600 per day in a hospital under Medicare.
The article also mischaracterizes the Medicare competitive bidding system and new quality standards for durable medical equipment. By design, this competitive bidding program excludes many home medical equipment providers from participating in Medicare - even if the providers agree to lower prices set by the bid process. The Medicare bidding program will likely drive large numbers of providers out of the Medicare program.
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