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Oxygen Therapy

The AAHomecare urges Congress to enact legislation to help more than one million Medicare home oxygen patients breathe easier by reducing the burdens placed on them by the Deficit Reduction Act of 2005 (DRA) and making improvements to strengthen the home oxygen benefit.

AAHomecare supports the enactment of legislation that would amend the DRA by restoring Medicare home oxygen payments for the period of medical need. The Association supports key improvements to the home oxygen benefit including linking reimbursement to beneficiary need and adding patient protections while sparing oxygen payments from further reductions. It is also crucial that oxygen legislation recognize critical services and 24/7 around-the-clock care that homecare providers furnish to patients. Services are integral to effective, quality home-based oxygen therapy, which allows patients with severe lung disease to remain at home rather than in institutional care.

Issue Brief: Rural O2 Access


Millions of Americans live with chronic diseases that require them to receive home oxygen therapy to help them breathe, mitigate the symptoms of their disease, and slow disease progression. When properly prescribed and combined with education and monitoring, home oxygen therapy reduces adverse symptoms and improves quality of life. Medicare covers this therapy for the vast majority of patients for whom oxygen is a necessity.

In 2009, Medicare providers of home oxygen therapy absorbed payment cuts of 27 percent. In fact, the average Medicare payment for home oxygen therapy is now less than half of what it was in 1997. Medicare has compounded the impact of these cuts by stopping payments for emergency and other non-routine services as well as necessary disposable supplies for patients on home oxygen longer than 36 months.

The DRA capped reimbursement for Medicare home oxygen at 36 months. This artificial cap prevents oxygen providers from receiving reimbursement to cover costs related to services for the entire period that medical necessity dictates beneficiaries are to receive oxygen. The cap on reimbursement is imposing severe financial hardships on homecare companies and is resulting in job losses. Moreover, the policy of capping payment jeopardizes Medicare beneficiary access to the quality of care that they require. AAHomecare, the American Lung Association, and other patient and physician/clinician organizations and provider stakeholders vigorously oppose the capping of home oxygen payments in Medicare policy.

The current oxygen benefit is fundamentally flawed and is negatively affecting patient care. Today’s benefit does not address the three key issues necessary for high quality of care:  1) length of need for the beneficiary; 2) ongoing maintenance and service; and, 3) quality of life and the ability to be a productive member of society.

Under the current system, payments are based on oxygen equipment rather than the services that are inherent in the provision of oxygen therapy, and those payments are arbitrarily capped after 36 months while providing virtually no payments for vital services and supplies beyond the 36-month period  No other benefit under the Medicare program is capped while therapy and services continue. It has been estimated that the costs related to oxygen therapy equipment account for only 28 percent of reimbursement while 72 percent of a provider’s costs are due to ongoing patient service and overhead costs.


To protect Medicare patients, AAHomecare urges policymakers not to impose additional cuts on care provided to patients on home oxygen therapy, which would lead to further reductions in services.  AAHomecare also recommends improvements to Medicare’s home oxygen benefit.

Recommended Improvements

The Association urges Congress to improve the oxygen benefit in a fiscally responsible manner, linking Medicare reimbursement to patient need, increasing transparency regarding cost and quality, and recognizing that a strong service component is essential to providing effective home oxygen services. Importantly, improvements to the benefit can be made without further reductions to home oxygen payments, while eliminating the 36-month cap.

Oxygen stakeholders including organizations representing both large and small home oxygen providers, manufacturers, physicians and clinicians, and home oxygen patients believe an improved home oxygen payment system would accomplish the following:

  1. Eliminate the 36-month cap on home oxygen equipment and restore payments for home oxygen therapy through the patient’s period of medical need.

  2. Establish a uniform level of patient services that includes but is not limited to:

    • An initial evaluation of the patient.

    • Routine evaluation of the patient’s ability to operate the oxygen equipment safely and appropriately.

    • Patient and caregiver education about home oxygen therapy, equipment, safety and infection control.

    • Equipment delivery, set-up, and maintenance, including checking oxygen system purity levels and flow rates, changing and cleaning filters, and assuring the integrity of alarms and back-up systems.

    • Reports to physicians when the home oxygen service supplier becomes aware of changes that occur in patients’ compliance with the plan of care.

    • Provision of 24-hour on-call coverage as well as supplies and equipment (including back-up systems).

    • Assistance with coordination of equipment, services, and suppliers associated with patient travel.

  3. Establish retesting requirements to ensure that only those who need oxygen therapy receive it.

  4. Maintain standards for qualified home oxygen service suppliers, including holding accreditation from at least one CMS-approved accrediting body and complying with the Medicare Supplier Enrollment Safeguards and the Medicare Quality Standards regulations.

  5. Create cost transparency by requiring a representative sample of suppliers to submit annual cost surveys to CMS.

  6. Specify rights of the beneficiary to, among other things:

    • Choose or change home oxygen service suppliers,

    • Be informed about and participate in all aspects of the oxygen therapy services being provided,

    • Be informed about all treatment modalities and categories of equipment offered by the provider,

    • Be informed of the right to consult with his or her physician about changes to equipment or services, and

    • Be informed of the provider’s internal and external complaint processes.

  7. Create a Home Oxygen Services Advisory Committee within the Department of Health and Human Services that includes representatives from all stakeholders in the home oxygen community to, among other things, advise on the creation of a quality improvement program, comparative effectiveness analyses, and enhanced program integrity policies.

AAHomecare members can find more information and get involved in shaping policy for this issue through the Home Medical Equipment/Respiratory Therapy Council.

Sleep Policy

AAHomecare is concerned with the CMS policy on non-consumable supplies as it applies to CPAP. Recently, AAHomecare submitted comments to CMS on the DME MAC bulletin on non-consumable supplies that requires providers to confirm the need for more supplies and refill no sooner than 14 calendars days before the shipping date, confirm the beneficiary request for a refill, and hold off on shipping until 10 calendar days before the beneficiary’s current supply runs out.

AAHomecare members can find more information and get involved in shaping policy for this issue through the Home Medical Equipment/Respiratory Therapy Council. For in-depth commentary on pending legislation and regulations, go to Analysis and Comments, Testimony & Official Statements.

Congressional Sign-On Letter - CPAP BundlingDear Collegue Letter - CPAP Bundling


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