Budget neutrality wreaks more havoc in proposed rule

WASHINGTON - CMS's proposed changes to the home oxygen benefit would ding reimbursement for portable equipment and portable gas contents, as well as oxygen generating portable equipment (OPGE).

Per a recently released proposed rule, the agency seeks to create two separate payment classes for liquid equipment and liquid contents, and to apply a “budget neutrality offset” to all classes, not just stationary equipment and oxygen contents.

The end result, per an example provided by CMS: Reimbursement would drop from $17.29 per month to $16.04 for portable equipment; from $53.32 to $49.46 for portable gas contents; and from $37.44 to $34.73 for OPGE, based on fully adjusted fee schedule amounts for non-rural areas in the Southeast.

“Depending on a provider's business mix and the modalities they provide, this could result in more cuts,” said Cara Bachenheimer, chair of the government affairs practice at Brown & Fortunato. “We believe CMS has simply exceeded its authority when it applies budget neutrality to bid pricing.”

Per CMS's example, reimbursement for stationary oxygen equipment and oxygen contents, however, would rise from $70.23 to $72.59 per month, because the offset would be spread across the proposed seven classes.

Stakeholders say the majority of providers no longer provide liquid equipment and liquid contents—only a small population of patients needs liquid and it's more service intensive—which is one reason why CMS seeks to make the changes.

“I think this is an obvious recognition by the agency that they, along with the pulmonary community, are concerned for liquid,” said Tom Ryan, president and CEO of AAHomecare. “So in that regard, this is a good thing.”

But AAH will likely argue in its comments to the proposed rule that the reimbursement that CMS proposes for liquid equipment and liquid contents—per CMS's example, $34.73 and $74.19 per month, respectively—still doesn't cover costs and that the agency should make them a separate product category in the bid program.

“If they really want to see what the market can bear for liquid, let providers bid on it separately,” Ryan said.

Stakeholders also plan to argue in their comments that if CMS creates separate classes for liquid equipment and liquid contents there need to be corresponding policies that specify the qualifications for this modality.

“You need to make sure that there's a true medical need,” Bachenheimer said.

A bigger deal than the separate classes, however, remains CMS's insistence that it must apply a budget neutrality offset for oxygen products. With competitive bidding now in place, stakeholders have argued that this creates a “double dip” in reimbursement. A provision in H.R. 4229 would eliminate the offset for products included in the bid program.

“It's clear now from this rule that CMS has dug its heels even deeper, when it comes to budget neutrality, and we have no choice but to address the issue through Congress,” Bachenheimer said.