Rural rates for oxygen dip below bid rates

WASHINGTON - Industry stakeholders are trying to figure out why the recently released 2017 DMEPOS fee schedule appears to apply a “double dip” cut to rural rates for oxygen concentrators, lowering them to below competitive bidding rates.

To determine the fee schedule, CMS reduces payments for oxygen concentrators by a certain percentage to maintain budget neutrality in the face of increased utilization for oxygen generating portable equipment.

“This comes as somewhat of a surprise because rural rates are supposed to be derived from the competitive bid program, not this alternative methodology that applies to the fee schedule,” said Cara Bachenheimer, senior vice president of government relations for Invacare. “We're not quite sure what they did, but we don't think it's correct. CMS has yet to publicize the actual calculation.”

CMS has the authority to determine payment rates under the fee schedule and, separately, the authority to determine rural rates. As near as stakeholders can tell, CMS combined both authorities.

The result: The rural rate for oxygen concentrators is $77.16 per month compared to the Round 1 2017 single payment amount of, on average, $79 per month.

“This seems like a bit of a double dip,” said Kim Brummett, vice president of regulatory affairs for AAHomecare. “It makes no sense for rural rates to be lower then the bid rate. Rural rates are supposed to be the highest rates.”

Stakeholders at press time were determining their next moves.

“We are putting together a strategy to figure out how to tackle this and push back on it,” said Brummett.

Their first step: On Dec. 20, AAHomecare sent a letter to the associate general counsel at CMS, outlining what they believe has happened and why it's a concern.

“We request that CMS recalculate these rates,” the letter states. “Given the approaching Jan. 1, 2017, effective date for the new fee schedules, this issue urgently concerns AAHomecare members.”