Medicare Changes Worry Patients, Oxygen Suppliers

WASHINGTON — Jean Henry needs a constant flow of nearly pure oxygen to stay alive, but she says planned Medicare changes may make it more difficult for her to get it.

As the result of a 2003 change in the Medicare law that is just now being implemented, only some of suppliers will be contracted to continue supplying oxygen under the federal program for the elderly and disabled. How many will be revealed in May, and the program will begin July 1.

Those suppliers were the winners of competitive bidding in 10 metropolitan areas around the country. Companies that are not selected may continue to provide oxygen at the Medicare bid price to their current customers, but Medicare will not pay them for new customers.

Henry, 82, of Boca Raton, Fla., has been on oxygen for three years because she suffers from chronic obstructive pulmonary disease. She gets her equipment from Physicians Choice Respiratory Services Inc., based in Port St. Lucie.

That company was not chosen to be one of the contracted suppliers serving South Florida, but it was selected to serve the Orlando area.

Steve Mamangakis, the company's owner, said half of his business comes from Palm Beach County and that he plans to continue serving those clients as long as he can. Mamangakis doesn't have any customers in the Orlando area.

Henry is worried she will have to search for another supplier who may not be as convenient.

Medicare officials say using competitive bids will save the program and beneficiaries huge amounts of money.

For example, Medicare now pays roughly $200 a month to rent an oxygen concentrator, which turns room air into 90 percent-pure oxygen. It is the most common type of oxygen equipment and retails for between $600 and $800.

Under the competitive bids, monthly payments will be reduced to about $141, a savings of 29 percent. The average beneficiary will save about $12 a month.

Nationwide, Medicare paid for about 890,000 patients to use oxygen concentrators in 2006.

Peter B. Kelly, chief executive officer for Pacific Pulmonary Services and a leader of the oxygen industry's lobbying group, the Council for Quality Respiratory Care, said the industry is likely to see a $1.5 billion reduction in payments, roughly 20 percent, over the next two years, split nearly evenly as a result of the switch to competitive bidding and the cap on the length of rentals.

Mamangakis said Medicare is trying to "Wal-Martize" the oxygen industry by replacing hundreds of companies with a few large corporations.

Worse, because durable medical equipment suppliers no longer will be contracted to sell all types of equipment — only those items for which they won the bid — patients will have a more difficult time obtaining them, he said.

For example, a hospital patient about to be discharged may have to remain longer while the caregiver lines up a hospital-style bed, a special commode and an oxygen concentrator from three different suppliers.

Another Medicare change also will affect Henry starting next year.

Until 2005, Medicare would rent oxygen equipment indefinitely. But beginning in 2006, Medicare started renting equipment for up to 36 months. After that, the patient will own the equipment.

That means patients who were renting oxygen equipment on Jan. 1, 2006, will own that equipment at the end of this year.

Oxygen equipment suppliers say turning ownership of the equipment over to patients could be harmful if people skip routine maintenance — which previously was covered — because they will have to pay for it. Or they may forget.

"Who is going to service it? Who is going to take care of it? Who is going to come out in the middle of the night when it breaks?" Mamangakis asked.

He warned that if a machine is not checked regularly, "it could just be blowing room air."

Henry voices the same concerns.

"With these people, they come out and service the concentrator," Henry said. "Any problem I have, they respond within a half-hour because they're close. I don't know where these other companies will have to come from."

Medicare officials note that the program will continue to pay for 80 percent of the maintenance and repair charges. They also argue that in the long run, patients will save money because current rental payments far exceed the actual cost of the equipment.

But industry leaders insist that a 2006 Health and Human Services inspector general's report on the cost of renting equipment ignored the value of regular maintenance and on-call service.

The inspector general's report challenged the industry's maintenance practice. It said patients could do most of the routine servicing and that such maintenance needed to be done only twice a year. Most oxygen suppliers service their machinery four times a year.

The industry also is resisting the Bush administration's proposal to reduce the rental period from 36 months to 13 months, which the industry group's Kelly said would reduce payments to oxygen suppliers an additional 55 percent because not all patients use the three-year period.

"If that happens, they will decimate the industry," Mamangakis said, noting that oxygen is the most profitable part of his business. "I don't see how we could stay in it. It would not be worth it."

In a rare example of agreement, both the Bush administration and key Democratic members of Congress such as Rep. Pete Stark, D-Calif., chairman of the House Ways and Means health subcommittee, are pushing to reduce federal payments to the oxygen industry, which they say is overpaid.

But other bipartisan members of both houses have urged congressional budget writers to reject the proposed reduction in the length of the rental cap. In letters to the House and Senate budget committees, the lawmakers argue that cuts on top of the 20 percent reduction because of the competitive bidding program and the current 36-month cap, "could jeopardize care for some patients."

Mamangakis warned that if patients stop using their home oxygen, they will be forced to go the hospital. He said one day in the hospital costs Medicare more than it pays for oxygen equipment for an entire year.