By Keith Purtell, Muskogee Phoenix, Okla.
Jul. 6–Government cuts in Medicare are doing more than slashing costs; they are cutting off the air supply to millions of elderly Americans.
As a part of the Deficit Reduction Act of 2005, the federal government is capping Medicare benefits for portable oxygen tanks and concentrators. Concentrators are home machines that extract pure oxygen from the air. The cap will mean that people currently on oxygen will become responsible for maintenance, repairs and replacement of their existing equipment.
The American Association for Homecare says that the typical Medicare home oxygen beneficiary is a woman in her 70s who suffers from late-stage chronic obstructive pulmonary disease and as a consequence has severe low levels of oxygen in her blood. Approximately 12 million Americans have been diagnosed with COPD, and an additional 12 million more remain undiagnosed.
Providers of oxygen and oxygen-related supplies are in a section of health care known as Durable Medical Equipment.
Barry Watson, with DME provider AlternaCare on West Okmulgee Avenue, said the public has not been fully informed about what’s about to hit.
“The average person has no clue this is happening,” he said. “It’s going to affect a lot of people. They make decisions like this on Capitol Hill, and the public doesn’t find out about it until later.”
Watson said he is worried about what will happen when Medicare no longer pays for servicing and maintenance of those concentrators after 36 months.
“Rental of the oxygen concentrator pays for a lot of the extra costs that are limited by Medicare,” he said. “For portable oxygen tanks, we are allowed $55 a month (per patient). A lot of our patients go through that in a week. So the rest comes out of the rental of the concentrator. We have patients who cost us $100 to $150 a month in tank rentals.”
When the cap comes down in January 2009, Watson said it will immediately change lives.
“What’s going to happen is that there will have to be a limit, and these patients will not be able to get out of their house as much as they want to,” he said.
Watson said that when concentrator service is limited, patients may not have any warning of faulty performance.
“Right now, every 30 days we are doing our concentrator checks as a service,” he said. “What will happen now is that unless the patients can pay companies to come out, they won’t know how efficient the concentrator is or how pure the oxygen is. Until it’s too late.”
Watson said he’s concerned that only human suffering will motivate the government to carefully consider the Medicare cuts.
“What I’m afraid of is that what will be required for this situation to change is for someone to get really sick or die,” he said.
Sherri Hiseley, co-owner of DME provider Medic-Aire Inc. on West Okmulgee Avenue, said the first wave of impact will be felt in only six months.
“Anyone on oxygen on or prior to January 2006; that was day one,” she said. “Medicare will pay 36 months and then cap at the beginning of 2009.”
And the effects are already being felt in how Medic-Aire does business.
“We’ve had to turn people away because we can’t afford to take on someone who is about to cap out,” Hiseley said.
RespiratoryMgmt.com published a data analysis conducted by Avalere Health that shows impending cuts to Medicare’s home oxygen benefit are much deeper than anticipated, totaling $710 million in 2009 and $855 million in 2010. The reductions in funding — which amount to an 18.8 percent reduction in the reimbursement rate — are the result of changes brought by the Deficit Reduction Act of 2005 and the Medicare Modernization Act of 2003, and will affect a significant portion of the more than one million Medicare beneficiaries with chronic lung disease who rely on home oxygen for health and independence.
The analysis shows more than 1.4 million Medicare beneficiaries will be impacted by the changes, amounting to approximately a $325 cut per patient.
“When you consider these cuts in a historical context, the severity is particularly significant,” said John Richardson, of Avalere Health, and one of the analysis’ authors. “Not adjusted for inflation, the average Medicare home oxygen payment by 2010 will be almost half what it was in 1997.”
Hiseley said only last minute action by Congress could halt what is about to happen. She is disappointed in the government’s decision-making process.
“I’ve seen this happen in our industry; the government never does their homework,” she said. “Our industry is only two percent of the budget for Medicare.”
The AAH agrees with that, saying the Durable Medical Equipment sector represents about 1.7 percent of the $400 billion-plus in total Medicare spending and is the slowest-growing sector in Medicare. There was 3.8 percent growth in Durable Medical Equipment spending from 2005 to 2006 (the latest year for which figures are available), compared to 19 percent growth for the entire Medicare program spending during the same period.
Additionally, according to a December 2007 survey of 1,000 adults by research firm Harris Interactive, Americans overwhelmingly prefer to receive home-based care over that delivered by nursing homes and other institutions. Moreover, three out of four (74 percent) Americans agree with the statement posed by the survey workers, “Homecare is part of the solution to the problem of rapidly increasing Medicare spending for America’s seniors.” That result is consistent across Democratic and Republican party lines and across age groups.
Hiseley said she is dismayed at the apparent lack of research in the federal government’s decision making. She can’t understand why such a small portion of the health care industry is being hit so hard.
“Somebody in the government just got the idea that we were making a killing,” she said. “There have been three cuts in our payments during the past 11 years. We get a set amount of $180 a month. It doesn’t matter how often we have to go out. We’re available 24 hours a day.”
Hiseley said that even from an accounting perspective, the numbers don’t work.
“It doesn’t add up in terms of dollars and cents,” she said. “It costs $2,000 a year to provide a geriatric patient with oxygen, but if they don’t get it and have to go to the hospital, it can cost $2,000 a day.”
As dramatic as that sounds, it may be an underestimate. The data analysis by Avalere Health stated the government is cutting a benefit that’s proved to be cost saving to the Medicare program. According to the Council for Quality Respiratory Care, home oxygen costs the Medicare program $7.62 per day versus as much as $4,600 per day in the hospital. In 2002, there were 673,000 hospitalizations for COPD with an average length of stay of 5.2 days.
In addition to the cap, the government has already introduced competitive bidding among providers, a move that is expected to add to paperwork received by patients.
After full implementation of the new competitive bidding program and 36-month cap, daily reimbursement for home oxygen will fall to between approximately $4.50 and $5.50.
The analysis went on to say that fully 22 percent of the 1.4 million Medicare beneficiaries who require home oxygen use it for more than 36 months.
Congressman Dan Boren, D-Muskogee, said in a media release that the DRA was something he considered flawed from the beginning.
“These health care cuts are yet another reason I voted against the Deficit Reduction Act of 2005,” he said. “My hope is that Congress and a new Administration will address this issue before Oklahomans, who desperately need these health services, are forced to pay increased fees for the use of oxygen-equipment.”
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