February 2009

Medicare regs strangle oxygen suppliers

by Joel Solkoff

lung disorders. The two most common con-

gency room. One day’s stay at Mt. Nittany

ditions requiring medical oxygen are chronic

Medical Center costs the equivalent of a

“In every industrialized nation, the move-

obstructive pulmonary disease and conges-

year’s worth of home oxygen, a curious con-

ment to reform health care has begun with

tive heart failure. Given the American

sequence of Medicare’s efforts to reduce

stories about cruelty….In Australia, a 1954

Association of Retired Persons’ estimate that

costs by reducing home service benefits.

letter published in the Sydney Morning

40 to 70 million baby boomers will cause

Herald sought help for a young woman who

Medicare rolls to swell by 77 percent over

How did this happen?

had lung disease. She couldn’t afford to refill

the next

25 years, the number of Centre

During the past three years, the federal

her oxygen tank, and had been forced to

County residents affected by these regula-

government has been systematically imple-

ration the intake ‘to a point where she is on

tions is bound to escalate.

menting a Medicare policy that is disman-

the borderline of death.’”

—from “Getting

Yet Centre County oxygen patients are

tling the elaborate safety net constructed over

There From Here, How Should Obama

receiving declining levels of service and the

years to protect home oxygen users.

Reform Health Care?,” by Atul Gawande,

situation is getting worse.

Medicare has reduced expenditures for oxy-

The New Yorker , Jan. 26, 2009

“This is a catastrophe waiting to happen,”

gen, equipment and services.

says Jim Young, general manager of Dick’s

“Oxygen patients in Centre County and

As President Barack Obama was giving

Homecare, one of three suppliers with

throughout Pennsylvania may well experi-

his inaugural address emphasizing the

offices in State College. The other two sup-

ence unnecessary deaths,” predicts John

importance of raising the quality of health

pliers are the mom-and-pop T&B; Medical

Shirvinsky, executive director of the

care, the three suppliers of medical oxygen

and the corporate giant American

Pennsylvania Association of Medical

in Centre County still had not received regu-

HomePatient. Each supplier is in danger of

Suppliers.

Photo by Doug Bauman

lations from Medicare on how to get paid,

going out of the oxygen business or not

Medicare, which is responsible for setting

Travis Barr, owner of T&B; Medical in Boalsburg,

putting at risk the oxygen supply to more

being able to maintain a presence in Centre

oxygen homecare policies in Centre County

says Medicare regulations are making it hard for

him to keep supplying medical oxygen.

than 3,000 Centre County residents ranging

County.

and throughout the country, is the largest

in age from small children to the elderly.

What does that mean to medical oxygen

insurance company in the United States. Last

cal nurse with chronic obstructive pulmonary

Specifically, Medicare still had not deter-

patients and the rest of us? Eventually, fewer

year, Medicare’s budget was $431 billion;

disease and asthma, lives just over the coun-

mined how home oxygen suppliers would be

local trucks providing local 24-hour, 7 day-a-

therefore any Obama initiative for health

ty line in Huntingdon County. Because of her

reimbursed for services to an increasing

week service, critical for most oxygen

care for all Americans must take Medicare

number of new patients whom doctors are

patients. Or more calls to 911 for emergency

into account.

trying to prevent from dying from severe

services. Or more trips to the local emer-

Margaret Hawn, a retired licensed practi-

see Oxygen , pg. 4

Eyewitness to an inauguration transformation

thousand people were walking around the

by Charles Dumas

city. There were photo ops and parties every-

“America, in the face of our common

where: in front of the capitol, the Washington

dangers, in this winter of our hardship, let

Monument, Lincoln Memorial and near the

us remember these timeless words; with

White House (still occupied by you-know-

hope and virtue, let us brave once more the

who). The spirit was celebratory and friend-

icy currents, and endure what storms may

ly. It was clear that there were many who had

come; let it be said by our children’s chil-

never before been to their capitol city and

dren that when we were tested, we refused

they were going to make the most of it.

to let this journey end, that we did not turn

The celebratory spirit continued into the

back nor did we falter; and with eyes fixed

next day with the brilliant staged inaugura-

on the horizon and God’s grace upon us, we

tion concert at the Lincoln Memorial. It was

carried forth that great gift of freedom and

where Dr. Martin Luther King, Jr. made his

delivered it safely to future generations.”

“I Have A Dream” speech in 1963, where in

As President Obama spoke these words,

1939 Eleanor Roosevelt arranged for

we were like the proverbial tree planted by

Pennsylvanian Marian Anderson to give her

the waters of the reflecting pool in front of

concert when the Daughters of the

the Lincoln Memorial, but contrary to the

American Revolution refused her admit-

old song we were very much moved. The

Photo by Mary Vinograd

tance to Constitution Hall because of her

president was calling upon us to carry forth

One State College contingent to the historic inauguration included Jo Dumas, Ceci Marquette, Jade

color. It was where countless workers, sol-

Wright, Charles Dumas and Grace Githaiga, a Humphrey Fellow from Kenya.

“the great gift of freedom.” But unlike pre-

diers, protesters, million man marchers,

vious administrations that had said similar

need to bring change, but that change must

We arrived in Washington early on

poor people, religious people, students,

sentiments as a call to an evangelical impe-

begin with ourselves. At least that is what

Saturday night to avoid the crowds they told

rialism, this president seemed to be issuing

we Obama marchers in D.C. and billions of

us were coming. We were lucky we had a rel-

a call for a movement of regeneration. We

others around the world hoped.

ative in nearby Bethesda. Already several

see Inauguration , pg. 7

February 2009

—Back up systems in case of electrical or

Although generally speaking, suppliers

equipment failure.

were required to provide free service for the

from Oxygen , pg. 3

—Accreditation with an approved profes-

remaining two years, in some instances

access to medical oxygen, she is able to play

sional association, an expensive and detailed

MIPPA, as interpreted by the regulators,

with her 8-year old grandson Ryan. As she

process for proving to Medicare and other

made allowances for reimbursing certain

sews Indiana Jones costumes and fits Ryan

insurance providers that the supplier has the

costs. One allowed cost was the refilling of

with superhero masks in her McAlvey’s Fort

knowledge, personnel and procedures in

oxygen cylinders during the last two years of

home, a 45-pound concentrator directs air

place to serve medical oxygen customers.

the contract. Oxygen cylinders give patients

with a higher percentage of oxygen through

—Portability, allowing the customer to

the ability to leave the house. Previously,

tubing going to a device positioning the tube

switch service providers at any time any-

under the safety net, cylinders were delivered

into her nostrils. T&B; Medical provides

where in the United States and still receive

in unlimited numbers. Under MIPPA, regula-

Hawn with a respiratory therapist who

the full range of respiratory services.

tors implemented a low reimbursement fee

checks the oxygen concentration of the air

The centerpiece of the medical oxygen

with burdensome requirements. Several sup-

and makes necessary adjustments so that it

supplier system was the monthly rental of

pliers decided that for budget reasons they

matches Hawn’s prescription. Such services

oxygen concentrators. The supplier owned

would limit the number of cylinders provid-

make it possible for Hawn to breathe. She

the concentrator and rented it to the patient

ed to customers in that fourth and fifth year.

prefers to move around her house connected

(or more accurately the insurance company)

Hawn, the grandmother from McAlvey’s

to the concentrator by up to 50 feet of tubing.

for about $200 a month. In return for the

Fort, estimates that each portable cylinder

Three years ago, if a four-year old concen-

rental, the supplier encouraged patients able

lasts her three hours. She is now limited to

trator stopped working properly, Medicare

to leave their homes to do so by providing

six cylinders per month.

paid suppliers to provide immediate service.

without charge relatively lightweight cylin-

“This means I can’t go outside as much as

Now, Medicare will reimburse the supplier

ders and supplied (without additional charge)

I like,” she said. Her mobility is also affected

Photo by Doug Bauman

for maintenance twice a year up to $60, hard-

the other services as a package.

by complicated new procedures making it

Without proper oxygen supplies and maintenance

ly enough for gas money, regardless of how

Then Medicare reduced the payment to

difficult for patients to receive technological-

Margaret Hawn cannot get out of the house or

much work is required and how far the sup-

tend to her grandson.

oxygen suppliers from $200 a month in 2006

ly improved and easier-to-use equipment.

plier has to travel. And Medicare no longer

to $176 a month in 2009. In addition, under

Hawn said she would prefer having a rela-

pays for tubing and other supplies. One sup-

form during the second Clinton

the current Medical Improvements for

tively new portable concentrator (weighing

plier said Medicare told him to instruct cus-

Administration. The Bush Administration

Patients and Providers Act

(MIPPA),

less than 10 pounds).

tomers to call 911 and go to the emergency

adopted this practice because doing so gener-

Medicare obliged suppliers to honor the

room if they have trouble breathing.

ally does not require Congressional approval.

terms of a five-year contract, but only paid

see Oxygen , pg. 5

Communication between Medicare and

Also, efficiently-used regulatory authority is

them for three.

suppliers is so inadequate that in December

considerable and accountability limited.

2008 the Pennsylvania Association of

CMS’s Keiser is a regulator whose word

Medical Suppliers held a statewide work-

has become law when it comes to deciding

shop for its members where experts clarified

what oxygen-related services Medicare will

the regulatory environment. More than 100

pay for and what procedures suppliers must

members attended to hear how and why their

meet to get paid. Keiser’s office had delayed

once-lucrative businesses had, over a three-

issuing regulations. Instead, he has held peri-

year period, become money-losers.

odic conference calls with Cuervo,

The suppliers listened as Asela Cuervo, a

Bachenheimer and others to give them a

Washington-based healthcare attorney and

sense of Medicare’s direction.

Cara Bachenheimer, an attorney and senior

“The problem was that one day Keiser

vice president for government relations at

would tell us one thing and the next day he

Invacare (a major equipment manufacture)

would say exactly the opposite,” Cuervo

described their conference calls with Joel

explained to the oxygen suppliers. “That left

Keiser, deputy director for Durable Medical

us very confused and with no sense of direc-

Equipment, Prosthetics/Orthotics and

tion.”

Supplies at the Centers for Medicare and

Medicaid Services (CMS).

The safety net erodes

CMS issues Medicare regulations. In

Until three years ago, each oxygen suppli-

December, the old law governing Medicare

er provided basic services which formed a

oxygen services (the Deficit Reduction Act

safety net for home oxygen patients:

of 2005, signed in 2006) was expiring and

—A concentrator which weighed 40 to 60

the new law passed last the summer (the

pounds and filled a room with additional

Medicare Improvements for Patients and

oxygen per the physician’s prescription.

Providers Act) was about to take effect. Both

—An on-staff respiratory therapist who

laws left to regulators the responsibility for

traveled to the patient’s home to make sure

formulating policy

(a function generally

the oxygen level is correct.

regarded as a Congressional prerogative) and

—Maintenance people, plus trucks and

for supplying details necessary to keep oxy-

equipment, capable of fixing concentrators,

gen suppliers operating day-to-day.

available 24 hours a day, seven days a week.

The National Journal refers to what has

—Oxygen cylinders that gave the patient

now become a widespread practice as “gov-

the ability to leave home. Suppliers refilled

ernment by regulators,” turned into an art

and delivered cylinders.

February 2009

The critical language of the law reads:

law gave ownership of condensers to patients

Benner Pike location, serves

171 oxygen

“Payment for oxygen equipment (including

after three years, effectively dismantling the

patients in Centre County area and 1,000

from Oxygen , pg. 4

portable oxygen equipment) under this para-

safety net. In a remarkably vague manner,

patients throughout the Commonwealth.

“The paperwork would be a nightmare and

graph may not extend over a period of con-

given the drastic action the Bush

—American HomePatient, Inc. is a public

I doubt we could get it through,” explained

tinuous use (as determined by the Secretary

Administration had taken, the law required

corporation based in Brentwood, Tenn. As of

supplier Travis Barr at T&B; Medical.

[of Health and Human Services]) of longer

patients, suppliers, and Medicare to figure

Sept. 30, 2008, American Homepatient had

than

36 months…. On the first day that

out how to make the patient-owned con-

annual revenues of

$353 million.

Media interest was intense when MIPPA

begins after the 36th continuous month dur-

densers work, what other respiratory servic-

Nationwide, the company has 2,362 full-

passed Congress last summer, especially

ing which payment is made for the equip-

es were required and how much to pay for

time employees, providing home services to

when Sen. Edward Kennedy, in the midst of

ment under this paragraph, the supplier of

them.

patients through 245 centers in 33 states.

brain cancer treatment, appeared on the floor

the equipment shall transfer title to the

“The idea seems very simple if you look at

One of these centers is on Commercial

of the Senate against his physicians’ advice

equipment to the individual.

the numbers,” Shirvinsky, of the

Boulevard in State College and serves some

and succeeded in getting Congress to over-

‘‘After the supplier transfers title to the

Pennsylvania Association of Medical

2,800 local patients, by far the largest num-

ride President George Bush’s veto of the bill.

equipment…payments for oxygen shall con-

Suppliers, explained.

“You look at the

ber of home medical oxygen patients in

Kennedy’s efforts were geared toward

tinue to be made… for the period of medical

Internet; you can buy an oxygen concentrator

Centre County.

reversing a decline in pay for physicians, a

need; and…maintenance and servicing pay-

for $600.” On the other hand the cost of rent-

Even corporate giant American

major feature of MIPPA, but MIPPA also

ments shall, if the Secretary determines such

ing it for a year was $2,400 (a rate which has

Homepatient, Inc. has been suffering finan-

contains the current Medicare legislation set-

payments are reasonable and necessary, be

since been significantly reduced). So, on the

cially. In the past three years, the company’s

ting medical oxygen policy.

made (for parts and labor not covered by the

face of it, Medicare—and by extension the

stock has dropped from $3 a share to 17

MIPPA made relatively modest changes to

supplier’s or manufacturer’s warranty, as

taxpayers—would enjoy significant savings

cents a share according to Securities and

the oxygen provisions hidden in the massive

determined by the Secretary to be appropri-

if the patient bought a concentrator for $600

Exchange Commission filings.

Deficit Reduction Act of 2005 (DRA). The

ate for the equipment), and such payments

rather than rent it for $2,400 a year.

Until three years ago, home users of med-

DRA included provisions to protect arctic

shall be in an amount determined to be

“The other way of looking at it,”

ical oxygen were assured reliable services

wildlife, prepare the public for digital televi-

appropriate by the Secretary…”

Shirvinsky said, “is that the UPS guy can

without having to worry about the details.

sion transmission and fund agriculture. The

The power to pay or not to pay now

deliver the concentrator. What the patient has

Physicians signing certificates of medical

Bush Administration rammed the legislation

resided with the Secretary of Health and

is a box which must be unloaded, installed,

necessity could trust that their patients’needs

through Congress in the hopes that damage

Human Services, and what Medicare used to

maintained and fit with the proper tubing etc.

were being met when their nurses at Centre

done to the safety net for oxygen users would

rent from suppliers, patients would now own.

Generally, the patient is elderly or disabled

Medical and Surgical Associates, social

go unnoted. That damage was done in less

The law went into effect more than a

and requires oxygen,” he added, implying the

workers at Mt. Nittany Medical Center or

than a page of the 1,010-page bill.

month before President Bush signed it. The

patient has neither the endurance nor the

other professionals called one of the three

expertise to set up the equipment.

local medical oxygen suppliers.

The immediate impact of the Medicare

The threat to suppliers

changes has been on Centre County’s three

Centre County’s three oxygen suppliers

oxygen suppliers who have tried to protect

exemplify the range of suppliers in the indus-

their customers and the medical community

try:

from the effect of Congress’ on-going efforts

NEW RECYCLED SMART

—T&B; Medical has six employees

to slash the $431 billion a year Medicare pro-

including local owners Travis and Barbara

gram, costs that Medicare opponents refer to

Barr. For the past eleven years, T&B; Medical

“out of control.” Oxygen and other

has been operating out of a single location,

durable medical equipment, including

on South Atherton. T&B; Medical serves 48

wheelchairs, power chairs, and walkers,

oxygen patients.

accounted for $7 billion, or less than 2 per-

—Dick’s Home Care has been a family-

cent of the total. Medicare is federal insur-

owned business since 1929. Dick’s is based

ance for the elderly and disabled who are

in Altoona and has seven homecare locations

and three pharmacies in 13 Pennsylvania

see Oxygen , pg. 6

counties. Dick’s employs seven people at its

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