Access to Home Oxygen Equipment Is Substantially Unchanged

Preliminary information indicates that access to home oxygen equipment remains largely unchanged, despite the 25-percent Medicare payment reduction that took effect in January 1998. This trend is observed in the aggregate data, which show that claims for liquid stationary systems declined by approximately 12 percent between the first half of 1997 and the first half of 1998. For example, claims data do not identify the types of portable tanks provided to beneficiaries. The hospital discharge planners and suppliers we talked with said they were able to make arrangements with suppliers for all patients with high-liter-flow needs. Overall, the number of Medicare home oxygen suppliers has declined by about 6.5 percent since the January 1998 payment reduction. HCFA Is Not Doing All It Can to Assess and Ensure Access to Home Oxygen

In a November 1997 report, we made several recommendations to HCFA about its implementation of the BBA provisions, including that it monitor trends in Medicare beneficiaries’ access to the various types of home oxygen equipment; restructure the modality-neutral payment, if warranted; educate prescribing physicians about their right to specify the home oxygen systems that best meet their patients’ needs; and establish service standards for home oxygen suppliers. HCFA Has Contracted for an Evaluation of Access to Home Oxygen

As required by the BBA, HCFA has contracted with a PRO to evaluate access to and quality of home oxygen equipment and services provided to Medicare patients. Changes in supplier practices will be an indicator of the impact of the payment reduction. Results from the PRO study are not expected until January 2000. Service standards would define what Medicare is paying for and what beneficiaries should expect from suppliers. Standards are even more important as suppliers respond to reduced payment rates. The PRO study HCFA has contracted for will provide a more in-depth look at this issue. Recommendations

We recommend that the Administrator of HCFA do the following: monitor complaints about and analyze trends in Medicare beneficiaries’ use of and access to home oxygen equipment, paying special attention to patients who live in rural areas, are highly active, or require a high liter flow; on the basis of this ongoing review, as well as the results of the PRO study, consider whether to modify the Medicare payment method to preserve access; and make development of service standards for home oxygen suppliers an agency priority in accordance with the BBA’s requirement to develop such standards. HCFA acknowledged that it has not developed specific service standards for the home oxygen benefit as required by law.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO provided information on Medicare beneficiaries' access to home oxygen equipment, focusing on: (1) changes in access to home oxygen for Medicare patients since the payment reduction mandated by the Balanced Budget Act (BBA) of 1997 took effect; and (2) actions taken by the Health Care Financing Administration (HCFA) to fulfill the BBA requirements and respond to GAO's November 1997 recommendations.

What GAO Found

GAO noted that: (1) preliminary indications are that access to home oxygen equipment remains substantially unchanged, despite the 25-percent reduction in Medicare payment rates that took effect in January 1998; (2) the number of Medicare beneficiaries using home oxygen equipment has been increasing steadily since 1996, and this trend appears to have continued in 1998; (3) while Medicare claims for the first 6 months of 1998 showed a decrease in the proportion of Medicare patients using the more costly stationary liquid oxygen systems, this decline was consistent with the trend since 1995; (4) hospital discharge planners and suppliers GAO talked with said that even Medicare beneficiaries who are expensive or difficult to serve are able to get the appropriate systems for their needs; (5) further, suppliers accepted the Medicare allowance as full payment for over 99 percent of the Medicare home oxygen claims filed for the first half of 1998; (6) although these indicators do not reveal access problems caused by the payment reductions, issues such as sufficiency of portable tank refills and equipment maintenance could still arise; (7) HCFA has responded to only one BBA requirement; (8) as required by the BBA, HCFA has contracted with a peer review organization (PRO) for an evaluation of access to, and quality of, home oxygen equipment; (9) results from this evaluation are not expected before 2000; (10) meanwhile, HCFA has not implemented an interim process to monitor changes in access for Medicare beneficiaries--a process that could alert the agency to problems as they arise; (11) although not required by the BBA, such monitoring is important because of the life-sustaining nature of the home oxygen benefit; (12) until HCFA gathers more in-depth information on access and the impact of payment reductions, HCFA cannot assess the need to restructure the modality-neutral payment; (13) HCFA has not yet implemented provisions of the BBA that require service standards for Medicare home oxygen suppliers to be established as soon as practicable; and (14) service standards would define what Medicare is paying for in the home oxygen benefit and what beneficiaries should expect from suppliers.