Cuts to Home Respiratory Care Providers Endanger Medicare Seniors’ Health

In the U.S. today, more than 24 million Americans live with Chronic Obstructive Pulmonary Disease, and many more have other respiratory conditions that make it difficult to enjoy daily life. Thankfully, home respiratory therapies — such as home oxygen, home sleep, and home ventilation therapies — provide individuals living with these conditions the access to care which allows them the opportunity to remain in their own homes and communities and to continue to enjoy the dignity of living independently. Unfortunately, recent rule changes by the Centers for Medicare & Medicaid Services threaten this access to care and impede oxygen therapy access for vulnerable seniors who depend on these services to remain in their own homes.

In the past few months, CMS implemented new reimbursement procedures, which cut the reimbursement rate for home respiratory care delivered in rural America and other less-densely populated areas by more than 50 percent.  These drastic cuts are the result of CMS unfairly applying competitive bid rates in rural communities that Congress expressly excluded from the broader competitive bid program. Further, government reports show that many bidding providers were not compliant with the qualifications established by CMS, yet CMS awarded contracts to these unqualified bidders. As a result, the median award price was artificially lowered, causing dramatic price reductions, sometimes exceeding 50 percent, even though those bidders are not able to service markets they won.

As a result, many providers have been forced to cut back on services, limit product choice, decline to take on new patients, or lay off employees — all of which negatively impact Medicare seniors in rural areas. These short-sighted cuts, based on pricing derived from a bidding program for home medical equipment in major metropolitan areas, fail to consider the differences between serving rural and urban regions, including the distance of delivery routes and the associated higher costs in fuel and staff time.

On top of cuts to services for Medicare patients living in rural areas, CMS compounded these challenges by further reducing fee schedules on oxygen concentrators used in the home. In applying these cuts, CMS is misinterpreting a 2006 budget requirement from Congress, which was enacted to reduce payment for certain oxygen equipment in favor of other equipment. However, the budget neutrality provision applied to the old fee schedule specifically and should not have been applied to the new fee schedule CMS adopted on Jan. 1, 2016. Therefore, home oxygen providers in urban and rural areas, are facing additional cuts of approximately 11 percent due to the government’s misinterpretation of Congress’s directive.

I am deeply troubled that CMS does not seem to fully recognize the problems beneficiaries could experience because of these cuts.  A comparison of patient data from 2008 (the year before Medicare implemented competitive bidding) and 2014 shows that the number of Medicare beneficiaries receiving home oxygen therapy has measurably declined, while the number of beneficiaries diagnosed with COPD has measurably increased.  This is very concerning.

According to data from the Medicare, 5 Percent Standard Analytic File and the Part B National Summary File, the percentage of the Medicare population receiving home oxygen services declined by 42 percent between 2008 and 2014. Over that same period, the total Medicare population grew by 19 percent. The numbers are even worse when analyzing the increase in COPD diagnoses.  Over this period, the Medicare aged population experienced a 59 percent increase in COPD diagnoses, the main indicator for prescribing home respiratory care. Yet, what’s more troubling is that the percentage of Medicare patients with COPD receiving home oxygen therapy declined from 30 percent to less than 15 percent over this same period.

I support Medicare’s goal to deliver savings to the taxpayer. However, the unintended consequence of these rule changes mean that more seniors will lose access to a therapy that is the best and most cost-effective way to manage their respiratory conditions.

But now, rather than receive these services at home, patients must get them in the hospital setting, which ultimately results in higher Medicare costs. Home respiratory therapy is the preferred care of Medicare beneficiaries who would like to age in place while maintaining quality of life. Data show that home oxygen care reduces preventable hospitalizations and readmissions, which suggests that reducing access to it will only lead to more emergency room visits, higher readmission rates and much higher Medicare costs.

When the federal government changes the rules mid-way through the game, Medicare seniors end up suffering. They pay the price through lower quality product options and limited services to help with the products they purchase. This latest round of cuts to home oxygen therapy shows that Medicare has decided to prioritize short-term savings on home respiratory therapy over the best care options for our seniors and the higher costs of higher hospital readmission rates because seniors may no longer have adequate access to care.

I urge lawmakers in Congress to reach out to CMS and ask them to implement these Medicare rules correctly, so that older Americans who rely on home respiratory care can remain at home and lead quality lives.


Timothy C. Pigg is president and CEO of Rotech Healthcare Inc.

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