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Date: Friday, July 11, 1997 FOR IMMEDIATE RELEASE Contact: HCFA Press Office (202) 690-6145
The proposal would reduce payments by 40 percent and bring them close to the amount currently being paid by the Department of Veterans Affairs. This reduction is based on HCFA's legal authority to adjust payments that are inherently unreasonable. It also is consistent with legislation passed by the Senate. If Congress enacts legislation to cut home oxygen rates, it will supersede this proposal. "The General Accounting Office and congressional hearings have confirmed that Medicare payments for home oxygen are excessive. In part, that is because HCFA is prohibited by law from using competitive bidding to get the best price," said HCFA Administrator Bruce C. Vladeck.
Current rates paid for home oxygen equipment and supplies are based on formulas set in law and not on competitive rates. The Clinton administration has proposed legislation to allow competitive bidding in Medicare, but until Congress changes the law HCFA must use the formula set in law or determine that payment rates are inherently unreasonable.
The Department of Veterans Affairs, which is allowed to use competitive bidding to get a fair market rate, pays far less than Medicare for the very same services and supplies. For example, in 1994, the VA paid on average $126 for an oxygen concentrator and portable system for which Medicare paid approximately $325.
"All the evidence from General Accounting Office and HHS Inspector General studies convinces us that efficient providers will continue to compete to serve Medicare beneficiaries at these prices," said Vladeck.
The proposal to revise Medicare payment rates for home oxygen equipment and supplies is going on display at the Federal Register today. Public comments will be accepted for 60 days after publication. A final rule will set the date for implementing the corrected payment rates unless Congress acts before then to reduce payment rates by law.