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
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
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
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
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
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
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
from the effect of Congress’ on-going efforts
—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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