May 16, 2011--Oxygen Concentrator

I have a friend who is quite old and has a chest cold. This is a dangerous condition for someone his age and he has been told to spend much of the day, until his lungs clear, hooked up to an oxygen concentrator.

It is a device that provides oxygen to a patient at substantially higher concentrations than is available in ambient air and is considered to be a safer, less expensive, and more convenient alternative to tanks of compressed oxygen.

He has had one in his house now for about three-and-a-half years and uses it when he has a cold or experiences shortness of breath.

It was obtained from a medical supply company and paid for by Medicare.

When I told another friend about this, she asked if I knew how much it cost since she has a cousin who, she feels, could benefit by having occasional access to doses of oxygen. So I asked the company that provides the concentrator to my elderly friend.

They told me he does not own it, that it is leased, and Medicare is billed $175 a month for it.

Curious to learn more, I turned to Goggle where I quickly learned that $176 is the national monthly average for leasing one of these devices, but that one can also buy them for about $600.

A little quick arithmetic showed that in less than four months it costs more to rent than buy one. And that my friend’s has thus far cost Medicare—in other words, taxpayers—more than $ 7,000!

Additional research revealed that in February 2011, the General Accounting Office compared Medicare reimbursement rates for oxygen concentrators with those of eight private insurers and the Department of Veterans Affairs.
According to the report:

The eight private insurers GAO interviewed used payment methodologies similar to Medicare’s, but seven did not use a rental cap. If Medicare had used the methodologies and payment rates of the lowest-paying private insurer, it could have saved about $670 million of the estimated $2.15 billion it spent on home oxygen in 2009. Using the VA’s payment methodology, savings could have been approximately $410 million to $810 million. Basing Medicare’s national rates on data from CMS’s competitive bidding program 2011 rates could have saved $700 million. Since beneficiaries pay 20 percent of the payment, lower rates could have reduced beneficiary spending.

So I next turned to electric wheelchairs, those motorized mini-vehicles that are heavily advertised on television. My mother-in-law had one and they are terrific. How much do they cost, I wondered, and how good a deal are taxpayers getting?

I was sadly not surprised to find that power-driven wheelchairs are costing Medicare and its beneficiaries nearly four times what suppliers pay for them and, according to an inspector general's report, competitive bidding could reduce those costs.
According to the Department of Health and Human Services' internal watchdog, a standard power wheelchair costs Medicare and Medicaid an average of $4,018 to lease, compared with $1,048 for suppliers to buy.

The report found that "Medicare and its beneficiaries paid suppliers an average of $2,970 beyond the suppliers’ acquisition cost to perform an average of five services [such as delivery and repairs associated with the wheelchair] and cover general business costs." It was estimated that at least a billion dollars a year could be saved if effective competitive bidding were required.

So, in 15 minutes of Googling, prior to this not knowing anything about these matters, I found nearly $2.0 billion in health care savings that could be implemented if we would get just our oxygen concentrator and electric wheelchair act together.

I know the upcoming debate about cutting the federal deficit will certainly include ways to reduce waste, fraud, and abuse from the health care system. Leased medical equipment is one obvious place to start. That is if the medical equipment lobbyists are kept out of the room.

I’m taking bets as to how likely that will be. Any takers?