Fact Sheets

CMS FACT SHEET ON THE DEFICIT REDUCTION ACT PROVISION ON OXYGEN

Section 5101(b) of the Deficit Reduction Act (DRA) modifies Medicare payment for oxygen equipment.  Concerns have been raised about this provision.  The facts are:

• The DRA provision would cap the time period that Medicare will make monthly rental payments for oxygen equipment at 36 months.  After 36 months, the beneficiary will own the oxygen equipment, and neither Medicare nor the beneficiary will have to make any more rental payments.
• After the beneficiary owns the equipment, the DRA provision requires Medicare to pay for reasonable and necessary service and maintenance that is not covered by a manufacturer’s warranty.  Except as specifically provided by the Medicare statute, Medicare only pays for items and services that are reasonable and necessary.  The language does not give the Secretary discretion to deny payment for reasonable and necessary service and maintenance.
• The DRA also requires Medicare to continue to pay for gas and liquid oxygen contents for beneficiaries using stationary or portable oxygen tanks and cylinders after the beneficiary using that equipment owns it. 
• The DRA provides for a new 36 month rental cap period beginning January 1, 2006 for all beneficiaries using oxygen equipment. Thus, a new 36 month rental cap period would apply both to beneficiaries starting to use the equipment as well as for beneficiaries who have been using it for several years.