Comparison of Medicare and VA Payment Rates for Home Oxygen

HEHS-97-120R: Published: May 15, 1997. Publicly Released: May 16, 1997.

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William J. Scanlon
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Pursuant to a congressional request, GAO compared the rates paid for home oxygen by Medicare and the Department of Veterans Affairs (VA).

GAO noted that: (1) Medicare's fee schedule allowances for home oxygen are significantly higher than the rates by VA, which uses competitive contracting arrangements; (2) Medicare's monthly rate, including allowances for portable units, was about $320 for each home oxygen patient for the first quarter of fiscal year (FY) 1996; (3) during that same period, VA paid about $155 per month for each patient, according to GAO's analysis of all oxygen supplies, services, and portable units provided to a nationwide sample of 5,000 VA patients; (4) GAO analyzed differences between the Medicare and VA oxygen programs that could make servicing a Medicare patient more costly than servicing a VA patient; (5) GAO's analysis included consideration of the administrative burden associated with filing Medicare claims; (6) on the basis of this analysis, GAO concluded that adding a 30-percent adjustment to VA's payment rates adequately reflects the higher costs suppliers incur when servicing Medicare beneficiaries; (7) the VA payment rate, after the 30 percent adjustment, was about $200 per month, or $120 less than Medicare; and (8) if Medicare had paid oxygen suppliers at the adjusted VA rates, the Medicare program would have saved over $500 million in FY 1996.

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