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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules state that initial coverage of home oxygen therapy and oxygen equipment is reasonable and necessary 
for Groups I and II if all of the following conditions are met: 
 
The treating practitioner has ordered and evaluated the results of a qualifying blood gas study performed at the 
time of need; and, 
The beneficiary's blood gas study meets the criteria stated below; and, 
The qualifying blood gas study was performed by a treating practitioner or by a qualified provider or supplier 
of laboratory services; and, 
The provision of oxygen and oxygen equipment in the home setting will improve the beneficiarys condition. 
Time of need is defined as during the patients illness when the presumption is that the provision of oxygen 
will improve the patients condition in the home setting. For an inpatient hospital patient anticipated to require 
oxygen upon going home, the time of need would be within 2 days of discharge. 
 
NOTE: When applicable, the beneficiarys medical record must have documentation that describes any 
concerns for variations in oxygen measurements that may result from such factors as the patient's age, the 
patients skin pigmentation, the altitude level, or a decrease in oxygen carrying capacity. 
 
In this policy, the term blood gas study refers to either an oximetry test or an arterial blood gas test. 
 
Group I criteria include any of the following: 
 
An arterial PO2 at or below 55 mm Hg or an arterial oxygen saturation at or below 88 percent taken at rest 
(awake) while breathing room air; or, 
An arterial PO2 at or below 55 mm Hg, or an arterial oxygen saturation at or below 88 percent, taken during 
sleep for a beneficiary who demonstrates an arterial PO2 at or above 56 mm Hg or an arterial oxygen saturation 
at or above 89 percent while awake. In this instance, oxygen and oxygen equipment is only reasonable and 
necessary during sleep; or, 
A decrease in arterial PO2 more than 10 mm Hg, or a decrease in arterial oxygen saturation more than 5 
percent from baseline saturation, taken during sleep and associated with symptoms of hypoxemia such as impairment of cognitive processes and nocturnal restlessness or insomnia (not all inclusive). In this instance, 
oxygen and oxygen equipment is only reasonable and necessary during sleep; or, 
An arterial PO2 at or below 55 mm Hg or an arterial oxygen saturation at or below 88 percent, taken during 
exercise for a beneficiary who demonstrates an arterial PO2 at or above 56 mm Hg or an arterial oxygen 
saturation at or above 89 percent during the day while at rest. In this instance, portable oxygen and oxygen 
equipment is only reasonable and necessary while awake and during exercise. 
Group II criteria include all of the following: 
 
An arterial PO2 of 56-59 mm Hg or an arterial blood oxygen saturation of 89 percent; and, 
Any of the following: 
Dependent edema suggesting congestive heart failure; or, 
Pulmonary hypertension or cor pulmonale, determined by measurement of pulmonary artery pressure, gated 
blood pool scan, echocardiogram, or "P" pulmonale on EKG (P wave greater than 3 mm in standard leads II, 
III, or AVF); or, 
Erythrocythemia with a hematocrit greater than 56 percent. 
 
You can find this information in the Local Coverage Determination (LCD) Oxygen and Oxygen Equipment 
L33797. 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.