Department of Health and Human Services 
OFFICE OF 
 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
R 2 C
  OUND    OMPETITIVE 
 
B O :
IDDING FOR  XYGEN  
 
 
C A V
ONTINUED  CCESS FOR  AST 
 
 
M B  
AJORITY OF  ENEFICIARIES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
Suzanne Murrin  
Deputy Inspector General for 
Evaluation and Inspections 
May 2018 
OEI-01-15-00041 
  Report in Brief   U.S. Department of Health & Human Services 
May 2018 
Office of Inspector General 
 
OEI-01-15-00041 
 
   
Round 2 Competitive Bidding for Oxygen: 
Why OIG Did This Review 
Continued Access for Vast Majority of 
The Competitive Bidding Program changed 
Beneficiaries  the way Medicare pays for DME, and it is 
Key Takeaway  important to understand how this change 
What OIG Found  Round 2 of the Competitive  may have affected beneficiary access to 
The vast majority of beneficiaries who in 2013 started  Bidding Program does not  needed DME.  Medicare established the 
using oxygen equipmentincluding compressed gas  appear to have disrupted  program to combat fraud, waste, and abuse 
systems, liquid oxygen systems, and oxygen  beneficiary access to oxygen  in the provision of DME.  The program 
concentratorsappeared to have continued access to  equipment or contents.  The vast  replaced a fee schedule with a competitive 
this equipment after Round 2 of the Competitive  majority of beneficiaries who  bidding process to set Medicare 
Bidding Program began in July 2013.  After Round 2  started using oxygen equipment  reimbursement amounts for certain types of 
began, Medicare payments for equipment continued  in 2013 and who used contents  DME. 
for 86 percent of beneficiaries in Round 2 competitive  in 2013 appeared to have 
In a letter to the Office of Inspector General 
bidding areas (CBAs) and 89 percent of beneficiaries in  continued access to them after 
(OIG), Members of Congress expressed 
areas that were not CBAs (which we refer to as  Round 2 began.  Beneficiaries 
concerns about the programs effect on 
non-CBAs).  These rates are consistent with the  who received oxygen equipment 
88 percent of beneficiaries for whom Medicare  and contents in the first half of  access to DME and requested that OIG 
payments for oxygen equipment continued over the  2013 continued to receive them  study this issue. 
same timeframe in 2012, 1 year prior to Round 2 of  at a similar rate in Round 2 CBAs 
competitive bidding.  and in nonbidding areas after  How OIG Did This Review 
Round 2 began.   We used Medicare claims to identify two 
Our surveys of physicians and beneficiaries provided 
populations of beneficiaries for whom 
some anecdotal context for a sample of beneficiaries 
Medicare paid claims for oxygen 
for whom payments for oxygen equipment and/or oxygen contentscompressed and liquid 
oxygen refills for oxygen equipmentstopped.  For example, physicians told us that most  equipment and contents before Round 2 
beneficiaries still needed the equipment, and 5 of the 11 responding beneficiaries reported  of the Competitive Bidding Program 
continued use of equipment.  started in 2013.  The first population 
included those with paid claims for oxygen 
For oxygen contents, we found that the vast majority of beneficiaries appeared to have 
equipment; the second, those with paid 
continued access to them after Round 2 began in July 2013.  Medicare payments for contents 
claims for oxygen contents.  Using 
continued for 86 percent of beneficiaries in Round 2 CBAs and for 88 percent in non-CBAs.  
discontinued payments after Round 2 
These rates are almost identical to the 87 percent of beneficiaries for whom Medicare 
began as a proxy for disrupted access 
payments for contents continued over the same timeframe in 2012.  
within each population, we compared the 
As they did with regard to oxygen equipment, our physician and beneficiary surveys provided  rates of discontinued payments in Round 
some potential insights for a sample of beneficiaries without continued payments for contents.  
2 CBAs and non-CBAs.  We also analyzed 
In our physician and beneficiary surveys, the majority of physicians in both Round 2 CBAs and 
Medicare claims data from 2012 to 
non-CBAs told us that the beneficiaries still needed contents after Round 2 began, and 
determine how often Medicare payments 
responding beneficiaries reported getting contents when they needed them.  
stopped for beneficiaries who were 
What OIG Concludes  receiving oxygen equipment or oxygen 
The Competitive Bidding Program aims to combat fraud, waste, and abuse; improve the  contents in the last full year prior to 
methods for setting payments for durable medical equipment (DME); and create cost savings for  Round 2 of the program.  In addition, we 
Medicare and its beneficiariesall while maintaining beneficiary access to needed DME.  Our  drew samples of beneficiaries for whom 
analysis for this report supports the conclusion that the vast majority of beneficiaries had  Medicare payments for oxygen equipment 
continued access to oxygen equipment and contents after Round 2 began.  However, we did  and contents stopped after Round 2 
find that the percentage of beneficiaries for whom Medicare payments for oxygen equipment  began.  We then sent surveys to the 
and contents did not continue was slightly higher in Round 2 CBAs than in non-CBAs.  This  physicians who had ordered oxygen for 
difference may or may not indicate disruptions in receiving needed oxygen equipment and  these beneficiaries and to some of the 
contents.  For example, this difference may indicate that the program reduced the provision of  beneficiaries to learn about their 
unnecessary oxygen equipment and contents, as the Centers for Medicare & Medicaid Services  experience after Round 2 began.  
determined to be the case with Round 1 of the program. 
Full report can  be found at oig.hhs.gov/oei/reports/oei-01-15-00041.asp 
     
TABLE OF CONTENTS 
 
Objective ......................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................7 
Findings...................................................................................................... 11 
The start of Round 2 does not appear to have disrupted access to 
oxygen equipment for the vast majority of beneficiaries............... 11 
The start of Round 2 does not appear to have disrupted access to 
oxygen contents for the vast majority of beneficiaries ..................14 
Conclusion .................................................................................................17 
Agency Comments and OIG Response......................................................17 
Appendices .................................................................................................18 
A:  Agency Comments ...................................................................18 
B:  Detailed Methodology ..............................................................19 
Acknowledgments......................................................................................28 
 
     
OBJECTIVE 
To determine whether Round 2 of the Competitive Bidding Program 
(CBP) appeared to disrupt beneficiary access to oxygen equipment and 
contents. 
BACKGROUND  
The Medicare Prescription Drug, Improvement, and Modernization Act of 
2003 mandated the establishment of the CBP as one of several efforts 
aimed at combating fraud, waste, and abuse.1  For selected categories of 
durable medical equipment (DME), this program replaces a fee-schedule 
payment methodology with a competitive bidding process in certain areas 
of the country.  The goal of the program is to improve the methodology for 
setting DME payment amounts in a way that creates cost savings for 
Medicare and its beneficiaries while maintaining beneficiary access to 
quality items and services.  The Centers for Medicare & Medicaid 
Services (CMS) has reported that the CBP is a success; however, Congress 
and other stakeholders have raised concerns about the programs impact 
on beneficiary access to DME. 
In a July 2014 letter to the Office of Inspector General (OIG), 
138 Members of Congress expressed concerns about the CBPs effect on 
Medicare beneficiary access to DME.  The letter suggested that 
noncompliance of contracted suppliers in the CBP is affecting the quality 
and choice of DME available to beneficiaries and requested that OIG 
study the CBPs effect on access to DME. 
In a report issued in May 2016, CMS concluded that the CBP was saving 
money for Medicare and its beneficiaries without compromising access to 
DME.  In that report, CMS stated that the CBP had saved about 
$3.6 billion and had not had any negative impact on beneficiary health 
outcomes.2  CMS conducts real-time data analysis to monitor the health 
status of beneficiaries served by the CBP, and as of the end of June 2017, 
CMS reported that it had not observed any negative changes in beneficiary 
 
1 Medicare Prescription Drug, Improvement, and Modernization Act of 2003.  P.L. No. 
108-173  302(b). 
2 CMS, Providing Quality, Affordable Durable Medical Equipment for Beneficiaries.  
Accessed at https://wayback.archive-
it.org/2744/20161207130006/https:/blog.cms.gov/2016/05/17/providing-quality-
affordable-durable-medical-equipment-for-beneficiaries/ on April 26, 2017. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           1   
health outcomes.3  For its real-time data analysis, CMS monitors health 
outcomes such as deaths, hospitalizations, and emergency room visits, as 
well as the average number of days that beneficiaries spent hospitalized, 
among other data.  In addition, CMS estimated in 2012 that Round 1 of 
competitive bidding had reduced Medicare spending on oxygen equipment 
and contents (compressed and liquid oxygen refills for oxygen equipment) 
by nearly $60 million.4 
Overview of the Competitive Bidding Program 
Under the CBP, DME suppliers compete to contract with Medicare to 
supply selected DME items within specific geographic areas known as 
Competitive Bidding Areas (CBAs).  CMS and its Competitive Bidding 
Implementation Contractor evaluate a suppliers bid on the basis of the bid 
amount and several other criteria, including the suppliers eligibility and 
financial stability.5  
Pursuant to the Medicare Modernization Act, CMS established bidding in 
rounds, which CMS must recompete at least once every 3 years.6  Each 
round involves certain DME product categories and CBAs.  Each product 
category includes a group of related products that are used to treat 
a similar medical condition.  In January 2016, CMS began using pricing 
data from the CBP to set reimbursement rates for DME in areas of the 
country not subject to the CBP.7  (In this report, we refer to areas not 
subject to the CBP as non-CBAs.)  See Exhibit 1 below for details on 
the rounds of the CBP. 
   
 
3 CMS, Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive 
Bidding ProgramHealth Status Monitoring:  Summary of Findings thru the Second 
Quarter of 2017.  Accessed at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/Downloads/DME-Summary-of-Findings.pdf on 
November 16, 2017. 
4 CMS, Competitive Bidding UpdateOne Year Implementation Update, April 17, 2012.  
Accessed at https://www.cms.gov/medicare/medicare-fee-for-service-payment/ 
dmeposcompetitivebid/downloads/competitive-bidding-update-one-year-
implementation.pdf on October 26, 2016. 
5 CMS, DMEPOS Competitive Bidding  Home.  Accessed at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/index.html?redirect=/dmeposcompetitivebid/ on 
May 5, 2015. 
6 Social Security Act,  1847(b)(3)(B), 42 U.S.C.  1395w-3(b)(3)(B); 42 CFR 
 414.422(b). 
7 42 CFR  414.210(g). 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           2   
Exhibit 1: CBP Round Effective Dates, CBAs, and Product Categories 
CBP Round  Effective Dates  CBAs  Product Categories* 
Round 1 Rebid:8       9 to 13 CBAs  For the Round 1 Rebid  All Effective Dates:  Oxygen; 
Round 1 
Jan. 1, 2011  Dec. 31,  and Round 1 Recompete, 9 CBAs  CPAP/RAD devices and supplies; 
2013   covering the largest metropolitan  enteral nutrition; standard power 
statistical areas by population that did  wheelchairs; scooters; walkers; 
Round 1 Recompete:9   
not span multiple Medicare  hospital beds 
Jan. 1, 2014  Dec. 31,  Administrative Contractor jurisdictions,10 
2016  Some Effective Dates:  Complex 
but not including New York City,  
rehabilitative wheelchairs, 
Round 1 2017:           Los Angeles, and Chicago.  For  
standard manual wheelchairs, 
Jan. 1, 2017  Dec. 31,  Round 1 2017, to prevent multi-State 
support surfaces, mail-order 
2018  CBAs, CMS split 3 of the original 9 CBAs 
diabetes supplies, commode 
into multiple CBAs, for a total of 
chairs, patient lifts, seat lifts, 
13 CBAs. 
transcutaneous electrical nerve 
stimulation, external infusion 
pumps, nebulizers, negative 
pressure wound therapy pumps 
July 1, 2013   June 30,  100 to 117 CBAs  For Round 2,  Oxygen; CPAP/RAD devices and 
Round 2 
2016  100 CBAs, covering the next 91 largest  supplies; enteral nutrition; 
metropolitan statistical areas and  standard wheelchairs; walkers; 
Recompete:              
including New York City, Los Angeles,  hospital beds; support surfaces; 
July 1, 2016  
and Chicago, with each subdivided into  negative pressure wound therapy 
December 31, 2018 
multiple CBAs.  For the Round 2  pumps 
Recompete, 117 CBAs to prevent 
multi-State CBAs.   
National  July 1, 2013   June 30,  1 CBA  All parts of the United States, 
Diabetes testing supplies 
Mail Order  2016  including the 50 States, the District of 
Program  Columbia, Puerto Rico, the U.S. Virgin 
Recompete:              
Islands, Guam, and American Samoa. 
July 1, 2016  
December 31, 2018 
 
*Some product categories were renamed and combined from one contract cycle to the next.
Suppliers that rent equipment to beneficiaries and are not awarded a 
contract under the CBP mayunder a grandfather provisioncontinue 
renting those items to beneficiaries in CBAs to whom they were renting at 
the time the CBP was implemented.  Those suppliers may also provide 
related supplies to the beneficiaries to whom they are renting equipment.  
 
8 Round 1 was implemented in 2008 and discontinued 2 weeks later by the passage of the 
Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).  As required 
by MIPPA, the supplier competition was held again in 2009.  This 2009 competition is 
referred to as the Round 1 Rebid. 
9 The Round 1 Rebid included contracts for mail-order diabetes testing supplies, but those 
contracts ended in December 2012, and bidding for diabetes testing supplies moved to the 
National Mail Order Program.  CMS, Round 1 Rebid Mail-Order Diabetic Supply 
Contracts Ending on December 31, 2012.  Accessed at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ 
DMEPOSCompetitiveBid/Downloads/2012-12-14-DMEPOS.pdf on January 12, 2017. 
10 CMS, General Overview of the Final Rule for Competitive Acquisition for Certain 
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies, April 10, 2007.  
Accessed at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Payment/DMEPOSCompetitiveBid/Downloads/DMEPOSRegSumm.pdf on May 5, 
2015. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           3   
These noncontract suppliers are called grandfathered suppliers and must 
agree to meet certain conditions, including accepting assignment of 
Medicare payment as payment in full.11  Grandfathering is designed to 
support continuity of access to DME when an area transitions to the CBP. 
Medicare Coverage of Oxygen Equipment and Contents 
To be covered by Medicare, an item or service must be reasonable and 
necessary for the diagnosis or treatment of illness or injury or to improve 
the functioning of a malformed body part.12  Medicare considers oxygen 
equipment and contents to be reasonable and necessary for beneficiaries 
diagnosed with significant hypoxemia (i.e., abnormally low levels of 
oxygen in the blood) who meet certain requirements for medical 
documentation, laboratory evidence, and health conditions.13 
Medicare pays for oxygen equipment through monthly rental payments.  
Payments for oxygen equipment may last up to 36 months, after which the 
beneficiary may continue using the equipment.14  After the first 36 months, 
the supplier that furnished the oxygen equipment still owns the equipment 
and must continue to service it as long as medical necessity exists.  
Medicare also pays for oxygen contents.  For patients using stationary 
equipment (with or without portable equipment), the payments for oxygen 
contents are included in the payments for oxygen equipment for the first 
36 months.  For patients using portable equipment only, Medicare pays for 
oxygen contents separately from the oxygen equipment payment.  After 
 
11 CMS, The Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
Competitive Bidding Program:  Grandfathering Requirements for Non-Contract 
Suppliers (ICN 900923).  Accessed at https://www.cms.gov/Outreach-and-
Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/ 
DME_Grandfathering_Factsheet_ICN900923.pdf on October 25, 2016. 
12 Social Security Act  1862(a)(1)(A), 42 U.S.C.  1395y(a)(1)(A). 
13 CMS, Medicare National Coverage Determination Manual, Pub. No. 100-3, ch. 1, 
pt. 4,  240.2.  Accessed at https://www.cms.gov/medicare-coverage-database/overview-
and-quick-search.aspx on April 25, 2017. 
14 42 CFR  414.226(a)(1) and (f)(1).  See also, Local Coverage Determination (LCD) for 
Oxygen and Oxygen Equipment (L33797) for DME MAC Jurisdictions A, B, C, and D.  
Accessed at https://www.cms.gov/medicare-coverage-database/details/lcd-
details.aspx?LCDId=33797&ver=10&DocID=L33797&bc=gAAAABAAAAAA& on 
January 18, 2018.  Prior to 10/1/2015, the DME MACs had separate but identical LCDs 
for oxygen and oxygen equipment (i.e., LCDs L11468, L27221, L11446, and L11457 for 
DME MAC Jurisdictions A, B, C and D, respectively), available online at 
https://localcoverage.cms.gov/mcd_archive/. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           4   
the first 36 months, Medicare pays separately for oxygen contents as long 
as medical necessity exists.15, 16, 17 
Oxygen equipment includes stationary and portable compressed gas 
systems; stationary and portable liquid oxygen systems; and oxygen 
concentrators.18  Oxygen contents include compressed and liquid oxygen 
refills for stationary and portable oxygen systems.19  Medicare instructs 
suppliers to contact beneficiaries to ensure continued need prior to sending 
refills of oxygen contents to beneficiaries.20 
Program Integrity Concerns with Oxygen Equipment and 
Contents 
Medicares Comprehensive Error Rate Testing (CERT) program has long 
found high error rates in DME, including oxygen equipment and contents.  
In 2012, the year before Round 2 of the CBP started, the CERT found 
a 66-percent error rate in DME and a 81-percent error rate in oxygen 
equipment and contents.  This error rate for oxygen equipment and 
contents corresponded to an improper payment amount of about 
 
15 42 CFR  414.226. 
16 Oxygen and Oxygen EquipmentPolicy Article A52514 for DME MAC Jurisdictions 
A, B, C, and D.  Prior to 10/1/2015, the DME MACs had separate policy articles for 
oxygen and oxygen equipmentA33768, A47097, A33750, and A33677available 
online at https://localcoverage.cms.gov/mcd_archive/. 
17 CMS, Medicare Learning Network: Home Oxygen Therapy (ICN 908804), p. 21.  
Accessed at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNProducts/Downloads/Home-Oxygen-Therapy-ICN908804.pdf on January 17, 
2018. 
18 LCD L33797. 
19 LCD L33797. 
20 CMS, Medicare Program Integrity Manual, Pub. No. 100-08, ch. 5,  5.2.8.  This 
requirement has moved from  5.2.6 (see CMS Transmittal 378, effective August 2, 
2011) to  5.2.9 (see CMS Transmittal 623, effective November 10, 2015) to its current 
position at  5.2.8 (see CMS Transmittal 641, effective March 19, 2016).  See also CMS, 
Medicare Learning Network: Home Oxygen Therapy (ICN 908804), p. 21.  Accessed at 
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-
MLN/MLNProducts/Downloads/Home-Oxygen-Therapy-ICN908804.pdf on April 11, 
2018. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           5   
$1.4 billion.21  In 2016, the CERT found a 46-percent error rate in DME 
overall and a 45-percent error rate in oxygen equipment and contents.22, 23 
Related OIG Work 
OIG has a long history of identifying fraud, waste, and abuse in the 
provision of DME devices and supplies.  Since passage of the Medicare 
Prescription Drug, Improvement, and Modernization Act of 2003, which 
established the CBP, OIG has opened more than 2,000 investigative cases 
involving DME suppliers.  Over the last several years, OIG investigations 
have contributed to several fraud cases by the Department of Justice 
against suppliers of oxygen equipment and contents.24, 25, 26   
OIG audits and evaluations have examined implementation of the CBP 
and market trends for specific types of DME. 27  A November 2017 OIG 
audit found that CMS generally met requirements in Round 2 of the CBP.28  
However, because of inconsistency in how CMS followed its procedures, 
CMS awarded a small number of Round 2 contracts to suppliers that did 
not meet program requirements.  OIG has also released three 
 
21 CMS, Medicare Fee-For-Service 2012 Improper Payments Report, p. 32.  Accessed at 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-
Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/Medicare-Fee-for-
Service-2012-Improper-Payments-Report.pdf on November 2, 2016. 
22 CMS, Medicare Fee-For-Service 2016 Improper Payments Report, p. 29. Accessed at 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-
Programs/Medicare-FFS-Compliance-
Programs/CERT/Downloads/MedicareFeeforService2016ImproperPaymentsReport.pdf 
on November 16, 2017. 
23 CMS, Medicare Fee-For-Service 2016 Improper Payments Report, p. 21.  Accessed at 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-
Programs/Medicare-FFS-Compliance-
Programs/CERT/Downloads/AppendicesMedicareFee-for-
Service2016ImproperPaymentsReport.pdf on November 16, 2017. 
24 The Federal Bureau of Investigation, President of DME Company Sentenced to 
12 12 Years for Medicare and Medicaid Fraud, August 2011.  Accessed at 
https://archives.fbi.gov/archives/tampa/press-releases/2011/president-of-dme-company-
sentenced-to-12-12-years-for-medicare-and-medicaid-fraud on April 27, 2017. 
25 U.S. Department of Justice, Oxygen Equipment Provider Pays $11.4 Million to Resolve 
False Claims Act Allegations, April 2017.  Accessed at 
https://www.justice.gov/opa/pr/oxygen-equipment-provider-pays-114-million-resolve-
false-claims-act-allegations on April 27, 2017. 
26 U.S. Department of Justice, Oxygen and Sleep Therapy Company Agrees to Resolve 
False Claims Act Allegations, December 2014.  Accessed at 
https://www.justice.gov/usao-ma/pr/oxygen-and-sleep-therapy-company-agrees-resolve-
false-claims-act-allegations on April 27, 2017. 
27 OIG, CMS Generally Met Requirements in the DME Competitive Bidding Round 1 
Rebid Program, A-05-12-00067, April 2014. 
28 OIG, CMS Generally Met Requirements in Round 2 of the DMEPOS Competitive 
Bidding Program, A-05-14-00049, November 2017. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           6   
memorandum reports evaluating the market shares of different types of 
diabetes test strips.29, 30, 31 
This report is one of a series on how the launch of Round 2 of the CBP has 
affected continued access to DME.  It examines beneficiary access to 
oxygen equipment and contents, which in 2013 made up 34 percent of 
paid claims in Round 2 of the CBP.  The other reports in this series 
examine CPAP/RAD devices (continuous positive airway pressure devices 
and respiratory assist devices) and related supplies and enteral nutrition 
supplies.  The former found that the launch of Round 2 of the CBP did not 
likely disrupt beneficiary access to CPAP/RAD devices but that it was 
inconclusive as to whether Round 2 had affected access to related 
supplies.32  The latter, Round 2 Competitive Bidding for Enteral Nutrition: 
Continued Access for Vast Majority of Beneficiaries, OEI-01-15-00042, 
which is being issued simultaneously with this report, found that Round 2 
of the CBP did not likely disrupt beneficiary access to enteral nutrition 
supplies. 
METHODOLOGY 
This inspection considers two different populations of Medicare 
beneficiaries over two different time spans to determine whether Round 2 
of the CBP appeared to disrupt access to oxygen equipment and contents.  
The first population includes beneficiaries using oxygen equipment and 
covers the 6 months before and the 6 months after Round 2 contracts 
became effective on July 1, 2013.  The second population includes 
beneficiaries using oxygen contents and covers the 2 months before and 
the 6 months after Round 2 contracts became effective.  For ease of 
presentation in this report, we refer to July 1, 2013the date when 
Round 2 contracts went into effectas the date that Round 2 began. 
We used Medicare claims data to identify our populations.  Both 
populations include beneficiaries who resided in Round 2 CBAs and 
non-CBAs, which enabled us to make comparisons to look for evidence of 
potential disruptions in access. 
 
29 OIG, Memorandum Report:  Medicare Market Shares of Mail Order Diabetes Test 
Strips from JulySeptember 2013, OEI-04-13-00680, June 2014. 
30 OIG, Memorandum Report:  Medicare Market Shares of Mail Order Diabetes Test 
Strips Immediately Prior to the National Mail Order Program, OEI-04-13-00681, 
June 2014. 
31 OIG, Memorandum Report:  Medicare Market Shares of Mail Order Diabetes Test 
Strips 36 Months After the Start of the National Mail Order Program, 
OEI-04-13-00682, November 2014. 
32 OIG, Round 2 Competitive Bidding for CPAP/RAD: Disrupted Access Unlikely for 
Devices, Inconclusive for Supplies, OEI-01-15-00040, June 2017. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           7   
Beneficiaries With Claims for Oxygen Equipment:  Beneficiaries in our 
first population, which includes beneficiaries using oxygen equipment, 
met both of the criteria below: 
  They started using oxygen equipment in the first half of calendar 
year 2013, before Round 2 began, and had no Medicare payments 
for oxygen equipment in 2012.  Choosing beneficiaries who were 
new to oxygen eliminated the chance that any interruption in 
Medicare payments for oxygen equipment rental was because 
beneficiaries had reached the 36-month limit on payments, at 
which point the beneficiaries own the equipment. 
  They had five or more paid claims for oxygen equipment in the 
first half of 2013.  This criterion helped to ensure that beneficiaries 
were established users of oxygen therapy before Round 2 began. 
Beneficiaries With Claims for Oxygen Contents:  Our second 
population includes beneficiaries for whom there was at least one claim 
for oxygen contents in May or June of 2013.  We selected these 
beneficiaries to help increase the chance that beneficiaries were using 
oxygen therapy immediately before Round 2 began. 
Using Medicare claims data, we determined the extent to which 
beneficiaries in our populations appeared to have their access to oxygen 
equipment and/or contents disrupted by Round 2 of the CBP.  Specifically, 
we used the absence of paid claims for beneficiaries in each population 
after Round 2 began as a marker of potential disruption in access.  We 
calculated the percentages of beneficiaries in each population for whom 
Medicare payments stopped and compared them between beneficiaries 
residing in Round 2 CBAs and those in non-CBAs.  As a comparison, we 
analyzed Medicare claims data from 2012 to determine how often 
Medicare payments stopped for beneficiaries receiving oxygen equipment 
or contents in the last full year prior to Round 2 of the CBP. 
To learn more about the experience of beneficiaries with a potential 
disruption in access after Round 2 began, we selected samples of 
beneficiaries in our populations for whom Medicare payments stopped.  
We stratified the samples by whether the beneficiaries resided in Round 2 
CBAs or non-CBAs.  To determine whether the sampled beneficiaries 
continued to need the items after Round 2 began, we separately surveyed 
the physicians who ordered their oxygen equipment and the physicians 
who ordered their oxygen contents.  Each physician whom we surveyed 
had ordered equipment or contents for one of our sampled beneficiaries.  
When a physician told us that the beneficiary had a continued need for the 
items and Medicare records indicated that the beneficiary was still living 
in 2016, we considered that beneficiary to be eligible for our survey, 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           8   
which asked beneficiaries to describe their experiences after Round 2 
began.  Exhibits 2 and 3 provide details on these samples and surveys. 
Exhibit 2: Surveys Regarding Oxygen Equipment 
Round 2 
  Non-CBAs  Total 
CBAs 
Total Physicians in Sample  150  150  300 
Physicians Surveyed1  103  108  211 
Physicians Responding With 
66  62  128 
Usable Data2 
Physician Response Rate   44%  41%  43% 
Beneficiaries Eligible for 
21  29  50 
Survey 
Beneficiaries Responding With 
6  5  11 
Usable Data 
Beneficiary Response Rate  29%  17%  22% 
Source:  OIG analysis of physician and beneficiary responses to survey, 2016. 
1 We did not survey a physician if the beneficiary was deceased when Round 2 began, if the physician 
was under investigation, or if the physician was no longer in business. 
2 In some cases, physicians cooperated by responding to our survey, but their responses included no 
usable information. 
 
Exhibit 3: Surveys Regarding Oxygen Contents 
 
Round 2 
  Non-CBAs  Total 
CBAs 
Total Physicians in Sample  150  150  300 
Physicians Surveyed1  134  134  268 
Physicians Responding With 
72  79  151 
Usable Data2 
Physician Response Rate   48%  53%  50% 
Beneficiaries Eligible for 
27  18  45 
Survey 
Beneficiaries Responding With 
8  4  12 
Usable Data 
Beneficiary Response Rate  30%  22%  27% 
Source:  OIG analysis of physician and beneficiary responses to survey, 2016. 
1 We did not survey a physician if the beneficiary was deceased when Round 2 began, if the physician 
was under investigation, or if the physician was no longer in business. 
2 In some cases, physicians cooperated by responding to our survey, but their responses included no 
usable information. 
 
Limitations 
This review has two limitations.  First, we use continued Medicare 
payment as a proxy for continued access to oxygen equipment and 
contents.  Continued Medicare payment is a measure of potential 
continued access, but we understand that it is not a direct measure of 
continued access to oxygen equipment and contents.  Without 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           9   
a determination of a beneficiarys continued need, the lack of continued 
Medicare payments does not necessarily indicate a disruption in access to 
oxygen equipment and contents. 
Secondly, the response rate for our survey was too low to project the 
results to all beneficiaries for whom claims did not continue.  Therefore, 
we present our survey responses as testimonial evidence to provide 
potential insights into these individual beneficiaries experiences in 
accessing oxygen equipment and contents.  We did not independently 
verify responses from physicians and beneficiaries, nor did we conduct 
a medical review of beneficiaries medical need for oxygen equipment or 
contents.  See Appendix A for a detailed description of our methodology. 
Standards 
We conducted this study in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           10   
FINDINGS 
The start of Round 2 does not appear to have 
disrupted access to oxygen equipment for the vast 
majority of beneficiaries 
In the first half of 2013, 110,345 beneficiaries started using oxygen 
equipment in Round 2 CBAs and non-CBAs.  These beneficiaries had 
claims that indicated Medicare paid for the devices for at least 5 months 
during this period.  The proportions of beneficiaries for whom Medicare 
made continued payments for oxygen equipment after Round 2 began 
were similar in Round 2 CBAs and non-CBAs..    Additionally, the rate at 
which Medicare payments continued for beneficiaries who started using 
oxygen equipment in the first half of 2013 was similar to the continuation 
rate for beneficiaries who started using oxygen equipment in the first half 
of 2012. 
In 2013, Medicare payments continued for 86 percent of 
beneficiaries in Round 2 CBAs and 89 percent of beneficiaries 
in non-CBAs 
After Round 2 began, 86 percent of beneficiaries in Round 2 CBAs and 
89 percent in non-CBAs had one or more paid claims for monthly rental of 
oxygen equipment.  Furthermore, Medicare paid four or more claims for 
nearly all of these beneficiaries, which suggests that beneficiaries 
continued to possess oxygen equipment both in Round 2 CBAs and 
non-CBAs months after Round 2 began.  These continued payments 
suggest continued access.  However, we note that the slightly higher 
proportion of beneficiaries without continued Medicare payments in 
Round 2 CBAs compared to beneficiaries in non-CBAs may suggest that 
a small proportion of beneficiaries experienced disruptions in receiving 
needed oxygen equipment.  Alternatively, it may indicate that Round 2 of 
the CBP reduced the provision of unnecessary oxygen equipment, similar 
to what CMS analysis found after Round 1 of the CBP.  See Exhibit 4 for 
additional detail on the numbers and percentages of beneficiaries for 
whom paid claims for devices continued or stopped. 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           11   
 
Exhibit 4: Numbers and Percentages of Beneficiaries For Whom Paid 
Claims for Oxygen Equipment Continued or Stopped After Round 2 Began 
 
Source:  OIG analysis of Medicare claims data, 2016. 
In addition, Medicare claims suggest that the vast majority of these 
beneficiaries likely continued to possess oxygen equipment without 
interruption, indicating continued access.  On average, over the 6 months 
before Round 2 began, suppliers of oxygen equipment submitted claims 
every 31 days or sooner for 97 percent of all beneficiaries in Round 2 
CBAs and non-CBAs, compared to 98 percent of beneficiaries in Round 2 
CBAs and non-CBAs over the 6 months after Round 2 began.  This 
suggests that beneficiaries with continued Medicare payments 
overwhelmingly kept their oxygen equipment without interruption after 
Round 2 began.  CMSs grandfathering policy may have supported 
continued access; however, we did not determine whether these 
beneficiaries switched suppliers and received new equipment or continued 
on with a grandfathered supplier. 
In 2012, Medicare payments continued for 88 percent of 
beneficiaries who started using oxygen equipment in the first 
half of the year 
We also examined Medicare payments in 2012, the last full year prior to 
Round 2, and found that Medicare payments in 2012 continued at a rate 
similar to that in 2013.  We found that 88 percent of beneficiaries with 
Medicare payments for oxygen equipment in the first half of 2012 
continued to have payments for oxygen equipment in the second half of 
that year.  
   
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In their survey responses, physicians often told us that 
beneficiaries without continued payments still had 
a prescribed need for oxygen equipment, and 5 of the 
11 responding beneficiaries reported continued use of oxygen 
equipment 
Our surveys provide some insights, albeit limited, to the experiences of 
beneficiaries for whom payments stopped after Round 2 began
an indicator of a potential disruption in access.  The physicians who 
responded to our survey generally reported that beneficiaries for whom 
they ordered oxygen equipment still had a prescribed need for it after 
Round 2 began.  This was the case both in Round 2 CBAs and non-CBAs.  
In Round 2 CBAs, 34 of 44 physicians reported that the beneficiaries for 
whom they ordered equipment still had a prescribed need for this 
equipment.  This compares to 40 of 47 physicians in non-CBAs.  
Responding beneficiaries provided some insights on their experiences with 
oxygen equipment.  For example, 5 of the 11 beneficiaries reported 
continued use of oxygen equipment, even though Medicare stopped 
paying for this equipment.  Specifically, two of six responding 
beneficiaries from Round 2 CBAs and three of five responding 
beneficiaries from non-CBAs reported continued use of oxygen 
equipment.  Of the five beneficiaries who reported continued use of 
oxygen equipment, none reported paying out of pocket and all reported 
obtaining needed oxygen equipment from their usual supplier or from a 
new supplier.  Having to pay out of pocket could limit access to needed 
items. 
Also, of the six beneficiaries who reported that they stopped using oxygen 
equipment, none reported stopping because they could not find a supplier.  
Of the four beneficiaries in Round 2 CBAs who reported that they stopped 
using oxygen equipment, three reported doing so because they no longer 
needed oxygen equipment.  In comparison, one of two beneficiaries in 
non-CBAs reported having stopped using oxygen equipment because of 
no longer needing it.  See Exhibit 5 for additional detail on survey 
responses from beneficiaries. 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           13   
Exhibit 5: Survey Responses From a Subset of Beneficiaries For Whom 
Paid Claims for Oxygen Equipment Stopped 
 
 
Source:  OIG analysis of beneficiary responses to survey, 2016. 
 
The start of Round 2 does not appear to have 
disrupted access to oxygen contents for the vast 
majority of beneficiaries 
In May and June of 2013, 85,551 beneficiaries had one or more claims for 
oxygen contents in Round 2 CBAs and non-CBAs.  Similar proportions of 
beneficiaries in Round 2 CBAs and non-CBAs had continued Medicare 
payments for oxygen contents after Round 2 began.  Additionally, 
Medicare payments in 2012 continued at a similar rate for beneficiaries 
who started using oxygen contents in May and June of that year. 
After Round 2 began, Medicare payments for oxygen contents 
continued for 86 percent of beneficiaries in Round 2 CBAs and 
88 percent in non-CBAs 
Eighty-six percent of beneficiaries in Round 2 CBAs who had one or more 
paid claims for oxygen contents in May or June of 2013 had paid claims in 
the second half of the year, compared to 88 percent in non-CBAs.  These 
continued payments suggest continued access.  However, we note that the 
slightly higher proportion of beneficiaries without continued Medicare 
payments in Round 2 CBAs compared to beneficiaries in non-CBAs may 
suggest that a small proportion of beneficiaries experienced disruptions in 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           14   
receiving needed oxygen contents.  Alternatively, it may indicate that 
Round 2 of the CBP reduced the provision of unnecessary oxygen 
contents, similar to what CMS analysis found after Round 1 of the CBP. 
See Exhibit 6 for additional detail on the number and percentage of 
beneficiaries with continued or stopped paid claims for contents. 
Exhibit 6: Numbers and Percentages of Beneficiaries For Whom Paid 
Claims for Oxygen Contents Continued or Stopped After Round 2 Began 
 
Source:  OIG analysis of Medicare claims data, 2016. 
In 2012, Medicare payments continued for 87 percent of 
beneficiaries who used oxygen contents in the first half of the 
year  
The percentages of beneficiaries in Round 2 CBAs and non-CBAs that did 
not have paid claims in the second half of 2013 are in line with the claim 
patterns for 2012the year before Round 2 began.  In 2012, 87 percent of 
beneficiaries who had a paid claim for oxygen contents in May or June 
had a paid claim in the second half of the year, while 13 percent did not.   
In their survey responses, most physicians told us that 
beneficiaries still had a prescribed need for contents, and 
responding beneficiaries reported getting contents when they 
needed them 
We surveyed physicians and beneficiaries to gain some insight to the 
experience of beneficiaries for whom Medicare payments for oxygen 
contents stopped after Round 2 began.  The physicians who provided 
usable data largely told us that most of the beneficiaries we asked about 
continued to have a prescribed need for contents after Round 2 began.  In 
Round 2 CBAs, 58 of 64 physicians reported that the beneficiary for 
whom they ordered oxygen contents still had a prescribed need for 
contents after Round 2 began, compared to 60 of 71 physicians in 
non-CBAs. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           15   
Beneficiaries who responded to our survey provided insights into their 
experiences.  Almost all beneficiaries who responded to our survey 
reported continuing to use oxygen contents in the 6 months after Round 2 
began.  All of these beneficiaries reported acquiring contents when they 
needed them.  Only 1 of the 11 who reported acquiring contents paid out 
of pocket for them.  Additionally, three of the seven beneficiaries in 
Round 2 CBAs who continued to use contents reported using contents 
they had on hand, compared to two of four beneficiaries in non-CBAs.  
See Exhibit 7 for additional detail on survey responses from beneficiaries. 
Exhibit 7: Survey Responses From a Subset of Beneficiaries For Whom 
Paid Claims for Oxygen Contents Stopped 
 
Source:  OIG analysis of beneficiary responses to survey, 2016. 
 
 
 
 
 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           16   
CONCLUSION 
This study is one in a series that determines whether the Round 2 of the 
CBP appeared to disrupt access to certain types of DME when it began in 
2013.  In this study, we examined oxygen equipment and contents, which 
together accounted for a third of paid Medicare claims under Round 2 in 
2013. 
According to our claims analysis, Round 2 of the CBP does not appear to 
have disrupted beneficiary access to oxygen equipment and contents. 
Another report in this series examines beneficiary access to CPAP/RAD 
and found that Round 2 did not likely disrupt beneficiary access to 
CPAP/RAD devices but that it was inconclusive as to whether Round 2 
had affected access to related supplies.  A third reporton enteral 
nutrition and suppliesfound Round 2 of the CBP did not likely disrupt 
beneficiary access to those items. 
Taken together, the three types of DME we examined in this series 
comprise just over 70 percent of DME subject to bidding under Round 2.  
The CBP aims to combat fraud, waste, and abuse; improve the methods 
for setting DME payments; and create cost savings for Medicare and its 
beneficiariesall while maintaining access for beneficiaries who need 
DME.  With respect to the DME we examined in this report, our analysis 
supports the conclusion that the vast majority of beneficiaries had 
continued access to oxygen equipment and contents after Round 2 began.  
However, we did find a slightly higher proportion of beneficiaries in 
Round 2 CBAs than in non-CBAs for whom Medicare payments did not 
continue in 2013.  These declines may suggest that a small proportion of 
beneficiaries experienced disruptions in receiving needed equipment and 
contents.  Alternatively, they may instead indicate that Round 2 of the 
CBP reduced the provision of unnecessary oxygen equipment and 
contents, similar to what CMS analysis found after Round 1 of the CBP. 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           17   
AGENCY COMMENTS AND OIG RESPONSE 
CMS wrote that it appreciates our review of the CBPs effect on 
beneficiary access to DME.  CMS stated that it continues to review the 
CBP and will take our findings and methods into account.  
OIG appreciates CMSs review of and comments to this report. 
 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           18   
APPENDIX A 
Agency Comments 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           19   
APPENDIX B 
Detailed Methodology 
Scope 
This inspection considers two different populations of Medicare 
beneficiaries over two different time spans to determine the effect of 
Round 2 of the CBP on access to oxygen equipment and contents.  The 
first population includes beneficiaries using oxygen equipment and covers 
the 6 months before and the 6 months after Round 2 contracts became 
effective on July 1, 2013.  The second population includes beneficiaries 
using oxygen contents and covers the 2 months before and the 6 months 
after Round 2 contracts became effective.  For ease of presentation in this 
report, we refer to July 1, 2013, as the date when Round 2 began. 
We used Medicare claims data to identify our populations.  Both 
populations include beneficiaries who resided in Round 2 CBAs and 
non-CBAs, which enabled us to make comparisons to look for evidence of 
potential disruptions in access. 
Beneficiaries With Claims for Oxygen Equipment:  Beneficiaries in our 
first population, which includes beneficiaries using oxygen equipment, 
met both of the criteria below: 
  They started using oxygen equipment in the first half of calendar 
year 2013, before Round 2 began, and had no Medicare payments 
for oxygen equipment in 2012.  Choosing beneficiaries who were 
new to oxygen eliminated the chance that any interruption in 
Medicare payments for oxygen equipment rental was because 
beneficiaries had reached the 36-month limit on payments, at 
which point the beneficiaries own the equipment. 
  They had five or more paid claims for oxygen equipment in the 
first half of 2013.  This criterion helped to ensure that beneficiaries 
were established users of oxygen therapy before Round 2 began. 
Combined, these criteria enabled us to focus our analysis on beneficiaries 
who generally could be expected to continue using and having Medicare 
payments for devices for several months after Round 2 began. 
Beneficiaries With Claims for Oxygen Contents:  Our second 
population includes beneficiaries for whom there was at least one claim 
for oxygen contents in May or June of 2013. 
   
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Data Sources 
Our data sources for this evaluation were Medicare claims and 
administrative data and survey responses that we collected from samples 
of beneficiaries and the physicians who ordered their oxygen equipment 
and contents.  We used the continuation of paid claims as a marker for 
continued access after Round 2 began.  We surveyed physicians and 
beneficiaries to learn about the experience of beneficiaries for whom 
Medicare stopped paying for equipment and contents after Round 2 began.  
Because we did not receive sufficiently high response rates to our surveys, 
we did not project the survey responses we received to our populations of 
beneficiaries. 
Identification of Beneficiaries Using Oxygen Equipment and Contents 
We identified beneficiaries who used oxygen equipment and contents in 
2013 using data from Medicares National Claims History File and CMSs 
Competitive Bidding Implementation Contractor.  To compare the 2013 
data with 2012 data, we identified beneficiaries who used oxygen 
equipment and contents in 2012 using data from Medicares National 
Claims History File. 
We first created files of claims for oxygen equipment and contents.  To do 
so, we downloaded a list of Healthcare Common Procedure Coding 
System (HCPCS) codes for oxygen equipment and contents subject to 
bidding from the Competitive Bidding Implementation Contractors 
website.  We then used these HCPCS codes to extract paid claims for 
oxygen equipment and contents from Medicares National Claims History 
File.  We created one claim file for 2012 and another for 2013.  Next, we 
matched ZIP Codes from Medicares Competitive Bidding 
Implementation Contractor to the beneficiary ZIP Code on the claim to 
identify each claim as being for a beneficiary in a Round 2 CBA, Round 1 
CBA, or non-CBA. 
To identify beneficiaries using oxygen equipment, we used our claims 
files to select beneficiaries who used oxygen equipment in the first half of 
2013.  Specifically, we selected all beneficiaries in Round 2 CBAs and 
non-CBAs for whom there were no paid claims for equipment in 2012 and 
at least five paid claims for oxygen equipment in the first half of 2013.  
This identified 110,345 beneficiaries. 
To identify beneficiaries using oxygen contents, we used our 2013 claims 
file to select all beneficiaries for whom there was at least one paid claim 
for contents in either May or June of 2013.  This identified 
85,551 beneficiaries.  See Exhibits A-1 and A-2 for additional detail on 
beneficiary selection criteria.   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           21   
Exhibit A-1: Selection Criteria for Sample of Beneficiaries Using Oxygen 
Equipment 
Characteristics of   Beneficiaries 
Beneficiaries 
Equipment-Using Beneficiaries  in Round 2  Total 
in Non-CBAs 
in Sample  CBAs 
HCPCS:  With RR (Rental) 
Modifier; 
E0424:  Stationary 
Compressed Gaseous Oxygen 
E0439:  Stationary Liquid 
Oxygen System 
E1390, E1391:  Oxygen 
Concentrator 
E0431, E0433:  Portable 
Gaseous Oxygen System 
E0434:  Portable Liquid 
46,509  63,836  110,345 
Oxygen System 
E1392:  Portable Oxygen 
Concentrator 
K0738:  Portable Gaseous 
Oxygen System, Homefill 
 
Payment History 
No paid claims in 2012 
At least 5 paid claims  
Jan.June 2013 
 
Source:  OIG analysis of Medicare claims data, 2016. 
 
Exhibit A-2: Selection Criteria for Sample of Beneficiaries Using Oxygen 
Contents 
Characteristics of   Beneficiaries 
Beneficiaries 
Contents-Using Beneficiaries  in Round 2  Total 
in Non-CBAs 
in Sample  CBAs 
HCPCS:   
E0441, E0442:  Stationary 
Oxygen Contents 
E0443, E0444:  Portable 
Oxygen Contents 
31,557  53,994  85,551 
 
Payment History 
At least 1 paid claim  
Jan.June 2013 
 
Source:  OIG analysis of Medicare claims data, 2016 
 
Identification of Populations of Beneficiaries For Whom Medicare 
Payments Stopped 
Next, for each group of beneficiaries we identified, we identified the 
population of those for whom there were no paid Medicare claims after 
Round 2 began.  For oxygen equipment, we identified 13,616 beneficiaries 
for whom there were claims for oxygen equipment from January 1 through 
June 30, 2013, only.  We did the same for oxygen contents, identifying 
10,759 beneficiaries for whom there were claims for contents in May or 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           22   
June of 2013 only.  See Exhibits A-3 and A-4 for additional detail on 
beneficiary claims data. 
Exhibit A-3: Beneficiaries With Paid Claims for Oxygen Equipment 
Status of Beneficiaries Who  Beneficiaries 
Beneficiaries 
Used Oxygen Equipment  in Round 2  Total 
in Non-CBAs 
Before Round 2 Began  CBAs 
Medicare payments stopped 
after Round 2 began  6,537  7,079  13,616 
(equipment population) 
Percentage of beneficiaries for 
whom Medicare payments  14%  11%  12% 
stopped after Round 2 began 
Medicare payments continued 
39,972  56,757  96,729 
after Round 2 began 
Percentage of beneficiaries for 
whom Medicare payments  86%  89%  88% 
continued after Round 2 began 
Source:  OIG analysis of Medicare claims data, 2016. 
 
Exhibit A-4: Beneficiaries With Paid Claims for Oxygen Contents 
Status of Beneficiaries Who  Beneficiaries 
Beneficiaries 
Used Oxygen Contents Before  in Round 2  Total 
in Non-CBAs 
Round 2 Began  CBAs 
Medicare payments stopped 
after Round 2 began (contents  4,392  6,367  10,759 
population) 
Percentage of beneficiaries for 
whom Medicare payments  14%  12%  13% 
stopped after Round 2 began 
Medicare payments continued 
27,165  47,627  74,792 
after Round 2 began 
Percentage of beneficiaries for 
whom Medicare payments  86%  88%  87% 
continued after Round 2 began 
Source:  OIG analysis of Medicare claims data, 2016. 
 
We also analyzed Medicare claims data from 2012 to determine how often 
Medicare payments stopped for beneficiaries receiving oxygen equipment 
or contents in the last full year prior to Round 2 of the CBP. 
Sample Selection 
From each population of beneficiaries for whom Medicare payments 
stopped after Round 2 began, we drew a statistical sample of 
300 beneficiaries.  We stratified the samples by whether the beneficiaries 
were in Round 2 CBAs or non-CBAs.  See Exhibit A-5 for a description of 
beneficiary sample sizes. 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           23   
 
Exhibit A-5: Samples of Beneficiaries Using Oxygen Equipment and 
Contents 
Beneficiaries 
Beneficiaries 
Type of Beneficiary  in Round 2  Total 
in Non-CBAs 
CBAs 
Beneficiaries using oxygen 
150  150  300 
equipment 
Beneficiaries using oxygen 
150  150  300 
contents 
     Total  300  300  600 
Source:  OIG analysis of Medicare claims data, 2016. 
Physician Survey  
To determine whether beneficiaries in our samples still had a prescribed 
need for oxygen equipment or contents, we surveyed the physicians who 
were the ordering physician on the beneficiaries final oxygen claims and 
who were still living.  We sent similar but different surveys for equipment 
and contents.  The surveys asked physicians if the beneficiary for whom 
they ordered equipment or contents had a prescribed need for them during 
the period from July 1 through December 31, 2013.  In the surveys, we 
also asked physicians if they prescribed alternate DME to replace oxygen 
contents, such as a home-fill system or an oxygen concentrator.  
We made at least three attempts to reach physicians with our survey.  We 
sent the surveys using a trackable delivery service and accepted survey 
responses by mail and by fax to a secure fax server.  We received 
responses from 390 of the 479 physicians we surveyed.  In 226 of those 
responses, physicians were able to answer our key question as to whether 
or not the beneficiary still needed equipment or contents after Round 2 
began.  In 192 of these responses, physicians told us that the beneficiary 
had a prescribed need for oxygen equipment or contents after Round 2 
began.  See Exhibits A-6 and A-7 for information on physician survey 
sampling and responses. 
   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           24   
Exhibit A-6: Results From Survey of Physicians for Beneficiaries Using 
Oxygen Equipment 
Round 2 
Characteristics of Physicians  Non-CBAs  Total 
CBAs 
A)  Total Physicians in 
150  150  300 
Sample 
B)  Physicians Surveyed1 
103  108  211 
C)  Physicians Responding 
66  62  128 
With Usable Data2 
D)  Physicians Answering Key 
44  47  91 
Question 
Physician Response Rate 
44%  41%  43% 
(Row C/Row A)   
Source:  OIG analysis of data from survey of physicians, 2016. 
1 We did not survey a physician if the beneficiary was deceased when Round 2 began, if the physician 
was under investigation, or if the physician was no longer in business. 
2 In some cases, physicians cooperated by responding to our survey, but their responses included no 
usable information.  
 
Exhibit A-7: Results from Survey of Physicians for Beneficiaries Using 
Oxygen Contents 
Round 2 
Characteristics of Physicians  Non-CBAs  Total 
CBAs 
A)  Total Physicians in 
Sample  150  150  300 
B)  Physicians Surveyed1  134  134  268 
C)  Physicians Responding 
With Usable Data2  72  79  151 
D)  Physicians Answering Key 
Question  64  71  135 
Physician Response Rate 
(Row C/Row A)  48%  53%  50% 
Source:  OIG analysis of data from survey of physicians, 2016. 
1 We did not survey a physician if the beneficiary was deceased when Round 2 began, if the physician 
was under investigation, or if the physician was no longer in business. 
2 In some cases, physicians cooperated by responding to our survey, but their responses included no 
usable information.  
 
Beneficiary Survey 
To learn about beneficiaries experiences in the 6 months immediately 
after Medicare stopped paying for their oxygen equipment or contents, we 
sent a brief survey to beneficiaries.  Specifically, we surveyed the 
beneficiaries who were still living and whose physicians told us in the 
physician survey that they had a prescribed need for equipment or contents 
after Round 2 began.  We sent similar but different surveys for equipment 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           25   
and contents.  In the surveys, we asked beneficiaries if they continued to 
use oxygen equipment or contents after Round 2 began and, if so, how 
they managed given that Medicare did not pay for their equipment or 
contents. 
We made at least three attempts to reach beneficiaries with our survey.  We 
used a trackable delivery service to send the surveys to beneficiaries and 
provided them with postage-paid business reply mail envelopes for 
returning the surveys directly to the Office of Inspector General.  We 
received responses from 23 of the 95 beneficiaries we surveyed.  We did 
not survey beneficiaries when Medicare records indicated that they were 
no longer living.  See Exhibits A-8 and A-9 for information on beneficiary 
survey eligibility and responses.   
Exhibit A-8: Response Rates for Survey of Beneficiaries Using Oxygen 
Equipment 
Beneficiaries 
Beneficiaries 
Status of Beneficiaries  in Round 2  Total 
in Non-CBAs 
CBAs 
Beneficiaries Eligible for 
21  29  50 
Survey 
Beneficiaries Responding With 
6  5  11 
Usable Data 
Beneficiary Response Rate  29%  17%  22% 
Source:  OIG analysis of survey data, 2016. 
Exhibit A-9: Response Rates for Survey of Beneficiaries Using Oxygen 
Contents 
Beneficiaries 
Beneficiaries 
Status of Beneficiaries  in Round 2  Total 
in Non-CBAs 
CBAs 
Beneficiaries Eligible for 
27  18  45 
Survey 
Beneficiaries Responding With 
8  4  12 
Usable Data 
Beneficiary Response Rate  30%  22%  27% 
Source:  OIG analysis of survey data, 2016. 
Data Analysis 
All-Beneficiary Analysis Using Medicare Claims 
We analyzed claims data to determine the extent to which beneficiaries 
experienced a potential disruption in access to equipment or contents.  To 
do so, we calculated the percentage of equipment-using beneficiaries for 
whom there were no paid claims for equipment after Round 2 began and 
the percentage of contents-using beneficiaries for whom there were no 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           26   
paid claims for contents after Round 2 began.  We used these percentages 
as the basis of our lead findings for equipment and contents. 
We analyzed claims data to determine two aspects of Medicare payments 
for equipment-using beneficiaries for whom there were continued 
payments after Round 2 began.  First, we counted the number of paid 
claims for equipment for these beneficiaries after Round 2 began to 
determine whether payments had continued for a sustained period.  
Second, we checked whether these beneficiaries experienced an 
interruption in payments immediately after Round 2 began.  To do so, we 
calculated the average number of days that beneficiaries went between 
equipment claims before Round 2 began and compared it to the average 
number of days between claims after Round 2 began.  We then determined 
the percentages of beneficiaries for whom these spans were greater than 
31 days.  
Tabulation of Physician and Beneficiary Survey Responses 
We counted responses to our physician survey to determine the number of 
responding physicians who told us that beneficiaries in our samples still 
needed equipment or contents after Round 2 began.  Our denominator of 
responses for this analysis considered the responses in which physicians 
were able to tell us whether the beneficiary still needed oxygen equipment 
or contents after Round 2 begani.e., we did not include responses of 
cannot determine. 
We also counted survey responses to determine the extent to which 
responding physicians reported that they prescribed alternate oxygen 
contents to beneficiaries in our samples. 
We counted responses to our survey of equipment-using beneficiaries to 
determine the extent to which beneficiaries reported that they continued to 
use oxygen equipment in the 6 months after Round 2 began.  For 
beneficiaries who reported continued use, we counted how many reported 
that they continued to use equipment from their existing supplier, found 
a new supplier, paid out of pocket, or borrowed oxygen equipment from 
a friend.  When beneficiaries reported stopping use of oxygen equipment, 
we counted how many reported stopping because they could not find 
a supplier, could not afford to pay out of pocket for the equipment, or no 
longer needed the equipment. 
We counted responses to our survey of contents-using beneficiaries to 
determine the extent to which beneficiaries reported that they continued to 
use oxygen contents in the 6 months after Round 2 began, and, if so, 
whether they needed any contents during that time.  For beneficiaries who 
reported that they did need contents during that time, we counted how 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           27   
many reported that they got contents from their existing supplier, found 
a new supplier, paid out of pocket, used contents that they already had on 
hand, or switched to another type of equipment that did not require oxygen 
contents.  When beneficiaries reported stopping use of oxygen contents, 
we counted how many reported stopping because they could not find 
a supplier, could not afford to pay out of pocket for the contents, or no 
longer needed oxygen contents. 
Limitations 
This review has two limitations.  First, we use continued Medicare 
payment as a proxy for continued access to oxygen equipment and 
contents.  Continued Medicare payment is a measure of potential 
continued access, but we understand that it is not a direct measure of 
continued access to oxygen equipment and contents.  Without 
a determination of a beneficiarys continued need, the lack of continued 
Medicare payments does not necessarily indicate a disruption in access to 
oxygen equipment and contents. 
Secondly, the response rates to both our survey of physicians and our 
survey of beneficiaries were too low to project the results to all 
beneficiaries for whom claims did not continue.  Therefore, we present our 
survey responses as testimonial evidence to provide potential insights into 
these individual beneficiaries experiences in accessing oxygen equipment 
and contents.  We did not independently verify responses from physicians 
and beneficiaries, nor did we conduct a medical review of beneficiaries 
medical need for oxygen equipment or contents.   
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           28   
ACKNOWLEDGMENTS 
Jesse Valente served as the team leader for this study, and Lyncy Ha 
served as lead analyst.  Other Office of Evaluation and Inspections staff 
who conducted the study include Jessica Fargnoli.  Office of Evaluation 
and Inspections central office staff who provided support include 
Joe Chiarenzelli, Kevin Farber, Evan Godfrey, and Christine Moritz.  
Other Office of Inspector General staff who provided support include 
Maria Maddaloni and Jessica Swanstrom. 
This report was prepared under the direction of Joyce Greenleaf, Regional 
Inspector General for Evaluation and Inspections in the Boston regional 
office, and Kenneth Price, Deputy Regional Inspector General. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
To obtain additional information concerning this report or to obtain copies, 
contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov. 
Round 2 Competitive Bidding For Oxygen (OEI-01-15-00041)           29   
Office of Inspector General 
https://oig.hhs.gov 
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs.  This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The Office of Audit Services (OAS) provides auditing services for HHS, either by conducting 
audits with its own audit resources or by overseeing audit work done by others.  Audits 
examine the performance of HHS programs and/or its grantees and contractors in carrying 
out their respective responsibilities and are intended to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and 
mismanagement and promote economy and efficiency throughout HHS. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) conducts national evaluations to provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud, waste, or abuse and promoting 
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations 
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations 
of fraud and misconduct related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI utilizes its resources 
by actively coordinating with the Department of Justice and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to criminal 
convictions, administrative sanctions, and/or civil monetary penalties. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support for OIGs internal operations.  OCIG represents OIG in all civil and 
administrative fraud and abuse cases involving HHS programs, including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program guidance, publishes fraud alerts, and provides other 
guidance to the health care industry concerning the anti-kickback statute and other OIG 
enforcement authorities.