Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
USAGE AND DOCUMENTATION OF 
HOME OXYGEN THERAPY 
JUNE GIBBS BROWN 
Inspector General 
AUGUST 1999 
OEI-03-96-00090  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, is to 
protect the integrity of the Department of Health and Human Services programs as well as the 
health and welfare of beneficiaries served by them.  This statutory mission is carried out through a 
nationwide program of audits, investigations, inspections, sanctions, and fraud alerts.  The 
Inspector General informs the Secretary of program and management problems and recommends 
legislative, regulatory, and operational approaches to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General.  It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public.  The 
inspection reports provide findings and recommendations on the efficiency, vulnerability, and 
effectiveness of departmental programs. 
OEI's Philadelphia office prepared this report under the direction of Robert Vito, Regional 
Inspector General, and Linda Ragone, Deputy Regional Inspector General.  Principal OEI staff 
included: 
REGION  HEADQUARTERS 
Robert Katz  Brian Ritchie, Program Analyst 
Lauren McNulty  Elise Stein, Program Specialist 
Amy Sernyak  Bambi Straw, Program Specialist 
Barbara Tedesco, Mathematical Statistician 
Vanessa Blankenship 
James Grossman 
Paul Heineman 
Kimberly Hughes 
Candace Sullivan 
To obtain copies of this report, please call the Philadelphia Regional Office at (800) 531-9562. 
Reports are also available on the World Wide Web at our home page address: 
http://www.dhhs.gov/progorg/oei  E X E C U T I V E   S U M M A R Y  
PURPOSE 
To determine if supplier documentation accurately reflects beneficiaries' medical need and 
reported use of home oxygen therapy. 
BACKGROUND 
Medicare covers home oxygen therapy for beneficiaries diagnosed with significant 
hypoxemia (a deficiency in the amount of oxygen in the blood).  Home oxygen therapy 
accounts for the largest share of Medicare payments for durable medical equipment. 
Medicare allowances for oxygen equipment totaled over $2 billion in 1997. 
Suppliers of home oxygen equipment submit claims to the Durable Medical Equipment 
Regional Carriers for processing and payment.  According to Medicare guidelines, oxygen 
suppliers must submit Certificates of Medical Necessity with oxygen claims, and keep 
original CMNs in their records.  Home oxygen CMNs must contain sufficient medical 
information, including diagnoses and results of laboratory tests, to establish that 
beneficiaries meet Medicare coverage requirements. 
For this inspection, we collected data from Medicare beneficiaries with paid claims for 
oxygen equipment in 1996 and the durable medical equipment suppliers who provided this 
equipment. 
FINDINGS 
Nearly one-quarter of oxygen Certificates of Medical Necessity were inaccurate or 
incomplete. 
While almost all beneficiaries used their stationary oxygen equipment, 13 percent 
of beneficiaries reported never using their portable systems. 
Suppliers reported providing services, but were unable to fully document all of 
these services. 
1 
Home Oxygen Therapy  OEI-03-96-00090  RECOMMENDATIONS 
To address the vulnerabilities identified in this report, we recommend that the 
Health Care Financing Administration: 
Ensure that system edits in place at the DMERCs are able to identify incomplete 
CMNs, and delay payments for oxygen equipment claims until complete CMNs are 
submitted.  The HCFA should also conduct periodic checks to ensure that original 
CMNs signed by beneficiaries physicians and kept on file by oxygen suppliers 
confirm the electronic versions of CMNs that suppliers submit to Medicare carriers. 
Target oxygen equipment claims for focused medical review.  We realize that it would 
not be manageable or cost effective to perform extensive reviews on all oxygen equipment 
claims.  However, we believe that our findings raise issues that can only be addressed 
through individual case review. 
Work to quickly establish specific service standards for home oxygen equipment 
suppliers as mandated by the Balanced Budget Act of 1997.  As part of these 
standards, we believe that suppliers should be required to maintain adequate 
documentation to verify the provision of equipment and patient services. 
Continue to alert physicians to the critical role they play in determining 
beneficiaries medical need for and utilization of medical equipment paid for by 
Medicare.  In a January 1999 Fraud Alert concerning physician certification of the need 
for medical supplies and services, our office emphasized that, by signing CMNs, physicians 
are attesting that information on the entire CMN is true, accurate, and complete to the 
best of their knowledge. 
AGENCY COMMENTS 
We received comments on our draft report from HCFA.  The full text of these comments 
can be found in Appendix C.  A summary and our response follows. 
HCFA Comments 
The HCFA concurred with all of our recommendations.  They reported that current policy 
calls for DMERC systems to edit required fields on electronic CMNs for completeness. 
The HCFA also stated that the file copy CMNs the OIG reviewed are used primarily for 
suppliers own records, and therefore may be abbreviated and may not include all the 
information the suppliers submit electronically.  Nevertheless, HCFA agreed they should 
make it clear to suppliers that file copy CMNs signed by physicians should contain all the 
information suppliers submit electronically. 
2 
Home Oxygen Therapy  OEI-03-96-00090  Based on the information presented in our report, HCFA commented that portable oxygen 
systems might prove to be a fruitful target for focused medical review.  The HCFA also 
indicated that they are planning to develop a regulation that will set service standards for 
home oxygen equipment suppliers. 
The HCFA also provided two technical comments.  With respect to our finding that 
Medicare paid $263 million in 1996 for oxygen equipment covered by inaccurate or 
incomplete CMNs, HCFA stated this figure does not necessarily represent payments made 
for medically unnecessary or unreasonable services.  The agency also believed it is 
important to clarify why laboratory reports did not confirm test results detailed on the 
CMNs, and to distinguish between test results recorded on CMNs that could not be 
supported by suppliers records and test results recorded on CMNs that differed from 
suppliers records. 
OIG RESPONSE 
We appreciate HCFAs positive response to our recommendations, and we concur with 
their proposed actions.  We appreciate the fact that HCFA agreed to make it clear to 
suppliers that CMNs kept on file should contain all the information submitted 
electronically.  While some suppliers may have retained only abbreviated versions of the 
CMN in their files, this practice is not in keeping with current policy.  The DMERC 
Supplier Manuals require suppliers to keep the original CMN signed by the physician on 
file, along with any additional medical necessity information.  This CMN must include all 
required information and be filled out completely and accurately.  We believe, in most 
cases, the information from this file copy CMN is used to develop the final electronic 
version of the CMN that is submitted for claims processing.  Therefore, in order to meet 
the requirements for coverage of oxygen therapy, file copies of the CMNs we reviewed 
should have been complete and accurate.  As presented in this report, we did not always 
find this to be the case. 
In response to HCFAs technical comments, we agree the $263 million for oxygen 
equipment supported by inaccurate or incomplete CMNs does not presuppose a finding of 
medically unnecessary services.  Rather, this estimate represents services where suppliers 
did not provide us with the complete documentary support required for Medicare 
reimbursement.  With regard to HCFAs comments about laboratory test results, we have 
revised the relevant heading in the report.  Our finding only relates to suppliers who 
provided laboratory test results for our review.  When we report non-confirming test 
results, this refers only to laboratory tests where information from the actual lab report 
differed from information listed on the CMN. 
3 
Home Oxygen Therapy  OEI-03-96-00090  T A B L E  O F  C O N T E N T S  
PAGE

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

INTRODUCTION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

Inaccurate and Incomplete Certificates of Medical Necessity  . . . . . . . . . . . . . . . . . . . .  10

Use of Oxygen Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Lack of Service Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15

APPENDICES

A: Estimates and Confidence Intervals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

B: Certificate of Medical Necessity for Home Oxygen (Form HCFA-484)  . . . . . . . . . .  23

C: Comments on the Draft Report  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

4 
Home Oxygen Therapy  OEI-03-96-00090  I N T R O D U C T I O N  
PURPOSE 
To determine if supplier documentation accurately reflects beneficiaries' medical need and 
reported use of home oxygen therapy. 
BACKGROUND 
Medicare Payment Policies and Expenditures 
Home oxygen therapy accounts for the largest share of Medicare payments for durable 
medical equipment (DME).  Medicare payments for oxygen equipment more than doubled 
between 1992 and 1996, increasing from about $900 million in 1992 to about $1.9 billion 
in 1996.  Medicare allowances for oxygen equipment totaled over $2 billion in 1997. 
Medicare reimburses suppliers for home oxygen equipment based on monthly fee schedule 
allowances which vary by State.  These monthly fee schedule allowances cover the oxygen 
equipment, oxygen contents including all refills, equipment set-up and maintenance, and 
patient training.  During the period of our review, monthly fee schedule allowances were 
about $300 for stationary oxygen equipment rentals, and about $50 for portable oxygen 
equipment rentals.  The 1997 Balanced Budget Act legislated oxygen fee schedule 
reductions totaling 30 percent, with a 25 percent cut effective January 1, 1998 and a 
further 5 percent cut effective January 1, 1999. 
Medicare Coverage of Home Oxygen Therapy 
Section 1861 (S)6 of the Social Security Act authorizes Medicare coverage of home 
oxygen therapy.  Medicare covers home oxygen therapy for beneficiaries diagnosed with 
significant hypoxemia (a deficiency in the amount of oxygen in the blood).  This condition 
is usually associated with severe respiratory problems.  Medicare beneficiaries may qualify 
for home oxygen therapy if 1) their ability to breathe is severely impaired, 2) laboratory 
tests demonstrate medical need for oxygen therapy, 3) the attending physician prescribes 
oxygen therapy, and 4) alternative treatment modalities have been tried or considered and 
deemed clinically ineffective. 
Oxygen delivery systems fall into two categories: stationary systems and portable systems. 
Beneficiaries may qualify for rental of stationary and/or portable oxygen systems. 
Stationary oxygen equipment includes oxygen concentrators, liquid systems, and gas 
systems.  Oxygen concentrators are electrically powered machines which generate higher 
5 
Home Oxygen Therapy  OEI-03-96-00090  concentrations of oxygen from room air.  Gas and liquid oxygen systems administer 
oxygen directly from tanks or cylinders.  Portable oxygen equipment includes small liquid 
cylinders and small gas tanks.  These systems allow patients to perform activities away 
from their stationary units, including activities outside the home. 
Medical Documentation 
Initial oxygen claims sent to the DMERCs must include a Certificate of Medical Necessity 
(CMN) for home oxygen therapy.  Most suppliers submit claims and CMNs electronically. 
The CMN must contain sufficient medical information, including diagnoses and results of 
laboratory tests, to establish that the beneficiary meets coverage requirements.  The CMN 
must be completed, signed, and dated by the ordering physician.  According to Medicare 
guidelines, oxygen suppliers must submit appropriate CMNs with oxygen claims, and keep 
original CMNs in their records.  The DMERCs revised the original home oxygen CMN 
(Form HCFA-484) and required suppliers to submit the revised version (Form HCFA-
484.2) with claims after April 1, 1998.  A copy of Form HCFA-484 is provided in 
Appendix B. 
Medicare requires documentation of hypoxemia, as demonstrated by the results of either 
an arterial blood gas test (PaO or PO ) or an oxygen saturation test (O Sat).  These tests 
2  2 2
measure the amount of oxygen in a patients blood.  Arterial blood gas tests provide a 
more precise and reliable measurement.  Medicare guidelines stipulate that arterial blood 
gas test results are preferred for documenting medical necessity. 
For coverage purposes, Medicare classifies beneficiaries into one of three groups 
depending on the results of arterial blood gas or oxygen saturation tests. 
Group I.  Medicare covers home oxygen therapy if a patients arterial blood gas test result 
is at or below 55 mm Hg or their oxygen saturation test result is at or below 88 percent, at 
rest.  Coverage is also available if the patient has higher blood gas levels at rest, but meets 
required levels during exercise or sleep.  Physicians must re-certify beneficiaries in this 
group after 12 months of therapy, and suppliers must submit re-certification CMNs with 
oxygen claims for the 13th month of therapy. 
Group II.  Coverage is available if a patients arterial blood gas test result is between 56 
and 59 mm Hg or their oxygen saturation test result equals 89 percent, and there is 
evidence of 1) dependent edema suggesting congestive heart failure, 2) pulmonary 
hypertension or cor pulmonale, or 3) erythrocythemia with a hematocrit greater than 56 
percent.  Physicians must re-certify beneficiaries in this group if their oxygen therapy will 
continue beyond three months.  Suppliers must submit re-certification CMNs containing 
new arterial blood gas or oxygen saturation test results with claims for the fourth month of 
therapy. 
6 
Home Oxygen Therapy  OEI-03-96-00090  Group III.  According to the Medicare Coverage Issues Manual Section 60-4, carriers 
must apply a rebuttable presumption of non-coverage for a patient with an arterial blood 
gas test result at or above 60 mm Hg, or an oxygen saturation test result at or above 90 
percent.  Physicians must submit additional evidence to carrier medical reviewers to justify 
the medical need for oxygen therapy in order for Medicare to reimburse claims in this 
group.  According to the Coverage Issues Manual, HCFA expects few claims to be 
approved for coverage in this category. 
METHODOLOGY 
Sampling 
We selected a stratified random sample of Medicare beneficiaries with paid claims for 
stationary and/or portable oxygen equipment.  Beneficiaries were selected from a database 
containing 5 percent of home oxygen therapy claims paid by Medicare in 1996.  The 5 
percent file was created from the 1996 HCFA Common Working File, which was 89 
percent complete at the time of sample selection. 
We designed a sample with three strata using two stratification criteria - total allowance 
and number of months of billings per beneficiary.  Stratum 1 contains all beneficiaries in 
the 5 percent file whose total allowances for oxygen equipment were greater than $4500. 
Stratum 2 contains beneficiaries with 4 or more months of billings in 1996.  Stratum 3 
contains beneficiaries with 3 or fewer months of billings in 1996.  We selected a total of 
801 beneficiaries.  After removing deceased beneficiaries identified through the Medicare 
Beneficiary Enrollment Database, our working sample contained 529 beneficiaries.  A 
description of each stratum is presented in Table 1. 
Table 1. Beneficiary Sample Specifications 
Strata  Criteria  Population  Selected  Working 
Sample  Sample 
1  Total allowances per beneficiary > $4500  107  107  86 
2  Beneficiaries with $ 4 months of billings  24689  408  304 
3  Beneficiaries with # 3 months of billings  8499  286  139 
Total  33295  801  529 
7 
Home Oxygen Therapy  OEI-03-96-00090  Data Collection and Analysis 
We collected data from Medicare beneficiaries and their suppliers from August 1997 to 
April 1998.  The Survey Data Analysis (SUDAAN) software package was used to 
compute point estimates and corresponding 95 percent confidence intervals.  We used 
sample beneficiaries claims for oxygen equipment to compute allowance totals.  (Point 
estimates and confidence intervals for all statistics presented in the Findings of this report 
are provided in Appendix A.) 
It is important to note that the sampling unit for this inspection was the Medicare 
beneficiary; therefore, we cannot generalize supplier-specific data to the population of 
home oxygen suppliers.  This information is only representative of the group of suppliers 
who provided oxygen to sample beneficiaries. 
Beneficiary data.  We designed a telephone survey instrument to collect data from 
sample beneficiaries.  Survey items focused on the types of oxygen equipment used, 
frequency and duration of daily oxygen use, portable system use, and frequency of supplier 
service visits.  We completed telephone interviews with 303 of the 529 beneficiaries in our 
sample, a 57 percent response rate.  Of non-respondents, 10 percent were beneficiaries for 
whom we could not find phone numbers, 18 percent could not be reached by phone after 
multiple attempts, 13 percent refused to participate, and 2 percent were beneficiaries for 
whom we had incomplete surveys.  Based on beneficiary responses, we determined 
whether and to what extent beneficiaries were using their stationary and portable oxygen 
systems, and whether and how often beneficiaries received portable oxygen refills and 
equipment service visits from suppliers. 
Supplier and CMN Data.  We developed a self-administered survey instrument for all 
suppliers who billed Medicare for sample beneficiaries oxygen therapy claims in 1996. 
We mailed 605 survey instruments to these suppliers.  Many of the questions on the 
supplier survey mirrored those on the beneficiary survey, including questions about 
oxygen equipment and supplier services provided to sample beneficiaries.  We requested 
that suppliers provide copies of sample beneficiaries oxygen CMNS, as well as lab reports 
showing arterial blood gas and/or oxygen saturation test results.  Of the 605 surveys 
mailed, 91 percent (n=550) were completed and returned. 
Based on supplier survey responses, we determined the types of stationary and portable 
equipment provided to beneficiaries, and the number of portable oxygen refills and 
equipment service visits provided to beneficiaries.  In almost all cases, suppliers submitted 
file copy CMNS rather than printouts of electronic transmission CMNS.  After reviewing 
all CMNS submitted with each supplier survey, we identified the earliest dated CMN 
covering oxygen therapy provided in 1996.  Herein, this CMN will be referred to as the 
review CMN.  All review CMNS were original forms (HCFA-484) in effect prior to 
DMERC revision.  We used the review CMN to complete a series of questions regarding 
8 
Home Oxygen Therapy  OEI-03-96-00090  document completeness, test results and dates, equipment prescription and justification, 
and re-certification. 
After receiving completed supplier survey instruments, we selected a small sub-sample of 
26 suppliers for a follow-up documentation review.  All of these suppliers indicated that 
they had provided portable oxygen refills and/or oxygen equipment service visits between 
January 1, 1996 and December 31, 1997.  In a mail request, we asked these suppliers to 
submit documentation to support their portable refill activity and/or equipment service 
visits.  Twenty-three of the 26 suppliers provided the requested materials.  One supplier 
submitted only a partial response, which we excluded from our review.  Finally, two 
suppliers did not respond to the mail request despite multiple attempts to secure requested 
documentation. 
This study was conducted in accordance with the Quality Standards for Inspections issued 
by the Presidents Council on Integrity and Efficiency. 
9 
Home Oxygen Therapy  OEI-03-96-00090  F I N D I N G S  
Nearly one-quarter of oxygen Certificates of Medical 
Necessity were inaccurate or incomplete 
Twenty-three percent of the oxygen CMNS we reviewed had one or more of the following 
problems: incompleteness, non-confirming lab reports, and lack of justification for 
portable oxygen where portable claims were paid.  Based on claims for oxygen services 
covered by these CMNS, we estimate that Medicare paid $263 million in 1996 for oxygen 
equipment covered by inaccurate or incomplete CMNS. 
Fourteen percent of CMNS were incomplete 
According to Medicare guidelines, home oxygen CMNS must contain specific information 
to establish a beneficiarys medical need for the benefit.  If CMNS do not contain all of 
this information, Medicare payments should not be processed.  However, 14 percent of 
CMNS had one or more required sections not completed.  Incomplete sections included 
oxygen prescription date, length of need for oxygen therapy, name and address of provider 
performing qualifying tests, oxygen prescription, physician signature, and date signed by 
physician.  About 48 percent of these incomplete CMNS were initial certifications for 
home oxygen therapy. 
Some lab reports provided by suppliers did not confirm CMN test results 
Thirty percent of suppliers submitted actual lab reports corresponding to the arterial blood 
gas or oxygen saturation test results recorded on review CMNS.  Of these suppliers who 
submitted actual lab reports, 27 percent submitted reports that did not confirm the test 
results recorded on CMNS.  Many of these lab reports did not agree with the test 
condition reported on the review CMN.  The test condition indicates the circumstances 
under which the arterial blood gas or oxygen saturation test was performed, such as at 
rest, while sleeping, while exercising, or on oxygen.  Other lab reports did not 
match the test values or test dates reported on review CMNS. 
The agreement of actual lab reports with test results recorded on CMNS varies by type of 
qualifying test.  While 33 percent of CMNS with pulse oximetry test results had non-
confirming lab reports, 20 percent of CMNS with arterial blood gas test results had non-
confirming lab reports.  For CMNS with both pulse oximetry and arterial blood gas test 
results, only 10 percent had corresponding lab reports that did not confirm CMN results. 
10 
Home Oxygen Therapy  OEI-03-96-00090  Medicare paid for portable oxygen equipment not justified on CMNS 
Medicare reimbursed portable equipment claims for 23 percent of review CMNS that did 
not provide justification for portable oxygen equipment.  In order for portable oxygen 
equipment to be covered during the period of our review, beneficiaries physicians must 
have prescribed a portable system and included a narrative justification of why the patient 
needed portable equipment on the CMN. 
While almost all beneficiaries used their stationary oxygen 
equipment, 13 percent of beneficiaries reported never using 
their portable systems 
Overall, beneficiaries were using stationary oxygen equipment as part of a 
prescribed home oxygen therapy regimen 
Almost all beneficiaries used the stationary oxygen equipment paid for by Medicare, and 
most beneficiaries reported using these systems every day.  Only 6 percent of beneficiaries 
reported that they did not use their stationary equipment every day (n=14).  Twelve of the 
14 beneficiaries used oxygen concentrators, one used a stationary liquid system, and one 
used a stationary gas system.  All but one of these beneficiaries reported using the 
stationary equipment a few times per week. 
Thirteen percent of beneficiaries never used their portable oxygen equipment 
Thirteen percent of beneficiaries indicated that they had never used the portable oxygen 
equipment paid for by Medicare.  We estimate that Medicare paid about $9.7 million in 
1996 for portable oxygen equipment that beneficiaries never used. 
Nearly one in five beneficiaries who did report using their portable oxygen equipment used 
the portable systems only two days per month or less.  Nine percent of beneficiaries used 
their portable oxygen systems one day per month or less; another 10 percent of 
beneficiaries reported using their portable equipment one day every two weeks. 
Beneficiaries with gas portable systems used their portable equipment significantly less 
than beneficiaries with liquid portable systems, as shown in Table 2.  Twenty-eight percent 
of beneficiaries with gas portable systems used the systems one day every two weeks or 
less, compared to only 8 percent of beneficiaries with liquid portable systems.  Fifty-eight 
percent of beneficiaries with gas portable systems used the systems every day or a few 
days per week, while about 82 percent of beneficiaries with liquid portable systems used 
these systems every day or a few days per week. 
11 
Home Oxygen Therapy  OEI-03-96-00090  Table 2.  Frequency of Beneficiaries Portable Oxygen Use 
How Often Portable System Was Used:  Overall  Portable Gas1  Portable Liquid1 
Every Day  21 %  22 %  29 % 
Few days per week  36 %  36 %  53 % 
One day per week  10 %  14 %  9 % 
One day every 2 weeks  10 %  17 %  2 % 
One day per month or less  9 %  11 %  6 % 
Never used portable system  13 %  NA  NA 
1 Computations of use percentages by portable equipment type exclude beneficiaries who reported never 
using portable systems. 
Information gathered from suppliers may provide further evidence of beneficiaries 
infrequent usage of their portable systems.  About 22 percent of sample suppliers who 
billed for portable oxygen equipment in 1996 did not provide any refills for these portable 
systems between January 1, 1996 and December 31, 1997.  We estimate that Medicare 
paid about $24 million in 1996 for portable equipment claims for which suppliers did not 
provide refills. 
As shown in Table 3, almost all of the suppliers who did not provide refills were providing 
gas portable systems to beneficiaries.  Twenty-nine percent of gas portable suppliers 
reported that they did not provide any refills between January 1, 1996 and December 31, 
1997, while less than one percent of liquid portable suppliers did not provide any refills 
during the two-year period. 
Table 3. Portable Refills Provided By Portable System Supplied 
Whether Supplier Provided  Overall  Gas Portable  Liquid Portable  Supplied Both 
Portable Refills:  Only  Only  Types 
Provided Refills  78 %  71 %  99 %  94 % 
Did Not Provide Refills  22 %  29 %  1 %  6 % 
12 
Home Oxygen Therapy  OEI-03-96-00090  Suppliers reported providing services, but were unable to 
fully document all of these services 
Suppliers reported providing portable system refills and equipment service visits 
Suppliers who provided portable oxygen equipment refills were asked to report the 
number of refills they provided between January 1, 1996 and December 31, 1997.  We 
confined our analysis of portable system refills to suppliers who provided oxygen to 
beneficiaries for the full two-year period of review.  Suppliers who furnished gas portable 
systems reported providing a median of 23 refill tanks, or about one tank per month, to 
beneficiaries over this period.  One of these suppliers reported providing 559 refill tanks to 
a beneficiary during this period; while, for seven cases, suppliers reported providing only 
one refill tank over the two-year period.  Suppliers who furnished liquid oxygen systems 
reported refilling beneficiaries stationary tanks, from which portable units were 
replenished, a median of 51 times over the two-year period.  The reported number of 
liquid system refills ranged from a minimum of zero to a maximum of 210. 
Suppliers were also asked to report how many times they sent an employee to subject 
beneficiaries homes to make sure that oxygen equipment was operating properly for the 
period January 1, 1996 to December 31, 1997.  Again, we confined our review of 
equipment service visits to suppliers who provided oxygen to beneficiaries for the full 
two-year period.  Suppliers reported providing a median of 13 equipment service visits to 
beneficiaries during this period, or about one visit every other month.  The number of 
equipment service visits provided varied greatly from a minimum of zero visits to a 
maximum of 209 visits between January 1, 1996 and December 31, 1997. 
Some suppliers were unable to provide documentation to support their reported 
services 
We asked a small sub-sample of suppliers to submit documentation to support the refill 
activity they reported in our survey.  These suppliers indicated when they completed the 
survey that they had documentation to support refill activity.  The six sub-sample suppliers 
who provided liquid systems were able to fully document all refill activity.  However, only 
42 percent of the 12 sub-sample suppliers who provided gas portable systems were able to 
fully document refill activity.  Of the 58 percent that could not fully document the number 
of portable gas refills they reported in our survey, three suppliers documented over half of 
reported refills, and 4 suppliers documented only 50 percent or less of the reported refills. 
Two of the four suppliers in the latter group did not provide any documentation 
supporting the number of reported refills. 
13 
Home Oxygen Therapy  OEI-03-96-00090  When asked to submit documentation supporting oxygen equipment service visits, only 
about 35 percent of sub-sample suppliers (8 of 23) were able to fully document these 
visits.  Of those that could not fully document service visits, 7 suppliers documented 80 
percent or more of reported visits, 5 suppliers documented 54 to 68 percent of visits, and 
3 suppliers documented 50 percent or less of reported equipment service visits. 
14 
Home Oxygen Therapy  OEI-03-96-00090  R E C O M M E N D A T I O N S  
To address the vulnerabilities identified in this report, we recommend that the 
Health Care Financing Administration: 
Ensure that system edits in place at the DMERCs are able to identify incomplete 
CMNs, and delay payments for oxygen equipment claims until complete CMNs are 
submitted.  The HCFA should also conduct periodic checks to ensure that original 
CMNs signed by beneficiaries physicians and kept on file by oxygen suppliers 
confirm the electronic versions of CMNs that suppliers submit to Medicare carriers. 
Target oxygen equipment claims for focused medical review.  We realize that it would 
not be manageable or cost effective to perform extensive reviews on all oxygen equipment 
claims.  However, we believe that our findings raise issues that can only be addressed 
through individual case review. 
Work to quickly establish specific service standards for home oxygen equipment 
suppliers as mandated by the Balanced Budget Act of 1997.  As part of these 
standards, we believe that suppliers should be required to maintain adequate 
documentation to verify the provision of equipment and patient services. 
Continue to alert physicians to the critical role they play in determining 
beneficiaries medical need for and utilization of medical equipment paid for by 
Medicare.  In a January 1999 Fraud Alert concerning physician certification of the need 
for medical supplies and services, our office emphasized that, by signing CMNs, physicians 
are attesting that information on the entire CMN is true, accurate, and complete to the 
best of their knowledge. 
AGENCY COMMENTS 
We received comments on our draft report from HCFA.  The full text of these comments 
can be found in Appendix C.  A summary and our response follows. 
HCFA Comments 
The HCFA concurred with all of our recommendations.  They reported that current policy 
calls for DMERC systems to edit required fields on electronic CMNs for completeness. 
The HCFA also stated that the file copy CMNs the OIG reviewed are used primarily for 
suppliers own records, and therefore may be abbreviated and may not include all the 
information the suppliers submit electronically.  Nevertheless, HCFA agreed they should 
15 
Home Oxygen Therapy  OEI-03-96-00090  make it clear to suppliers that file copy CMNs signed by physicians should contain all the 
information suppliers submit electronically. 
Based on the information presented in our report, HCFA commented that portable oxygen 
systems might prove to be a fruitful target for focused medical review. The HCFA also 
indicated that they are planning to develop a regulation that will set service standards for 
home oxygen equipment suppliers. 
The HCFA also provided two technical comments.  With respect to our finding that 
Medicare paid $263 million in 1996 for oxygen equipment covered by inaccurate or 
incomplete CMNs, HCFA stated this figure does not necessarily represent payments made 
for medically unnecessary or unreasonable services.  The agency also believed it is 
important to clarify why laboratory reports did not confirm test results detailed on the 
CMNs, and to distinguish between test results recorded on CMNs that could not be 
supported by suppliers records and test results recorded on CMNs that differed from 
suppliers records. 
OIG RESPONSE 
We appreciate HCFAs positive response to our recommendations, and we concur with 
their proposed actions.  We appreciate the fact that HCFA agreed to make it clear to 
suppliers that CMNs kept on file should contain all the information submitted 
electronically.  While some suppliers may have retained only abbreviated versions of the 
CMN in their files, this practice is not in keeping with current policy.  The DMERC 
Supplier Manuals require suppliers to keep the original CMN signed by the physician on 
file, along with any additional medical necessity information.  This CMN must include all 
required information and be filled out completely and accurately.  We believe, in most 
cases, the information from this file copy CMN is used to develop the final electronic 
version of the CMN that is submitted for claims processing.  Therefore, in order to meet 
the requirements for coverage of oxygen therapy, file copies of the CMNs we reviewed 
should have been complete and accurate.  As presented in this report, we did not always 
find this to be the case. 
In response to HCFAs technical comments, we agree the $263 million for oxygen 
equipment supported by inaccurate or incomplete CMNs does not presuppose a finding of 
medically unnecessary services.  Rather, this estimate represents services where suppliers 
did not provide us with the complete documentary support required for Medicare 
reimbursement.  With regard to HCFAs comments about laboratory test results, we have 
revised the relevant heading in the report.  Our finding only relates to suppliers who 
provided laboratory test results for our review.  When we report non-confirming test 
results, this refers only to laboratory tests where information from the actual lab report 
differed from information listed on the CMN. 
16 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  A 
Estimates and Confidence Intervals

PAGE 
TABLE 1.  Inaccurate or Incomplete CMNS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

TABLE 2.  Incomplete CMNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

TABLE 3.  Actual Lab Reports and Test Results Recorded on CMNS . . . . . . . . . . . . . . . . . 18

TABLE 4. 	 Agreement of Actual Lab Reports With CMN Test Results 

By Type of Qualifying Test  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

TABLE 5. 	 Source of Conflict Between Actual Lab Reports and Test 

Results Recorded on CMNS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

TABLE 6.  Medicare Paid for Portable Oxygen Equipment Not Justified on CMNS . . . . . . .  19

TABLE 7.  Distribution of Beneficiaries By Stationary Equipment Use . . . . . . . . . . . . . . . . .  20

TABLE 8.  Beneficiaries Who Never Used Portable Oxygen Equipment . . . . . . . . . . . . . . . .  20

TABLE 9.  Distribution of Beneficiaries By Frequency of Portable Equipment Use  . . . . . . .  20

TABLE 10.  Frequency of Portable Equipment Use: Gas Portable Equipment  . . . . . . . . . . . .  21

TABLE 11.  Frequency of Portable Equipment Use: Liquid Portable Equipment  . . . . . . . . . .  21

TABLE 12.  Portable Oxygen Equipment Refills  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

TABLE 13.	 Portable Equipment Refills and Equipment Service Visits Reported 

By Suppliers, 2-Year Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

TABLE 14.  Supporting Documentation: Portable Equipment Refills . . . . . . . . . . . . . . . . . . .  22

TABLE 15.  Supporting Documentation: Equipment Service Visits  . . . . . . . . . . . . . . . . . . . .  22

17 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  A 
Estimates and Confidence Intervals 
The tables below contain statistical estimates presented in the Findings section of this 
report.  We used the Survey Data Analysis (SUDAAN) software package to compute 
percentages, means, medians, totals and confidence intervals.  These estimates are 
weighted based on the stratified random sample design and are reported at the 95 percent 
confidence level. 
Table 1. 
Inaccurate or Incomplete CMNs 
Point  95% Confidence Interval 
Estimate 
Percent of Incomplete or Inaccurate CMNs  22.85%  18.96% - 27.01% 
Total Medicare Allowances in 1996 for Oxygen 
Equipment Covered by Incomplete or Inaccurate  $262,625,991  $205,904,911 - $319,347,071 
CMNs 
Table 2. 
Incomplete CMNs 
Percent  95% Confidence Interval 
Incomplete CMNs  13.56%  10.17% - 16.95% 
Incomplete Initial CMNs  48.37%  34.89% - 61.85% 
Table 3. 
Actual Lab Reports and Test Results Recorded on CMNs 
Percent  95% Confidence Interval 
Suppliers Submitted Actual Lab Reports  29.83%  25.34% - 34.32% 
Actual Lab Reports Did Not Confirm Test Results  26.62%  18.72% - 34.52% 
Recorded on Review CMNs 
Table 4. 
18 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  A 
Agreement of Actual Lab Reports With

CMN Test Results

By Type of Qualifying Test*

Percent of CMNs With  95% Confidence 
Type of Test Recorded on CMN  Non-Confirming Lab Reports  Interval 
Oxygen Saturation Test Only  33.43%  22.61% - 44.25% 
Arterial Blood Gas Test Only  19.65%  5.46% - 33.84% 
Both Test Types  10.41%  0% - 24.62% 
* Difference between percentages is significant at the 94% confidence level (p=0.0522). 
Table 5. 
Source of Conflict Between Actual Lab Reports 
and Test Results Recorded on CMNs 
Number of Cases 
Test Condition  25 
Test Values  12 
Test Date  9 
Test Type  3 
Provider Performing Qualifying Test  1 
Table 6. 
Medicare Paid for Portable Oxygen Equipment 
Not Justified on CMNs 
Percent  95% Confidence Interval 
Review CMNs Without Portable Justification:  23.42%  14.11% - 32.73% 
Portable Claims Paid  (n=24) 
19 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  A 
Table 7. 
Distribution of Beneficiaries By Stationary Equipment Use 
Percent  95% Confidence Interval 
Used Stationary Oxygen Equipment  98.83%  97.61% - 100% 
Used Stationary Oxygen Equipment Every Day  94.44%  91.36% - 97.52% 
Did Not Use Stationary Oxygen Equipment Every Day  5.56%  2.48% - 8.64% 
Table 8. 
Beneficiaries Who Never Used Portable Oxygen Equipment 
Point  95% Confidence Interval 
Estimate 
Percent of Beneficiaries Who Never Used Portable  13.46%  8.64% - 18.2.8% 
Equipment Reimbursed by Medicare  (n=30) 
Total Medicare Allowances in 1996 For Portable  $9,734,960  $5,182,570 - $14,287,350 
Equipment Beneficiaries Never Used 
Table 9. 
Distribution of Beneficiaries By Frequency of Portable Equipment Use 
Percent  95% Confidence Interval 
Every Day  21.25%  15.25% - 27.25% 
Few Days Per Week  36.36%  29.28% - 43.44% 
One Day Per Week  10.44%  6.17% - 14.71% 
One Day Every 2 Weeks  9.86%  5.43% - 14.29% 
One Day Per Month or Less  8.63%  4.55% - 12.71% 
20 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  A 
Table 10. 
Frequency of Portable Equipment Use: 
Gas Portable Equipment 
Percent  95% Confidence Interval 
Every Day  22.41%  13.93% - 30.86% 
Few Days Per Week  35.72%  26.02% - 45.42% 
One Day Per Week  14.27%  7.56% - 20.95% 
One Day Every 2 Weeks  16.68%  9.08% - 24.28% 
One Day Per Month or Less  10.92%  4.80% - 17.04% 
Table 11. 
Frequency of Portable Equipment Use: 
Liquid Portable Equipment 
Percent  95% Confidence Interval 
Every Day  29.31%  17.31% - 41.31% 
Few Days Per Week  53.43%  40.12% - 66.74% 
One Day Per Week  9.16%  1.83% - 16.49% 
One Day Every 2 Weeks  2.02%  0% - 5.94% 
One Day Per Month or Less  6.09%  0% - 12.73% 
Table 12. 
Portable Oxygen Equipment Refills 
Point  95% Confidence Interval 
Estimate 
Total Medicare Allowances in 1996 for Portable  $23,782,718  $17,051,620 - $30,513,816 
Equipment for which Suppliers Did Not Provide 
Refills 
21 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  A 
Table 13. 
Portable Equipment Refills and Equipment Service Visits 
Reported by Suppliers, 2-Year Period 
Type of Service  Median  IQR*  Minimum  Maximum 
Gas Portable System Refills  23.20  59.22  1  559 
Liquid Portable System Refills  51.24  62.03  0  210 
Equipment Service Visits  12.65  15.28  0  209 
* The interquartile range (IQR) is the difference between the 25th and 75th percentiles in a distribution. It is a 
measure of spread that discounts extreme cases, and is therefore insensitive to outliers. 
Table 14. 
Supporting Documentation: Portable Equipment Refills 
Degree To Which Reported Services Were  Gas Portable  Liquid Portable 
Documented  Refills  Refills 
Fully Documented Services  5  6 
Documented over 50 Percent of Services  3  0 
Documented 50 Percent or Less of Services  4  0 
Total  12  6 
Table 15. 
Supporting Documentation: Equipment Service Visits 
Degree To Which Reported Services Were  Equipment Service Visits 
Documented 
Fully Documented Services  8 
Documented 80-96 Percent of Services  7 
Documented 54-68 Percent of Services  5 
Documented 25-50 Percent of Services  3 
Total  23 
22 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  B 
Form HCFA-484

23 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  C 
Comments on the Draft Report 

In this appendix, we present in full the comments from the Health Care Financing 
Administration. 
24 
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  C 
25
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  C 
26
Home Oxygen Therapy  OEI-03-96-00090  APPENDIX  C 
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Home Oxygen Therapy  OEI-03-96-00090