Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JUNE GIBBS BROWN 

Inspector General 

AUGUST 1999 

OEI-03-96-00090 

USAGE AND DOCUMENTATION OF 

HOME OXYGEN THERAPY 
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 
EXECUTIVE SUMMARY 

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. 

Home Oxygen Therapy 1 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. 

Home Oxygen Therapy 2 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 HCFA’s 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 HCFA’s 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 HCFA’s 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. 

Home Oxygen Therapy 3 OEI-03-96-00090 
TABLE OF CONTENTS 

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

Home Oxygen Therapy 4 OEI-03-96-00090 
INTRODUCTION 

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 

Home Oxygen Therapy 5 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 HCFA484.2) 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 (PaO2 or PO2) or an oxygen saturation test (O2Sat). These tests 

measure the amount of oxygen in a patient’s 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 patient’s 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 patient’s 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. 

Home Oxygen Therapy 6 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 

Sample 

Working 

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 

Home Oxygen Therapy 7 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 

Home Oxygen Therapy 8 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 President’s Council on Integrity and Efficiency. 

Home Oxygen Therapy 9 OEI-03-96-00090 
FINDINGS 

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 beneficiary’s 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 nonconfirming lab reports, 20 percent of CMNS with arterial blood gas test results had nonconfirming 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. 

Home Oxygen Therapy 10 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. 

Home Oxygen Therapy 11 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 

Portable Refills: 

Overall Gas Portable 

Only 

Liquid Portable 

Only 

Supplied Both 

Types 

Provided Refills 78 % 71 % 99 % 94 % 

Did Not Provide Refills 22 % 29 % 1 % 6 % 

Home Oxygen Therapy 12 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. 

Home Oxygen Therapy 13 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. 

Home Oxygen Therapy 14 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 

Home Oxygen Therapy 15 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 HCFA’s 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 HCFA’s 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 HCFA’s 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. 

Home Oxygen Therapy 16 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

Home Oxygen Therapy 17 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 

Estimate 

95% Confidence Interval 

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 

CMNs 

$262,625,991 $205,904,911 - $319,347,071 

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 

Recorded on Review CMNs 

26.62% 18.72% - 34.52% 

Table 4. 

Home Oxygen Therapy 18 OEI-03-96-00090 
APPENDIX A 

Agreement of Actual Lab Reports With

CMN Test Results

By Type of Qualifying Test*

Type of Test Recorded on CMN Non-Confirming Lab Reports 

Percent of CMNs With 

Interval 

95% Confidence 

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: 

Portable Claims Paid 

23.42% 

(n=24) 

14.11% - 32.73% 

Home Oxygen Therapy 19 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 

Estimate 

95% Confidence Interval 

Percent of Beneficiaries Who Never Used Portable 

Equipment Reimbursed by Medicare 

13.46% 

(n=30) 

8.64% - 18.2.8% 

Total Medicare Allowances in 1996 For Portable 

Equipment Beneficiaries Never Used 

$9,734,960 $5,182,570 - $14,287,350 

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% 

Home Oxygen Therapy 20 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 

Estimate 

95% Confidence Interval 

Total Medicare Allowances in 1996 for Portable 

Equipment for which Suppliers Did Not Provide 

Refills 

$23,782,718 $17,051,620 - $30,513,816 

Home Oxygen Therapy 21 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 

Documented 

Gas Portable 

Refills 

Liquid Portable 

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 

Documented 

Equipment Service Visits 

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 

Home Oxygen Therapy 22 OEI-03-96-00090 
APPENDIX B 

Form HCFA-484

Home Oxygen Therapy 23 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. 

Home Oxygen Therapy 24 OEI-03-96-00090 
APPENDIX 

Home Oxygen Therapy 25

C 

OEI-03-96-00090 
APPENDIX 

Home Oxygen Therapy 26

C 

OEI-03-96-00090 
APPENDIX 

Home Oxygen Therapy 27

C 

OEI-03-96-00090