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###### Department of Health and Human Services

###### Centers for Medicare & Medicaid Services 

          - [CMS-1299-N] 

# AGENCY:

Centers for Medicare & Medicaid Services (CMS), HHS. 

# ACTION:

Notice. 

# SUMMARY:

This notice discusses a reduction in the 2005 monthly payment amounts for oxygen and oxygen equipment based on the percentage difference between Medicare's 2002 monthly payment amounts for each State and the median 2002 Federal Employee Health Benefit plan price reported by the Office of Inspector General. This reduction is required by section 302(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. 

# FOR FURTHER INFORMATION CONTACT:

                        Joel Kaiser, (410) 786-4499,                         *jkaiser@cms.hhs.gov.*

# SUPPLEMENTARY INFORMATION:

## I. Background 

In accordance with section 302(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted on December 8, 2003), Medicare's monthly payment amounts for oxygen and oxygen equipment for 2005 are to include a reduction based on the percentage difference between Medicare's 2002 monthly payment amounts for each State and the median 2002 Federal Employee Health Benefit (FEHB) plan price reported by the Office of Inspector General (OIG). The OIG has alerted us that they will need to collect additional information before the FEHB medians for oxygen and oxygen equipment and portable oxygen equipment are finalized. Therefore, Medicare claims for oxygen and oxygen equipment and portable oxygen equipment furnished on or after January 1, 2005, and identified by the Healthcare Common Procedure Coding System codes listed below, will be temporarily paid based on the 2004 monthly payment amounts. In accordance with the authority provided by section 1871(e)(1)(A)(ii) of the Social Security Act, we are making this change retroactive for items and services furnished on or after January 1, 2005, because we have determined that it would be contrary to the public interest to implement 2005 payment amounts based on preliminary and potentially erroneous data. 
    - E0424—Stationary Compressed Gaseous Oxygen System, Rental: Includes container, contents, regulator, flowmeter, humidifier, nebulizer, cannula or mask, and tubing;
    - E0439—Stationary Liquid Oxygen System, Rental: Includes container, contents, regulator, flowmeter, humidifier, nebulizer, cannula or mask, and tubing;
    - E1390—Oxygen Concentrator, Single delivery port, capable of delivering 85 percent or greater oxygen concentration at the prescribed flow rate delivery port, capable of delivering 85 percent or greater oxygen concentration at the prescribed flow rate;
    - E1391—Oxygen Concentrator, Dual delivery port, capable of delivering 85 percent or greater oxygen concentration at the prescribed flow rate;
    - E0431—Portable Gaseous Oxygen System, Rental: Includes portable container, regulator, flowmeter, humidifier, cannula or mask, and tubing;
    - E0434—Portable Liquid Oxygen System, Rental: Includes portable container, supply reservoir, humidifier, flowmeter, refill adaptor, contents gauge, cannula or mask, and tubing.

                    Once we receive the FEHB medians from the OIG, we will calculate and implement the 2005 monthly payment amounts and will begin paying claims using these amounts. These amounts will apply prospectively only. This is explained at                     *http://www.cms.hhs.gov/​suppliers/​dmepos/​.*                     Any future updates will also be published at this website.                           ( print page 6014)    

## II. Provisions of the Notice 

The purpose of this notice is to notify the public that the OIG has informed us of their need for additional information before the provision may be used and implemented to reduce monthly payment amounts for oxygen and oxygen equipment, based on the percentage difference between Medicare's 2002 monthly payment amounts for each State and the median 2002 Federal Employee Health Benefit plan price reported by the OIG. 

## III. Collection of Information Requirements 

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995. 

## IV. Regulatory Impact Statement 

We have examined the impact of this notice as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. 

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This notice does not reach the economic threshold and thus is not considered a major rule. 

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year. Individuals and States are not included in the definition of a small entity. We are not preparing an analysis for the RFA because we have determined that this notice will not have a significant economic impact on a substantial number of small entities. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined that this notice will not have a significant impact on the operations of a substantial number of small rural hospitals. 

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. This notice will have no consequential effect on the governments mentioned or on the private sector. 

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this regulation does not impose any costs on State or local governments, the requirements of E.O. 13132 are not applicable. 

In accordance with the provisions of Executive Order 12866, this document was not reviewed by the Office of Management and Budget. 

Authority:Section 302(c) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).

(Catalog of Federal Domestic Assistance Program No. 93.774, Medicare-Supplemental Medical Insurance Program) 

Dated: January 19, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & Medicaid Services. 

[FR Doc. 05-2176 Filed 2-3-05; 8:45 am] 

BILLING CODE 4120-01-P