Home oxygen therapy is a common treatment for individuals with severe respiratory illnesses, such as Chronic Obstructive Pulmonary Disease (COPD) and certain heart conditions. The necessary equipment, including oxygen concentrators, tanks, and accessories, is categorized as Durable Medical Equipment (DME) by Medicare. Medicare does pay for home oxygen under Part B, but coverage requires meeting specific rules regarding medical necessity and financial responsibility.
Establishing Medical Necessity for Home Oxygen
Medicare coverage for home oxygen depends strictly on a physician determining that the therapy is medically necessary. This requires a detailed written order (DWO) from a Medicare-enrolled doctor and comprehensive medical documentation. The physician must confirm the patient has a severe lung disease or condition causing low blood oxygen levels, known as hypoxemia.
Clinical testing is required to confirm the degree of hypoxemia. This testing typically involves an arterial blood gas (ABG) study or pulse oximetry, measuring oxygen saturation (SpO2) in the blood. To qualify, a patient must generally have an arterial partial pressure of oxygen (PaO2) at or below 55 mm Hg, or an SpO2 level at or below 88% while breathing room air at rest. Patients with higher resting levels may still qualify if saturation drops to 88% or below during exercise or sleep, provided there is evidence of a qualifying secondary diagnosis.
The medical record must also document that standard treatments, such as inhalers or medications, were tried or considered ineffective. The physician’s order must specify the required oxygen flow rate, frequency of use, and duration of the need. Medicare does not cover oxygen prescribed on an “as-needed” (PRN) basis.
Understanding Part B Coverage and Patient Costs
Home oxygen equipment and supplies are covered under Medicare Part B. Before Medicare pays, the patient must meet the annual Part B deductible. Once the deductible is satisfied, financial responsibility is split between Medicare and the patient based on the Medicare-approved amount.
Medicare Part B pays 80% of the approved amount for the rental of oxygen equipment and related accessories. The patient is responsible for the remaining 20% coinsurance of the Medicare-approved amount, paid monthly during the covered rental period.
To ensure predictable costs, patients should select a supplier who “accepts assignment.” This means the supplier agrees to accept the Medicare-approved amount as full payment, protecting the patient from being billed for the difference between the charge and the approved amount. Supplemental insurance, such as Medigap or Medicaid, often covers all or part of the patient’s 20% coinsurance, reducing out-of-pocket costs.
The Equipment Rental and Ownership Timeline
Medicare coverage for oxygen equipment follows a mandatory 5-year timeline. This timeline is split into a 36-month rental period followed by a 24-month maintenance period. For the first 36 continuous months, Medicare pays the supplier a monthly rental fee for the equipment, including stationary concentrators, portable equipment, and necessary supplies like tubing and masks.
During this initial 36-month period, the supplier is responsible for providing all equipment, oxygen contents, and maintenance. The patient is only responsible for the 20% coinsurance on the rental fee. After the 36-month rental period, the supplier must continue providing the equipment and necessary supplies for an additional 24 months, provided the patient still needs oxygen.
During the final 24 months, Medicare stops paying the monthly rental fee, and the patient pays no further rental fees for the concentrator itself. If the patient uses oxygen tanks or cylinders requiring content delivery, the patient remains responsible for the 20% coinsurance on those monthly content deliveries. The supplier owns the equipment throughout the entire 5-year period.
Once the 5-year period is complete, the supplier’s obligation ends. If the patient still requires oxygen therapy, a new 36-month rental period and 5-year cycle can begin with new equipment. This new equipment can be obtained from the same or a different supplier.
Selecting a Supplier and Avoiding Claim Denials
Securing coverage begins with selecting a Durable Medical Equipment (DME) supplier enrolled in Medicare. It is recommended that the supplier also agree to “accept assignment,” ensuring they bill no more than the Medicare-approved amount. Patients can use the official Medicare website to verify participating suppliers.
A significant number of claim denials for oxygen therapy result from incomplete or inaccurate documentation. The supplier must have a valid, detailed written order and a Certificate of Medical Necessity (CMN) on file before submitting the first claim.
Common reasons for denial include:
- Missing physician signatures.
- Blood gas studies performed outside the required 30-day window prior to certification.
- Lack of documentation showing that alternative treatments were considered.
Patients should actively track their documentation and ensure their physician’s office provides all required information to the supplier promptly. If a claim is denied, the patient has the right to appeal the decision. The appeal process involves several levels of review and can be successful if necessary medical records and clinical test results demonstrate that the strict medical necessity criteria were met.