Medicare helps cover the cost of medical equipment and supplies for people with certain health conditions who need care in their homes. Oxygen equipment is categorized under Medicare Part B as Durable Medical Equipment (DME). The program has established specific rules for coverage. Understanding these regulations is necessary for beneficiaries to ensure their equipment and supplies are covered. This article details the requirements for obtaining oxygen therapy coverage, the financial structure of the rental period, cost responsibilities, and long-term provisions for the equipment.
Qualifying for Medicare Oxygen Coverage
Obtaining coverage for home oxygen therapy requires a formal prescription from a Medicare-enrolled physician, certifying that the oxygen is medically necessary for use in the home. The prescribing physician and the equipment supplier must both be approved by Medicare for the service to be covered.
Medical necessity must be established through specific clinical testing to demonstrate a qualifying low oxygen level, a condition known as hypoxemia. The most common tests used are arterial blood gas analysis or pulse oximetry, which measure the oxygen concentration in the blood. These tests must be performed while the patient is in a “chronic stable state,” meaning their condition is not acutely ill or rapidly changing.
To qualify for Group I coverage, a patient’s oxygen saturation must be 88% or less, or their arterial blood gas (PaO2) must be 55 mm Hg or lower, while they are awake and breathing room air at rest. If resting levels are above this threshold, they may still qualify if oxygen levels drop to 88% or less during exercise or sleep. Coverage is contingent upon the expectation that oxygen therapy will improve the patient’s health outcomes or symptoms.
The 36-Month Rental and Equipment Ownership Cycle
Medicare’s payment structure for oxygen equipment centers on a mandatory 36-month rental period. During this time, Medicare makes monthly payments to the Durable Medical Equipment supplier for the equipment and all associated services. This payment schedule is set by federal regulation, specifically 42 CFR § 414.226, which caps the total number of rental payments.
Once the 36-month payment period concludes, Medicare ceases making rental payments to the supplier. The supplier remains obligated to provide the equipment, supplies, and maintenance for the remaining 24 months of the equipment’s five-year reasonable useful lifetime. The supplier retains ownership of the equipment during this entire 60-month period.
The supplier must continue to service and maintain the equipment in good working order throughout the full 60 months. This five-year timeline ensures continuous access to the medically necessary equipment without interruption.
Beneficiary Out-of-Pocket Costs and Covered Accessories
The beneficiary is responsible for certain out-of-pocket costs related to their oxygen equipment and supplies under Medicare Part B. Before Medicare pays its share, the annual Part B deductible must be met. After the deductible is satisfied, the beneficiary is responsible for a 20% coinsurance of the Medicare-approved amount for the monthly rental payment.
The monthly payment bundle includes the oxygen-generating equipment, accessories, and supplies. Items bundled into the single monthly fee include:
- Replacement tubing
- Nasal cannulas
- Oxygen masks
- Routine maintenance checks
If the patient uses oxygen tanks or cylinders, the cost for the gaseous or liquid oxygen contents is included in the monthly payment for the first 36 months. After the 36-month payment cap is reached, the supplier may continue to bill Medicare for the contents separately. The patient would still be responsible for the 20% coinsurance on these content deliveries for the remainder of the five-year period.
Long-Term Rules for Equipment Replacement and Travel
The initial 60-month period represents the reasonable useful lifetime of the oxygen equipment, after which the process resets. If a beneficiary’s medical need for oxygen continues past this five-year mark, a new 36-month rental payment cycle begins with replacement equipment. At the start of this new cycle, the patient may choose a new supplier or continue with the current one.
If the equipment requires major repair or replacement before the 60-month period ends, the supplier is responsible for providing a comparable unit. Medicare covers the oxygen equipment for use in the home, and this coverage extends to meeting the patient’s mobility needs both inside and outside the house.
If a patient moves or travels for an extended period outside of their supplier’s service area, the original supplier must coordinate with a local provider to ensure continuous access to oxygen and supplies. Medicare does not cover the specialized costs associated with air travel, such as renting an airline-approved portable oxygen concentrator, which remains the responsibility of the traveler.