A portable oxygen concentrator (POC) is a medical device that filters and concentrates oxygen from the ambient air, allowing individuals who require supplemental oxygen to maintain mobility. Unlike bulky stationary units or heavy oxygen tanks, the POC is a lighter, battery-powered machine that can be carried, offering greater independence for patients with severe respiratory conditions. Medicare Part B classifies oxygen equipment, including POCs, as Durable Medical Equipment (DME) and provides coverage for its rental, provided specific medical and administrative requirements are satisfied. The process hinges on establishing a documented medical need and navigating Medicare’s distinct rental rules for this type of equipment.
Establishing Medical Necessity for Coverage
Obtaining coverage for a portable oxygen concentrator begins with establishing a clear medical necessity, which requires stringent documentation from a treating physician. Medicare mandates that patients must have a severe lung disease, such as Chronic Obstructive Pulmonary Disease (COPD) or pulmonary fibrosis, or other cardiopulmonary conditions that result in low oxygen levels. The physician must certify that the oxygen therapy is reasonable and necessary for the patient’s treatment.
The most crucial requirement involves specific diagnostic testing to quantify the oxygen deficiency, which must typically be performed within 30 days of the prescription. Qualifying criteria generally involve an arterial blood gas (ABG) study showing a partial pressure of oxygen (PaO2) at or below 55 millimeters of mercury (mmHg) while breathing room air. Alternatively, a pulse oximetry reading showing an arterial oxygen saturation (SaO2) at or below 88% is also acceptable.
This testing must be conducted while the patient is in a stable state and may be performed at rest, during exercise, or during sleep, depending on when the hypoxemia occurs. To qualify for a portable unit specifically, the documentation must show that the patient can move around within the home and that the qualifying test was performed while awake or during exercise. The physician uses these quantitative results to prove that the patient’s health will improve with supplemental oxygen.
The physician must compile a detailed written order (DWO) that includes the prescribed oxygen flow rate, the frequency of use, and a description of the equipment required. The diagnosis and test results are used to complete a Certificate of Medical Necessity (CMN), although the documentation requirements are often now incorporated into the DWO and supporting clinical notes. This detailed paperwork is the foundation that a DME supplier will use to submit the initial claim for coverage.
Understanding Medicare Durable Medical Equipment Rules
Portable oxygen concentrators are covered under Medicare Part B, which addresses durable medical equipment for use in the home. The coverage mechanism for oxygen equipment is unique and differs significantly from the rules for most other DME items, which are paid for under a capped rental arrangement. Medicare does not cover the outright purchase of a POC; instead, it covers the cost of renting the equipment from a Medicare-approved supplier.
The core of the policy is the mandatory 36-month rental period, during which Medicare makes monthly payments to the supplier. These payments cover not only the oxygen equipment itself but also all necessary accessories, supplies, maintenance, and repairs. After the 36 continuous months of rental payments conclude, Medicare payments to the supplier stop entirely.
Despite the cessation of payments, the supplier is obligated to continue providing the equipment and all necessary maintenance and servicing for an additional 24 months, for a total of five years. The supplier retains ownership of the equipment throughout this entire 60-month period.
If the patient continues to need oxygen therapy after the five-year period ends, they become eligible for new equipment, which initiates a fresh 36-month rental cycle. The supplier must be enrolled in Medicare and agree to accept assignment for the claim to be covered. Accepting assignment means the supplier agrees to accept the Medicare-approved amount as the full payment for the service.
The Acquisition Process and Patient Costs
The process of acquiring a portable oxygen concentrator begins with the patient’s physician, who must first determine medical necessity and then issue the detailed written order. The patient must then select a Durable Medical Equipment supplier that is enrolled in Medicare and agrees to accept assignment. Finding a participating supplier is necessary to ensure that the out-of-pocket costs remain predictable and limited to the Medicare-approved amounts.
The supplier takes the physician’s prescription and supporting medical documentation, including the qualifying blood gas study, to submit the claim to Medicare. Once approved, the supplier provides the POC and begins the 36-month rental agreement. This agreement covers the equipment, supplies like tubing and cannulas, and any required servicing.
The financial responsibility for the patient involves several components under Medicare Part B. The patient must first have met their annual Part B deductible before coverage begins. After the deductible is satisfied, the patient is responsible for a 20% coinsurance of the Medicare-approved monthly rental amount. Medicare pays the remaining 80% directly to the supplier.
For many beneficiaries, this 20% coinsurance can be covered by secondary insurance, such as a Medigap policy or Medicaid. These supplemental plans often pay the patient’s share of the Medicare-approved amount, which minimizes the monthly out-of-pocket expenses. The patient is required to continue paying the 20% coinsurance for the entire 36-month rental period, with the monthly payments ceasing once that period concludes.