A Strange Alliance: Oxygen Companies and Their Medicare Patients Want Congress to Pay the Companies More

For years, the home-oxygen industry has failed in myriad ways the million-plus Americans who struggle to breathe. Lincare, the country’s largest distributor of breathing equipment, has a decadeslong history of bilking Medicare and the elderly, as ProPublica has revealed. Philips Respironics hid serious problems with its sleep apnea machines, with devastating consequences, including reported deaths. Other large respiratory companies have paid multimillion-dollar fraud settlements.

But as the current session of Congress hurtles to a close, advocates for oxygen patients — in a seemingly improbable alliance with the companies that have victimized them — are making a final push for legislation that, among other things, would pay the scandal-scarred industry hundreds of millions of dollars more than it currently receives. The patients, many aged and infirm, have been besieging lawmakers with meetings, calls and emails, pressing them to pass the Supplemental Oxygen Access Reform, or SOAR, Act by the end of the year. The corporate and patient advocates vow that if the legislation fails in the current term, as seems possible, they will push to reintroduce it next year.

The SOAR Act would achieve two long-sought goals for the industry, which receives much of its revenues from Medicare. The bill would protect companies from additional reductions in their billings by removing oxygen from Medicare’s competitive bidding program, which has saved taxpayers hundreds of millions of dollars. And it would make it far more difficult for the government to challenge those billings.

The patient groups, in turn, have their own goals: improving the industry’s notoriously poor service and assuring access to costly liquid oxygen for a relatively small group of the sickest patients. That form of oxygen is coveted by patients with advanced lung disease because it provides the high flows they need in easy-to-carry cylinders that last for hours. Emotional accounts of stricken patients, unable to obtain the equipment they need, have been prominent in the lobbying campaign to pass the measure.

“The current situation is pretty horrific,” said Susan Jacobs, pulmonary research nurse manager at Stanford University Medical Center, who has spent more than a decade studying access to oxygen therapy and supports the legislation. “Patients aren’t getting the oxygen devices they need or being educated or trained on use of that device. The SOAR Act addresses multiple issues.”

Jacobs and other advocates acknowledge the history of bad behavior by oxygen companies. “I used to feel like they are the enemy,” Jacobs said. Added Erika Sward, assistant vice president of national advocacy for the American Lung Association, another supporter of the SOAR Act: “Some of the companies were very much acting in bad faith when it came to taxpayer dollars.”

But the patient advocates are now backing the industry’s long-standing complaints that Medicare’s payment cuts have gone too far. “I have become convinced of this over the past five years or so,” Sward said. “They’re not being paid enough under competitive bidding. … I fully believe the suppliers are negotiating from a very good-faith perspective for patients.” She added: “Unless everyone is willing to compromise, nothing is going to change. Obviously they have a financial interest.” (Sward said the American Lung Association receives no funding from oxygen companies or trade groups.)

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The SOAR Act, which now has a half dozen sponsors in the Senate and 31 in the House, was first introduced in late February by Louisiana Republican Sen. Bill Cassidy, a physician, and Democratic senators Mark Warner of Virginia and Amy Klobuchar of Minnesota. “Respiratory care is lifesaving for so many patients, but too often access to this care is cost-prohibitive or simply not accessible,” said Warner, in a joint press release issued at the time. Cassidy, Warner and Klobuchar did not respond to requests for comment.

Beyond protecting against further Medicare rate cuts for items such as an oxygen concentrator (the bill would essentially freeze them at current levels), the SOAR Act would create a standardized medical form for authorizing suppliers’ claims; pay companies like Lincare to provide respiratory therapist services; and more than double what the companies are paid for liquid oxygen systems.

The bill is projected to cost taxpayers about $654 million over 10 years, according to a private study partly funded by industry (which the SOAR Act’s supporters have declined to share). The nonpartisan Congressional Budget Office has not yet prepared an estimate. Beneficiaries would also have to pay the companies more as part of their 20% Medicare copay.

Liquid oxygen has long been virtually unavailable even to Medicare beneficiaries who need it most. In 2004, before cuts in the government’s historically lavish payments for oxygen began kicking in, suppliers provided portable liquid oxygen equipment to more than 80,000 Americans.

Fewer than 4,000 Medicare patients received liquid oxygen in 2021, according to Medicare data. That’s a tiny portion of the 1.5 million Americans who now receive some form of supplemental oxygen. The bill’s advocates say there are thousands of Medicare beneficiaries who desperately need liquid oxygen to live more normal lives. “We’re ordering liquid,” Jacobs said. “Our [suppliers] are saying, ‘We don’t have it, and we can’t provide it.’ That’s not acceptable. Patients should be able to have enough oxygen to get out of their house. They’re unable to go to religious services, unable to see family, can’t go to a child’s graduation. These are heart-wrenching stories.”

Under the competitive bidding program that was launched in 2011, oxygen companies were legally required to provide liquid systems to any patient whose doctor prescribed them. But the companies insisted it was too expensive to do it at the rates the companies had agreed to in the bidding process. Providing liquid oxygen, which is stored at freezing temperatures under high pressure in special equipment, requires special trucks, frequent deliveries and hazmat-certified drivers.

Medicare enforcers never cracked down on the companies. Then, in 2019, the federal government “paused” the oxygen bidding program and many of its reimbursement rules — five years later, it can’t say when it may replace or reactivate them — freeing companies from any obligation to provide liquid oxygen.

In a statement, a Medicare spokesperson repeated the program’s long-standing contention, disputed by industry and patient groups alike, that access to liquid oxygen has not been a significant problem: “Although there were some complaints about contract suppliers refusing to furnish liquid oxygen, the suppliers came into compliance and agreed to furnish the liquid oxygen, so no [supplier] contracts were terminated as a result.”

The SOAR Act also includes what advocates call a “patient bill of rights” — and which they view as a major concession by the oxygen companies. Aimed at addressing the dismal service that has predominated, it and other parts of the bill would require suppliers to provide equipment setup assistance and monitoring, patient education and 24/7 coverage for emergencies as a condition for Medicare payment. (Left unresolved is how the federal government, whose enforcement record has historically been less than stellar, would police such rules.)

Lincare has long blamed problems on Medicare’s cuts and what it characterizes as the “flawed” competitive bidding program. The company told the agency in a 2017 letter that low reimbursements and “burdensome documentation requirements” had made it “next to impossible to continue providing quality services to beneficiaries.” Yet Lincare appears to collect substantial profits. It generated about $300 million in profit in 2023, on revenues of $2.4 billion, according to a former company executive. (Lincare declined to comment.) Rotech, another large company in the home respiratory business, was purchased this year for $1.36 billion, after recording $200 million in earnings for fiscal 2023.

Such profits make it possible for the industry to spend lavishly on Capitol Hill. Its lead trade group is the Council for Quality Respiratory Care, made up of six big manufacturers or distributors of oxygen equipment, including Lincare and Philips, and chaired by Lincare’s CEO. Since 2018, each of the six CQRC companies has reached at least one multimillion-dollar settlement with the government alleging it cheated Medicare. The corporations have typically denied wrongdoing.

Lobbying payments by the trade group and its member companies on reimbursement issues have totaled more than $1.4 million since the start of 2023. CQRC’s outside PR firm won an industry “advocacy” award for its 2016 campaign in support of legislation slowing oxygen reimbursement cuts, where it boasted of generating 29,000 emails to members of Congress. Through such efforts, the award commendation read, “an engaged community of concerned citizens was created to help support CQRC’s efforts.”

In a statement responding to ProPublica’s questions, CQRC praised the SOAR Act for providing “long-overdue Medicare reforms” and correcting service woes that patients and their advocates have often blamed on the industry. The trade group blamed “current law” and “chronic underfunding” for leaving patients “often unable to access the medically necessary home respiratory treatments their doctors prescribe,” but it said the bill would establish “clear patient protections and supplier responsibilities” while protecting Medicare beneficiaries from “potential fraud and abuse.”

Meanwhile, a new government-funded academic study is challenging the industry’s claims about the purported harms of competitive bidding for oxygen services. Published in late October in JAMA Internal Medicine, the investigation examined Medicare data to weigh the bidding program’s impact on patients with chronic obstructive pulmonary disease, by far the largest group of Medicare oxygen patients.

Its conclusion: Competitive bidding saved taxpayers and patients hundreds of millions of dollars, without curbing their access to oxygen or hurting their health. Dr. Kevin Duan, an assistant professor of respiratory medicine at the University of British Columbia and the article’s lead author, told ProPublica his team’s review found no evidence of harm: “No drop in claims, no change in clinical outcomes.” Duan said the study has sparked a backlash from the measure’s advocates. “I knew this was directly questioning a part of the SOAR Act,” he told ProPublica. “I feel like I walked into a firestorm.”

“We don’t have a horse in this race,” Duan said. “There’s a lot of blaming the competitive bidding program without much data. Rarely do we have high-quality evidence that can directly inform a piece of legislation. It shouldn’t be ignored.”

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Doris Burke contributed research.

Doris Burke contributed research.