Value of Homecare: COPD and Long-Term Oxygen Therapy. A White Paper

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1 Value of Homecare: COPD and Long-Term Oxygen Therapy A White Paper Chronic Obstructive Pulmonary Disease (COPD) is the 4 th leading cause of death in the world and afflicts over 14 million Americans. The direct medical costs for COPD in the US total $18 billion a year or nearly 9% of Medicare expenditures. Long-term home oxygen therapy is the only non-surgical therapy proven to extend life of COPD patients. Home oxygen for COPD costs $1.8 billion a year or less than 1% of all Medicare expenditures but 40% of all Medicare expenditures for respiratory therapy and home medical equipment. One full year of home oxygen costs Medicare about the same as one day in the hospital. Homecare allows the appropriate shifting of costs from high cost acute care environments to lower cost homecare. Value means saving Medicare billions of dollars by providing quality healthcare for patients in their homes. Wholesale reductions in payment for home oxygen will negatively impact quality and access to care. AAHomecare White Paper June,

2 Background Chronic obstructive pulmonary disease (COPD) includes chronic bronchitis and emphysema and has been defined recently as the physiologic finding of nonreversible pulmonary function impairment 1. COPD is the 4 th leading cause of death in the world and the only leading cause of death for which both prevalence and mortality are rising 1. COPD afflicts over 14 million people in the United States and is a disease characterized by severe airflow limitation resulting from chronic inflammation of the airways, decrease in functional lung tissue and the dysfunction of pulmonary blood vessels. The airflow limitation is progressive and very few effective therapies have been developed for COPD. Despite pharmacological advances, drug options for COPD are still quite limited. Medications such as inhaled bronchodialators (i.e. Albuterol, Atrovent) and corticosteroids (i.e. Beclamethasone dipropionate, Budesonide, Fluticasone) are absolutely essential to reduce the morbidity associated with the disease however the clinical benefits are only short term. Drug therapy in COPD is currently aimed at symptom relief and management with no long-term disease reversibility. Lung transplantation and lung-volume reduction surgery play a role in a small, select group of patients with advanced lung disease. Pulmonary rehabilitation is an effective intervention 2 however the improvements are short-term and pulmonary rehabilitation is only available to a small portion of patients with COPD. The demographics of the disease are described in table 1. Table 1. National demographics for Chronic Obstructive Pulmonary Disease American Indian or Asian or Pacific Black, not of Hispanic % White, not of TOTAL Alaskan Native % Islander % Hispanic Origin % Hispanic Origin % % Female Male TOTAL Source: Health, United States, 1999; National Center for Health Statistics; Hyattsville, MD, 1999 The American Lung Association (ALA) recently published a report entitled Estimated Prevalence and Incidence of Lung Disease by Lung Association Territory 3. In it they utilized a synthetic estimation to assess the magnitude of lung disease at the state levels. Table 2 summarizes these prevalence and incidence by the number of constituents diagnosed with chronic lung disease by state including District of Columbia. Table 3 provides estimates on the number of people diagnosed with COPD age who ultimately would require treatment with long-term oxygen therapy. AAHomecare White Paper June,

3 Table 2. Prevalence and incidence: number of constituents diagnosed with chronic lung disease by state AL 234,103 AK 28,068 AR 142,162 AZ 263,055 CA 1,663,685 CO 214,392 CT 182,433 DE 41,255 DC 30,972 FL 910,664 GA 401,475 HI 64,495 IA 157,568 ID 162,946 IL 791,717 IN 313,932 KS 38,926 KY 212,645 LA 224,310 MA 328,261 ME 70,197 MD 269,150 MI 512,301 MN 251,637 MO 293,926 MS 143,637 MT 48,133 NC 420,201 ND 34,361 NE 89,049 NH 64,644 NJ 445,569 NM 91,279 NY 998,677 NV 99,075 OH 598,026 OK 180,465 OR 181,453 PA 678,815 RI 56,803 SC 208,932 SD 39,426 TN 299,310 TX 1,002,686 UT 98,449 VA 248,216 VT 32,628 WA 301,383 WS 280,689 WV 102,199 WY 25,531 Source: ALA Epidemiology and Statistics Unit Research and Scientific Affairs, September 2003 Table 3. Estimated number of people between 55 and 65 diagnosed with COPD ESTIMATED NUMBER OF PEOPLE BETWEEN 55 AND 65 WITH COPD AGE PERSON COUNT 55 53, , , , , , , , , ,165 TOTAL 713,394 *estimate from the 2001 MEPS Full Year Consolidated File AAHomecare White Paper June,

4 Long-Term Oxygen Therapy Many COPD patients have chronic low oxygen levels in the blood (hypoxemia) and are treated with long-term oxygen therapy (LTOT). LTOT is a relatively safe and inexpensive therapy available in all health care environments however this paper focuses on the provision of LTOT for stable COPD patients who reside at home. LTOT is one of the few therapies that have been shown to be uniquely beneficial, drastically impacting both morbidity and mortality in addition to improving the patient s quality of life (QOL). LTOT is the only available non-surgical therapy demonstrated to prolong survival in patients with COPD. The use of LTOT as a primary treatment for hypoxemia in stable COPD patients was proven in two landmark multi-center clinical trials: the well-cited Nocturnal Oxygen Therapy Trial (NOTT), published in 1980 and the British Medical Research Council study, published in There is an abundance of scientific literature supporting the use of LTOT for patients with COPD and the related clinical benefits and relief to the workload of the heart and other key organ systems. The 5 th Oxygen Consensus Conference (2000) 5 reflected the opinion of the pulmonary medicine community in the United States when it declared that ambulatory oxygen therapy should by the standard of care for all COPD patients receiving LTOT who are able to continue activities of daily living. Economic Burden of COPD COPD costs the U.S. economy over $18 billion a year in direct medical costs and an estimated $11 billion in indirect costs. COPD is responsible for a significant part of all physician office visits and emergency room visits and ranks number three (3) in acute hospital admissions among Medicare aged persons. Based on 2001 data from Medicare, over 397,000 patients were discharged from acute care hospitals with a diagnosis of COPD. The average length of stay for a COPD admission is 5.1 days at the rate of nearly $2,000 per day. Medicare payments to hospitals for routine COPD admissions alone exceed $1.5 billion. Admissions that included mechanical ventilation add another $2.1 billion annually at a rate of approximately $4,000 per day. In the United States, there are an estimated 1.2 million patients actively being treated with LTOT. Among LTOT users, 82% are diagnosed with COPD. Due to the nature of the disease and its high incidence in the elderly, the principal funding source for LTOT is Medicare. The average Medicare payment for stationary and portable oxygen is approximately $250 per month or roughly $8.34 per day. The annual costs of LTOT are reported at approximately $1.8 billion or approximately $2,400 per patient per year. 6, 7 Life sustaining and quality of life improving oxygen can be provided to a COPD patient who resides at their home for one full year at about the same cost of one day in the hospital. LTOT provided to a patient who resides at home is one of the most cost-effective settings to care for patients with COPD. The irony is that Medicare reimbursement policies make it difficult for homecare providers to cover their costs to care for these patients. The Department of Health and Human Services trumpeted in an advertisement last year: "We care about the quality of home health care." However their position is not well represented with the proposed reimbursement cuts. AAHomecare White Paper June,

5 Value of Home Care and LTOT Home care is truly the lowest cost alternative and the most effective option for controlling the rising health care costs among patients with COPD. Several published clinical studies have demonstrated a significant decrease in expensive, short-stay hospitalizations following the start of LTOT. Despite the rise in incidence of patients diagnosed with COPD and their growing use of home care services, the percent of total health care dollars spent on LTOT and durable medical equipment (DME) have actually declined or remained consistent since the early 1960s. According to published data from Medicare, DME costs represented 3% of total Medicare spending in In 1990 and 2000 it represented approximately $3.5 billion a year or 1.7% of all Medicare dollars. There is continued pressure to reduce payments further for durable medical equipment, in particular LTOT. Wholesale payment reductions for important and cost-saving LTOT is simply a short-sited, short-term solution that will ultimately drive up the cost of care by shifting costs from low-cost effective care for patients who reside at home to high cost acute care environments. To initiate such reductions without a complete understanding of the impact on patient access to LTOT poses an unnecessary and unfair risk to patients. Home medical equipment and durable medical equipment providers who supply LTOT are a frequent target for Medicare funding cuts and payment reductions. Oxygen, one of the most economical and clinically proven treatments for COPD, has been singled out for significant payments reductions as part of almost every major Medicare funding reduction over the last 20 years. Once again, as a result of the Medicare Modernization Act (MMA), oxygen is again heading down the path of payment reduction. Long-term oxygen is a therapy, not just a product, and despite the lack of recognition, is a service-intensive home therapy. The current Medicare reimbursement model pays for LTOT in one lump sum per month; a fee that covers not only the technology but also the entire general business overhead and professional staff required to meet the patient s needs. Continued payment reductions will force providers to limit services and products and in some cases, eliminate oxygen from their offerings. With reduced access to care & service, patients will be forced to seek care in other more costly health care settings. The beneficial shift of the point of care from hospitals to home experienced over the past few years will reverse and result in an increase in acute care costs, emergency room visits, increased hospital length of stay (i.e. Medicare Part A costs) and potential increase in morbidity and mortality. The short-term savings of payment reductions for oxygen will be offset by the high cost of care in other settings. The value that home care provides in the continuum of care is essential and of paramount importance in reducing overall health care costs associated with caring for patients diagnosed with COPD who require treatment with LTOT. Dollars spent on LTOT are a solid and critical investment in the future of America s health care system. Today s smart investment in appropriate and costsaving home care services will pay significant dividends for future generations of Americans. AAHomecare White Paper June,

6 References: 1. Centers for Disease Control and Prevention MMWR: Surveillance Summaries August 2, 2002 / Vol. 51 / No. SS-6 2. Position Paper: The Principles of Pulmonary Rehabilitation: Richard Casaburi, Ph.D., MD, Robert S. Y. Chang, MD, and Andrew Ries, MD - Approved by CTS Executive Committee and CTS 1991, reviewed Estimated Prevalence and Incidence of Lung Disease by Lung Association Territory. American Lung Association Epidemiology and Statistics Unit Research and Scientific Affairs. September The Moran Company: estimates from the 2001 MEPS full year consolidated file 5. Recommendations of the Fifth Oxygen Consensus Conference: Thomas L Petty MD and Richard Casaburi Ph.D. MD for the Writing and Organizing Committees 6. Dunne PJ. The demographics and economics of long-term oxygen therapy. Respir Care. 45: , O Donohue WJ, AL Plummer Magnitude of usage and cost of home oxygen therapy in the United States Chest107: , AAHomecare White Paper June,