Is Oxygen Therapy Covered by Insurance?

Securing insurance coverage for oxygen therapy involves navigating policy requirements and demonstrating medical necessity. Understanding the criteria and procedural steps is important for patients seeking coverage. This article aims to demystify the path to securing insurance coverage for medically necessary oxygen.

Insurance Types and General Coverage

Oxygen therapy equipment is categorized as Durable Medical Equipment (DME), which includes items like hospital beds and wheelchairs. Coverage for DME, including oxygen, requires a demonstration of medical necessity. Different insurance plans have varying guidelines.

Medicare, a federal health insurance program, covers oxygen equipment and supplies under Part B (Medical Insurance) for home use. Medicare Part A covers oxygen therapy during inpatient hospital stays. Medicare Advantage (Part C) plans must offer at least the same coverage as Original Medicare, including oxygen therapy, though costs may vary.

Private health insurance, including employer-sponsored plans and those obtained through the Affordable Care Act (ACA) marketplace, provides coverage for oxygen therapy. These plans consider oxygen concentrators as DME, and their policies can differ significantly. ACA marketplace plans cover essential health benefits, which include rehabilitative and habilitative services and devices, often encompassing DME.

Medicaid, a joint federal and state program, classifies oxygen concentrators as DME. Coverage for oxygen equipment requires beneficiaries to meet specific requirements. While rules vary by state, many align their DME reimbursement rates with Medicare guidelines. Dual-eligible individuals, who qualify for both Medicare and Medicaid, may find Medicare covers a significant portion of costs, with Medicaid potentially covering the remainder.

Qualifying for Coverage

Qualifying for oxygen therapy coverage hinges on establishing medical necessity, supported by diagnostic evidence. A physician must certify the therapy is necessary, often due to a severe lung condition or insufficient oxygen levels (hypoxemia). Alternative treatments, such as medical and physical therapies, must have been tried or considered and found unsuccessful.

Diagnostic requirements involve blood gas studies, specifically arterial blood gas (PaO2) and pulse oximetry readings (oxygen saturation). For coverage, patients need to show an arterial PaO2 at or below 55 mm Hg or an arterial oxygen saturation at or below 88%, measured at rest while breathing room air. These measurements indicate how effectively oxygen moves from the lungs into the bloodstream. If resting levels are higher but drop during exercise or sleep, coverage may still be possible with specific criteria, such as a drop to 88% or below during exertion or a significant fall during sleep.

A physician’s prescription is necessary and must detail the diagnosis, oxygen concentration, flow rate, frequency of use, and duration of need. This prescription, along with a “Certificate of Medical Necessity” (CMN) or similar documentation, is necessary for eligibility. While the CMN was formally discontinued by CMS for Medicare claims on or after January 1, 2023, the underlying medical record must still contain all information previously required on the CMN to support medical necessity. This documentation must include evidence from a face-to-face visit with the treating physician within 30 days prior to the initial certification date.

Coverage requires periodic re-evaluation, meaning updated documentation and, in some cases, repeat testing may be necessary to demonstrate continued medical need. The medical record must sufficiently document the condition’s duration, clinical course, and prognosis. For portable oxygen, documentation indicating mobility within the home is also required.

Covered Equipment and Services

Once medical necessity for oxygen therapy is established, insurance covers a range of equipment and related services. Oxygen delivery systems fall into types: stationary oxygen concentrators, portable oxygen concentrators (POCs), compressed oxygen tanks, and liquid oxygen systems. Stationary concentrators are for continuous home use, while POCs offer mobility. Compressed oxygen tanks and liquid oxygen systems provide stored oxygen for home or portable use.

Beyond the primary oxygen delivery device, related supplies and services are also covered. This includes items such as tubing, cannulas, and masks, which are essential for oxygen delivery. Maintenance, servicing, and repairs for the covered oxygen equipment are also included in the insurance benefits.

A common practice among insurers, particularly Medicare, is to cover oxygen equipment on a rental basis rather than outright purchase. Medicare covers the rental of oxygen equipment for an initial period, often 36 months. After this rental period, the supplier is responsible for maintaining the equipment and providing related supplies for an additional 24 months, totaling five years, as long as medical necessity continues. While some less expensive DME items might be purchased, higher-cost devices like oxygen concentrators are rented, with ownership potentially transferring after a specified number of rental payments.

Understanding Costs and Obtaining Oxygen

Even with insurance coverage, patients incur various out-of-pocket costs for oxygen therapy. These financial responsibilities include deductibles, which are annual amounts paid before insurance begins to cover costs, and coinsurance, representing a percentage of the approved cost after the deductible is met. For instance, under Original Medicare Part B, individuals are responsible for a 20% coinsurance for oxygen therapy equipment and supplies after meeting their annual deductible. The typical monthly cost for oxygen equipment and supplies can be around $300, with Medicare and many private insurers covering 80% of this amount, leaving the patient responsible for the remaining portion.

Prior authorization is a common requirement from insurance companies before obtaining oxygen equipment. This process ensures the proposed therapy meets the insurer’s medical necessity criteria and coverage guidelines before services are rendered. The treating physician or the Durable Medical Equipment (DME) supplier initiates this process by submitting the necessary documentation and prescription to the insurance provider for approval.

Obtaining oxygen equipment involves working with a qualified DME supplier. It is important to select a supplier that is enrolled with and accepts assignment from the patient’s insurance plan, especially for Medicare beneficiaries. If a supplier does not accept assignment, the patient may be responsible for the full cost. The DME supplier handles equipment delivery, provides instructions, and manages billing with the insurance company. They submit claims based on the physician’s prescription and established medical necessity.