The area of home oxygen therapy provides a clear example of the benefit to patients and cost-savings to Medicare. Chronic Obstructive Pulmonary Disease (COPD) affects more than 24 million Americans . 1  CMS estimates that 12 percent of Medicare fee for service beneficiaries are living with COPD, making it one of the top 10 chronic conditions among Medicare beneficiaries . 2 Dual-eligible beneficiaries are 1.7 times more likely to have COPD than non-dual eligible beneficiaries . 3 COPD is the third leading cause of death in America, claiming the lives of 134,676 Americans in 2010. 4

The costs associated with COPD extend well beyond the cost of home respiratory therapy services. If not managed appropriately, COPD leads to emergency room visits and hospitalizations.

COPD is an important cause of hospitalization in our aged population. Approximately 65% of discharges were in the 65 years and older population in 2010. As seen in Figure 9, the discharge rate for the population over age 65 (114.1 per 10,000 persons) was over four times higher than that in the 45-64 age group (28.6 per 10,000 persons). 5


Hospitalization and readmissions are the primary drivers of the cost of caring for COPD patients. The National Heart Lung and Blood Institute estimated that the national projected annual cost for COPD in 2010 was $49.9 billion, including $29.5 billion in direct health care expenditures, $8.0 billion in indirect morbidity costs and $12.4 billion in indirect mortality costs. 6  According to the COPD Foundation, the total costs incurred by COPD patients are approximately $6000 higher than those incurred by non-COPD patients. Approximately, 13-14 percent of COPD patients had a hospital readmission, while 41-49 percent had a readmission within 60 days after discharge. 7


The majority of these costs can be avoided with proper disease management. Effective management of COPD means reducing the frequency and severity of exacerbations, as well as controlling baseline symptoms. The primary maintenance therapy for managing severe COPD is home oxygen therapy. 8  Without such therapy, severe exacerbations can occur and require hospitalization. 9 In 2009, the mean-adjusted standard hospital admissions cost for a COPD patient in Medicare was more than $14,000. 10 “Treatments that reduce the frequency of COPD-related hospitalizations or exacerbations are also associated with lower COPD-related medical costs, and in some cases lower total COPD-related costs.” 11 In fact, the COPD Foundation estimates that 40 percent of COPD costs could be avoided by preventing complications and hospitalizations. 12 The reduction in hospitalizations results in a substantial reduction in overall Medicare savings.


Similarly, non-invasive ventilation therapy, such as CPAP and BiPAP, have been shown to be effective for treating COPD and obstructive sleep apnea (OSA). Studies have shown that providing these types of therapies in the home reduces hospital admissions and minimizes overall costs. 13 One recent study found that patients receiving positive airway pressure therapy (PAP) have lower overall medical costs ($645.66 per patient per month) and better health outcomes than those who did not ($846.58 per patient per month). 14 Patients using PAP also have fewer hospitalizations that those who do not. 15 OSA is an independent risk factor associated with cardiac readmissions. Controlling the disease through the use of home sleep therapy has been found to reduce hospital readmissions. 16 Just as importantly, home sleep therapy improves patients’ quality of life. 17


As the research shows, the cost of providing home respiratory therapy is not the driver of the high costs for these beneficiaries. In fact, home respiratory services lower Medicare costs by providing a critical alternative to hospitalizations. CQRC members help patients manage their diseases and distinguish themselves among suppliers by providing subclinical services to patients to ensure that they remain compliant with their prescribed therapy and medications. We understand that not all suppliers may provide this level of service. However, rather than manage to the lowest denominator, CMS should support those suppliers that are providing high quality care, which can lead to lower overall Medicare expenditures.


More work can be done to leverage the potential for home respiratory therapy to reduce hospitalization and readmissions. The CQRC is committed to working to develop the appropriate tools to promote the goals of CMS’s National Quality Strategy to reduce hospitalizations and readmissions.


Learn More About Home Respiratory Therapies:

Millions of Americans are living with COPD and Obstructive Sleep Apnea, experiencing acute respiratory failure, or living with neuromuscular diseases. These individuals rely upon home respiratory therapies to remain at home. Learn more about home respiratory therapies and how they can help.

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