Oxygen Payment Reform for Medicare

Summary#

This bill (SOAR Act of 2025) changes how Medicare pays for oxygen and related equipment, and it adds rules to improve patient access and protections. The main change is to remove oxygen from the competitive bidding program and set new payment rules, including higher payment floors for liquid oxygen and add-on payments for high-flow patients and respiratory therapist services. The bill also requires electronic templates for medical necessity, monthly notices about rental periods, supplier responsibilities, and a set of beneficiary rights.

Key changes:

• Removes oxygen and oxygen-related equipment, supplies, and services from Medicare’s competitive acquisition (bidding) program starting January 1, 2026.
• Sets new payment methods for oxygen: area-based fee updates tied to the consumer price index, special payment formulas for rural/non-contiguous areas, and a blended formula for other areas.
• Creates a separate payment system for liquid oxygen, including a payment floor (at least 200% of the 2015 fee schedule adjusted for inflation), a transitional interim payment, and regular updates and cost reviews.
• Requires supplier responsibilities (evaluation, portable oxygen access, delivery and setup, education, maintenance, 24-hour on-call, coordination) to receive payment; those rules start one year after enactment.
• Recognizes respiratory therapist services as covered medical services and directs a non-budget neutral monthly add-on payment for those services beginning January 1, 2026.
• Requires electronic templates completed by prescribing practitioners to document medical necessity for oxygen and directs Medicare contractors to use electronic adjudication; restores use of clinical judgment in audits.
• Adds beneficiary notices and rights, including monthly reminders of months remaining in the 36-month rental cap, grievance process info, and protections around supplier communication, equipment maintenance, discharge, and emergency plans.

What it means for you#

• Medicare beneficiaries using oxygen

  • You may see different billing methods for oxygen and equipment starting in 2026.
  • You must receive clear notices about cost-sharing, including monthly updates on how many months remain in the 36-month rental period when you owe copayments.
  • You get new listed rights: choose or change a local supplier, receive clear communications, expect timely repairs and deliveries, get emergency backup supplies, be informed about changes, and have grievance rights.

• Patients who need liquid or high-flow oxygen

  • Liquid oxygen will have a separate payment system and coverage criteria set by Medicare; this could affect availability, device choices, or supplier behavior.
  • For prescriptions with flow rates ≥6 liters/minute, Medicare will create a monthly add-on to cover extra oxygen costs.

• Prescribing practitioners

  • For oxygen orders on or after January 1, 2026, you must complete an electronic template documenting visit timing, qualifying blood gas or oxygen saturation results, and documentation that the patient needs the equipment. Medicare contractors will use these templates to decide coverage.

• Suppliers of oxygen equipment and services

  • Suppliers must meet new service standards (evaluations, education, portability, maintenance, 24-hour on-call, coordination) to receive Medicare payment once the supplier responsibilities rule takes effect (one year after enactment).
  • Suppliers will face electronic claim adjudication and possibly more audits that use the restored clinical inference rule.
  • Suppliers may get higher payments for liquid oxygen and for cases requiring respiratory therapist services.

• Respiratory therapists

  • Respiratory therapist services are defined as payable medical services and the bill requires a non-budget neutral add-on payment to reflect their costs starting in 2026.

• Medicare program administration

  • CMS must make multiple rulemakings, set payment formulas, consult stakeholders, adopt templates, and run notice programs.

Expenses#

No publicly available information.

Possible cost-related effects the bill creates or implies:

• The bill establishes payment floors, add-ons, and separate liquid-oxygen payments that could increase Medicare spending compared with competitive bidding rates.
• The respiratory therapist monthly add-on is explicitly non-budget neutral, which implies additional Medicare outlays.
• Administrative costs for CMS and Medicare contractors to develop templates, run electronic adjudication, publish notices, and perform consultations and periodic assessments.
• Compliance costs for suppliers (training, systems updates, 24-hour coverage, documentation, and reporting).
• Potential billing transitions and short-term transitional payments for liquid oxygen until the permanent payment method is implemented.

Proponents' View#

• The bill appears intended to improve patient access to oxygen by taking oxygen out of the competitive bidding program and raising certain payments so suppliers can sustain services, especially liquid oxygen and high-flow patients.
• Supporters may argue that separate payment rules for rural or non-contiguous areas and transitional payments will protect access where delivery is costly.
• The bill could be seen as strengthening patient protections by requiring supplier responsibilities, clear notices, and a list of beneficiary rights.
• Requiring electronic templates may be seen as improving program integrity and speeding claim decisions while restoring clinician judgment in audits.
• Recognizing and paying for respiratory therapist services may support better clinical care and monitoring for patients on oxygen.

Opponents' View#

• One concern is that removing oxygen from competitive bidding and setting higher payment floors and add-ons could increase Medicare costs, but the bill does not provide cost estimates.
• The bill does not provide clear dollar figures or a fiscal note, making it hard to judge the overall budget impact or trade-offs.
• Implementing new payment systems, electronic templates, and supplier obligations may create administrative burdens for CMS and for small suppliers; the timeline and resource needs are not fully detailed.
• Some provisions leave details to future rulemaking (for example, how to define supplier scope or how clinical inference will be applied), so it is unclear how strictly standards will be enforced or how disputes will be resolved.
• The restoration of pre-2009 clinical inference in audits could be interpreted in different ways; the bill does not clearly state how audit standards will work in practice.