Shares of Lake Forest-based Apria Healthcare Group Inc. slumped nearly 10% on Friday after a government oversight agency said federal payments for home breathing equipment should be cut.
The Office of Inspector General of the Department of Health and Human Services urged limiting rental payments for breathing gear to as few as 13 months, down from three years now.
Delivering oxygen to patients with breathing trouble made up 68% of Apria’s $376 million in second-quarter revenue. The company gets about a third of its revenue from Medicare patients. Private insurers make up the rest.
Medicare now pays for oxygen tanks and equipment through a monthly rental fee, which is capped at three years. After that, the equipment goes to the patient, and Apria and other suppliers no longer receive equipment rental payments.
Capping rental payments at 13 months could save Medicare $3.2 billion in five years, the inspector general said.
Apria, which has felt the sting of earlier Medicare cuts, could win a reprieve from Congress. Changing healthcare for seniors may not fly in an election year, observers said.
