The SOAR Act of 2025 rewrites how Medicare pays for supplemental oxygen and related equipment, supplies, and services. It removes those items from the competitive acquisition program and establishes new payment rules — including area-specific fee-schedule adjustments and a distinct, cost-based approach for liquid oxygen — effective January 1, 2026.
Beyond payment, the bill defines supplier responsibilities, creates a non-budget-neutral add-on for respiratory therapist services, mandates electronic templates for medical-necessity documentation, and establishes explicit beneficiary notices and rights (including the right to choose a local supplier). For providers, suppliers, respiratory therapists, and compliance officers this bill changes reimbursement, documentation workflows, and service obligations in ways that will affect revenue, operations, and audits.
At a Glance
What It Does
It excludes oxygen and oxygen-related items from Medicare’s competitive bidding and prescribes new payment formulas for urban, rural/non-contiguous, and other areas, plus a separate cost-based payment regime for liquid oxygen with a statutory payment floor and a high-flow add-on. It also requires electronic templates for prescribing practitioners and new beneficiary notices and rights.
Who It Affects
Medicare DME suppliers of gaseous and liquid oxygen, respiratory therapists, prescribing clinicians, Medicare Administrative Contractors, and beneficiaries who use supplemental oxygen — particularly high-flow and liquid-oxygen patients and rural beneficiaries.
Why It Matters
The bill shifts payment away from competitive bidding toward administratively set rates and targeted add-ons, restores a role for clinical judgment in audits, and imposes service and notice requirements that could increase supplier costs while aiming to improve patient access and program integrity.
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What This Bill Actually Does
The bill removes supplemental oxygen and related equipment from Medicare’s competitive acquisition program and replaces competitive-bid pricing with payment amounts set under section 1834(a)(9). For areas that are competitive bidding areas for other items, payments default to December 31, 2025 fee-schedule amounts for 2026 and then increase by the CPI-U annually.
Rural/non-contiguous areas have a hybrid rule tying payment to 50% of an adjusted national average price and 50% of an updated fee schedule amount; other areas receive a mix of 75% adjusted and 25% unadjusted fee schedule amounts. These formulas are mechanical but produce different regional outcomes than the competitive bidding model.
Liquid oxygen gets special treatment: CMS must, through notice-and-comment rulemaking and stakeholder consultation, establish a separate cost-based payment amount for liquid oxygen and associated equipment that cannot be lower than a statutory floor — 200 percent of the 2015 DME fee schedule updated through 2025 — with annual CPI-U updates thereafter. The Secretary must consider per‑pound oxygen costs, infrastructure costs (storage, transport, labor), regulatory compliance costs, and may establish a monthly add-on for patients prescribed flows of 6 liters per minute or greater.
A transitional interim rate equal to the statutory floor will apply from enactment until the rulemaking is complete.The bill defines a set of supplier responsibilities intended to be conditions of payment. Those responsibilities include an initial evaluation using a uniform patient evaluation form, ensuring access to portable systems based on mobility needs, written and verbal education for patients and caregivers, equipment maintenance and safety checks consistent with manufacturer specs, delivery and set-up obligations (including discharge coordination), monitoring visits by appropriate personnel (including respiratory therapists), exception reporting to prescribers, 24-hour on-call coverage, and assistance coordinating coverage when a beneficiary travels or relocates.
The supplier-duty list becomes part of Medicare’s expectations and takes effect after a one-year implementation window for those provisions.On workforce and clinical services, the bill adds “respiratory therapist services” to the statutory definition of medical and other health services, defines the term, and directs the Secretary to create a non-budget-neutral monthly add-on to reflect the cost of respiratory therapist services where clinically appropriate. For program integrity, the Secretary must adopt electronic templates for clinicians to document medical necessity for oxygen-related items; these templates are intended to be the complete request for payment information, require specific fields (visit timeframes, qualifying blood gas/saturation results, and evidence the beneficiary needs or uses the equipment), and will be adjudicated electronically by Medicare contractors.
The bill also restores an explicit direction to use clinical inference and judgment in audits similar to pre-2009 practice.Finally, the bill layers on beneficiary-facing protections and notices: annual Medicare notices must explain the 36‑month rental period and cost-sharing, and suppliers must send a monthly notice listing remaining months in the rental cap. Regulation will require suppliers to provide clear communications, privacy protections, timely repair/replacement, emergency back-up supplies and contingency plans, advance notice for involuntary discharges (30 days except in immediate threats), and grievance information.
The combined effect is to tie payment reform to service expectations and documentation standards that change operational workflows for suppliers and clinicians.
The Five Things You Need to Know
The exclusion from the competitive acquisition program and new payment rules take effect for items furnished on or after January 1, 2026.
Liquid oxygen has a statutory payment floor equal to 200% of the 2015 DME Fee Schedule (updated through 2025) and a required separate rulemaking to set a cost-based base rate and annual CPI updates.
The Secretary must create a monthly non-budget-neutral add-on payment for respiratory therapist services and a separate monthly add-on for liquid‑oxygen patients with prescribed flows ≥6 liters per minute.
Suppliers must provide 24-hour on-call coverage, delivery and set-up (including at discharge), monitoring visits by appropriate personnel, and assist beneficiaries who temporarily travel or permanently relocate.
CMS must adopt clinician-facing electronic templates (including required fields for qualifying blood gas or saturation results) that contractors will use to adjudicate oxygen claims electronically.
Section-by-Section Breakdown
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Remove oxygen from competitive bidding; set new area- and modality-specific payments
This section amends sections 1834 and 1847 to exclude oxygen and oxygen-related items from the competitive acquisition program beginning January 1, 2026, and prescribes a set of fallback payment formulas. Urban competitive-bidding areas use December 31, 2025 fee-schedule rates for 2026 then CPI-U increases; rural/non-contiguous areas get a hybrid 50/50 split between an adjusted national average price and updated fee schedule, and other areas receive a 75/25 blend. The practical effect is to replace market-based bid prices with administratively determined schedules that vary by geography and modality.
Separate cost-based payment regime for liquid oxygen with floor and high-flow add-on
The bill directs CMS, via notice-and-comment rulemaking and stakeholder consultation, to establish a separate payment for liquid oxygen that reflects per‑pound oxygen cost, infrastructure, transportation, labor, regulatory compliance, and other costs. It sets a statutory payment floor (200% of 2015 DME fees updated through 2025), requires annual CPI-U updates after 2027, mandates a transitional interim payment equal to the floor until rulemaking concludes, and requires a periodic (every 3 years) adequacy assessment. It also requires a monthly add-on for patients with ordered flows ≥6 LPM equal to the per-pound cost above the threshold.
Supplier responsibilities criteria
Adds a new statutory description of services suppliers must provide to be eligible for Medicare payment: initial uniform patient evaluation; ensuring portable oxygen access; written and verbal patient/caregiver education and safety inspections; timely delivery and set-up; competency checks; equipment maintenance per manufacturer guidance; monitoring visits (including by respiratory therapists when necessary); exception reporting to prescribers; 24-hour on-call coverage; and assistance coordinating coverage when beneficiaries travel or relocate. These duties become requirements of participation after a one-year effective delay.
Recognize respiratory therapist services and authorize add-on reimbursement
The bill amends the Social Security Act to include respiratory therapist services in the statutory definition of medical and other health services and defines the term by reference to state scope-of-practice and accreditation standards. It then requires CMS to implement a non-budget-neutral monthly add-on to the oxygen payment to reimburse the cost of providing respiratory therapist services when clinically appropriate, to be set via notice-and-comment rulemaking.
Electronic templates and restoration of clinical inference
CMS must adopt electronic medical-necessity templates to be completed by prescribing clinicians for any oxygen-related item furnished on or after January 1, 2026. Templates must capture visit timing, qualifying blood gas or saturation results, and documentation that the beneficiary needs or uses the equipment; they may not require routine clinical notes. Medicare administrative contractors will adjudicate claims electronically. The bill also directs CMS to use clinical inference and judgment in audits similar to the pre-2009 approach, limiting overly rigid statistical- or algorithm-led denials.
Beneficiary notices on rental period and grievances
Adds statutory notice requirements: annual Medicare notices must explain the 36-month rental period and cost-sharing rules and the right to discuss prescriptions with prescribers; suppliers must provide a monthly statement of remaining months in the rental cap. Notices must also provide information on internal and external grievance processes and how to contact Medicare grievance help (hotline or ombudsman).
Statutory beneficiary protections and supplier obligations
Requires CMS to promulgate regulations guaranteeing beneficiaries rights including supplier choice, clear communications and privacy, informed consent and the right to refuse treatment, access to mobility-supporting equipment, manufacturer-standard maintenance, timely repair/replacement, delivery obligations and contact protocols, contingency planning for emergencies, and advance notice and procedures for involuntary discharge (30‑day notice except for immediate threats). Suppliers must also inform beneficiaries about equipment changes and grievance rights.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Medicare beneficiaries who use supplemental oxygen — they gain clearer notice of cost-sharing timelines, statutory rights (choice of supplier, grievance processes), and supplier obligations for delivery, maintenance, emergency backups, and mobility-supporting equipment.
- Liquid‑oxygen patients and those requiring high flow — the statutory payment floor and the monthly high‑flow add-on are designed to support continued access to liquid oxygen and higher-flow care that were undercompensated under competitive bidding.
- Respiratory therapists — the statutory recognition of respiratory therapist services and a directed non-budget-neutral add-on create an explicit reimbursement pathway and a stronger institutional role for RTs in home oxygen care.
- Patient advocates and clinicians — electronic templates and restored clinical inference aim to reduce arbitrary claim denials and make medical necessity reviews more clinically focused, potentially improving access when documentation is clinically appropriate.
Who Bears the Cost
- The Medicare trust funds and federal budget — replacing lower competitive-bid prices with administratively set payments, a liquid‑oxygen floor, and non‑budget‑neutral add-ons will increase program spending relative to the current competitive-bid baseline.
- Small and mid-size DME suppliers — new service obligations (24-hour coverage, delivery/set-up, monitoring visits, maintenance) and documentation/notice duties increase operational costs and workforce requirements, which may strain smaller suppliers' capacity.
- Medicare Administrative Contractors and CMS — the statutory mandate for electronic templates, electronic adjudication, periodic assessments, and new notice systems requires implementation work, IT changes, and rulemaking resources.
- Competitively awarded contract firms and entities built around the bidding model — exclusion from competitive acquisition shifts market structure and revenue expectations for entities that invested in bid-based delivery models.
Key Issues
The Core Tension
The central tension is between securing beneficiary access and comprehensive clinical support (via higher payments, add-ons, and supplier duties) and containing program cost and fraud risk. Strengthening clinical judgment and increasing payment for high-cost modalities improves access, but it also raises the chance of higher Medicare spending and creates incentives that require careful auditing and oversight — a trade-off with no mechanically correct balance.
The bill attempts to solve access problems by raising and restructuring payments while adding service standards and documentation controls. That dual approach creates implementation complexity: CMS must design a liquid‑oxygen cost model that reliably captures per‑pound oxygen costs, infrastructure and labor differentials, and then reconcile that model with area-based fee schedules and the CPI updates specified elsewhere in the statute.
The mandated payment floor and interim transitional rate reduce payment volatility for suppliers but also remove market pressure to lower costs, increasing fiscal exposure.
Operational friction is another risk. Electronic templates and contractor-level electronic adjudication are meant to streamline reviews, but poorly designed templates can shift burden to prescribers, delay care, and generate new denial categories if fields are misunderstood.
Restoring “clinical inference” in audits addresses overly mechanical denials, but it also reintroduces discretion that CMS and contractors will need to calibrate carefully to avoid inconsistent decisions across jurisdictions. Finally, supplier obligations (24-hour coverage, on-call staffing, delivery and travel assistance) improve beneficiary protections but raise compliance costs — potentially prompting consolidation in the supplier market and unintended access issues in thin rural markets if small suppliers exit.
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