Variability in the rate of prescription and cost of domiciliary oxygen therapy in Australia

Domiciliary oxygen therapy (DOT) involves providing oxygen equipment for ongoing home use. It is prescribed as long-term oxygen therapy (at least 15 hours a day) for chronic hypoxaemia, or to prevent oxygen desaturation associated with exercise or sleep.1,2 DOT provides mortality and morbidity benefits for patients with chronic hypoxaemia caused by chronic obstructive pulmonary disease (COPD),1,3-5 but it constitutes a prolonged commitment of resources to individual patients. A study from one Australian state found a mean survival of 2.9 years for patients with COPD who were prescribed DOT, but other countries have reported longer survival times.6 By extrapolation from prevalence and cost data in one state, DOT in Australia was estimated to cost $30.4 million in 2001.7

DOT is funded by all Australian states and territories (Box 1), and two federal government departments: the Department of Veterans’ Affairs (DVA) and the Department of Health and Ageing (DoHA). The DVA funds clinically eligible war veterans,8 and the DoHA pays oxygen subsidies to federally funded, residential aged care facilities.9

The position statement Adult domiciliary oxygen therapy by the Thoracic Society of Australia and New Zealand provides an evidence base for DOT services.1 Service provision is reported to vary between jurisdictions, but the extent and impact of this is unclear.1,7 The many funding sources and departments administering DOT programs make it difficult to assess accurately the rate of prescription and the total cost of these programs in Australia.

Our study aimed (i) to determine the rate of prescription and the total cost of government-funded DOT in Australia; (ii) to identify differences between jurisdictions in prescription rates, costs and service provision; and (iii) to evaluate the adequacy of available data to explain any differences.

The total number and rate of DOT prescriptions in Australia, including data from the DVA, the DoHA and individual states and territories, have not been published previously. Our data for the number of patients whose DOT was state-funded, and the costs incurred, were lower than previous estimates. Jones et al extrapolated 2002–2004 data from Tas to arrive at an estimate of 21 000 patients using state-funded DOT, exceeding our result by 59%.15 This difference is consistent with our finding that Tas had the highest rate of prescription of DOT.

Previous cost estimates for all state-funded services exceed ours by 46%–51%.7,15 Crockett et al estimated the total cost for Australia to be $30.4 million in 2001 by extrapolating data on DOT prescriptions from one DOT service in SA to the whole of Australia (111 patients prescribed DOT per 100 000 population, costing $1400 per patient per year).7 Our study found a lower state-funded rate in SA (83 per 100 000) and a higher cost per patient per year of $2574. This may be due to cost variability between services in SA, and the administrative costs included in our data from the Department of Health, SA. The prescription rate in Tas for DOT in 2002–2004 was found to be 102 per 100 000 population (comparable with our finding) at a cost of $1498 per patient per year (which extrapolates to a national figure of $31.5 million).15 While both these cost estimates approximate our findings, neither included data from the DVA or the DoHA. This highlights the potential for error when extrapolating, and the benefit that a national oxygen database would provide.

Our estimated national cost for DOT does not include administrative costs incurred by the DoHA and the DVA, nor the indirect clinical costs associated with assessment, reassessment, education and support of patients prescribed DOT. This represents a significant underestimation of the real cost of DOT. Appropriate assessment of patient suitability is needed to avoid unnecessary prescriptions, but requires clinician time (physiotherapist, physician, nurse) and resources (arterial blood gas analysis, overnight oximetry). Without this, poor adherence to prescribed DOT may negate benefit and waste expenditure.16

The lack of consistent definitions of data makes it difficult to interpret interstate variability. Factors that may influence cost include equipment type, delivery distance and frequency, and market competition. Some NSW state DOT services owned oxygen concentrators. Surprisingly, not all states with liberal cylinder refills (Box 7) incurred higher costs (costs were lowest in the ACT and Vic). More equitable provision of DOT may therefore be achievable.

Our study affirms that there is inequitable access to portable oxygen across jurisdictions. The costs of DOT provided by the DoHA exceeded by almost fourfold the DVA ’ s costs, despite both groups having similar equipment, and administrative costs not being included in our cost data for either service. The DVA ’ s costs for DOT were standard across the country, while the DoHA ’ s costs varied by 31% between states and territories. The mechanisms of payment were different: the DVA was billed directly by oxygen suppliers, whereas the DoHA paid subsidies to residential aged care facilities, who then paid oxygen suppliers. If all DOT prescribed in Australia was funded at the DVA rate, $14 million (less administrative costs) would theoretically be saved annually. In Qld, administrative costs were estimated to comprise 10%–15% of state-funded oxygen costs (Mr John Vasil, Manager, Oxygen and Specialised Services, Medical Aids Subsidy Scheme, Qld Health, personal communication, 20 April 2009).

Rates of DOT prescription varied widely between states. Those with less urbanised populations and arguably less access to medical services may be expected to show lower rates of DOT, as was seen in the NT (44 per 100 000). However, we were unable to show an association between remoteness and prevalence of DOT prescription within each state using grouped state-level data. Regional variations in DOT prescription rates in Tas, and higher rates where access to respiratory specialists was limited, has been reported previously.15 The NT data may be explained by the higher percentage of this population identifying as Indigenous and their increased prevalence of smoking. More NT patients may have benefited from DOT but, as smokers, they would have been ineligible.7,17

COPD was the most frequent diagnosis,1,5,6,15 representing 57% of patients receiving DOT from the Medical Aids Subsidy Scheme in Qld in 2005, and 48% of patients prescribed DOT in Tas.15 Geographical heterogeneity in the prevalence or severity of COPD could explain the variation in DOT usage; however, we did not find this association in state data. Variability in rates of DOT prescription between Danish counties was not explained by differences in COPD admissions, a crude surrogate for severe COPD.18 Other factors that may have influenced variability in Australia include the means test for eligibility in NSW and Qld, differing reassessment requirements, and variable survival of patients (in part due to poor adherence).

National DOT schemes operate in France, Sweden and, more recently, in England and Wales, with the capacity to benchmark rates of use, cost, clinical outcomes, access and adherence to guidelines.1,19-22 The number of patients prescribed DOT in England and Wales (76 763) was first reported in 2007 after the National Health Service implemented a national oxygen service.19

Even without a unified scheme in Australia, a national oxygen register with data from all DOT services would enable strategic planning and benchmarking of costs and outcomes, and would support the more rational and equitable use of this expensive therapy. A national register would also provide much of the data necessary to evaluate the potential benefits and risks of a unified scheme in Australia (demographics, assessment results, diagnosis and severity, prescriptions and adherence, cost, duration of therapy and reason for ceasing).

Our study was limited by our inability to identify the number of patients whose DOT was privately (partially or fully) funded, or funded by health insurance. Patients are unlikely to be funding their own oxygen equipment, except in NSW and Qld where subsidised oxygen is means tested. Patients whose DOT is funded by palliative care services are also expected to represent small numbers because of their short life expectancy. As cost data were not available from all jurisdictions for the 2004–05 financial year, costs from other years were substituted. Within these limitations, our results provide a reasonable approximation of the rate of DOT prescription, and give an estimate of the direct costs of DOT in Australia. However, they do not explain the variability in prescription rates and costs.

Australia urgently requires national benchmarks for the provision criteria, costs and rates of prescription of DOT, as the current fragmentation precludes services from benchmarking the cost-effectiveness and the clinical outcomes of DOT. The development of a national database has the potential to promote equity of access and to determine whether guidelines are uniformly adhered to, particularly in rural or disadvantaged areas. It also offers the significant possibility for major improvements in service provision and a reduction in the cost of individual DOT services, at least in some states.

4 Prescription rates per 100 000 population for domiciliary oxygen therapy (DOT) in Australian states and territories, by source of funding (2005)

DoHA = Department of Health and Ageing. DVA = Department of Veterans’ Affairs.

5 Average cost of domiciliary oxygen therapy (DOT) per patient prescribed per year in Australian states and territories, by source of funding (2005)

DVA = Department of Veterans’ Affairs. DoHA = Department of Health and Ageing. NSW state data exclude capital equipment purchases and administrative costs.

6 Association between prescription rates of domiciliary oxygen therapy (DOT) in Australian states and territories and demographic variables

COPD = chronic obstructive pulmonary disease.