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Lincare Holdings Inc. Announces Fourth Quarter and Year Ended 2008 Financial Results
Date:2/9/2009

ntial impact of these changes to its business, but estimates that revenues and operating income in 2009 will be negatively impacted by approximately $240 million to $255 million. The Medicare reimbursement changes included in this preliminary estimate include approximately $110 million attributed to scheduled nationwide reductions in Medicare payment amounts of 9.5% for the product categories, including oxygen, that were initially included in competitive bidding and additional Medicare price reductions for stationary oxygen equipment of approximately 2.5% contained in the 2009 national monthly fee schedule published by the Centers for Medicare and Medicaid Services ("CMS") in November, 2008. The preliminary estimate also includes $130 million to $145 million in Medicare payment reductions attributed to the implementation of new federal regulations that change the reimbursement methodology for oxygen equipment from continuous monthly payment for as long as the equipment is in use by a Medicare beneficiary to a capped rental arrangement whereby payment for oxygen equipment may not extend beyond a period of continuous use of 36 months.

The new Medicare oxygen regulations are complex and represent a fundamental change in the payment approach to oxygen. CMS has published initial guidelines addressed to providers, Medicare payment contractors and beneficiaries, however, final claims filing and processing instructions are still being developed. The assumptions used by the Company to develop its preliminary estimates of the financial impact of the oxygen capped rental regulations are highly dependent upon a number of variables, including, (i) the number of Medicare oxygen customers reaching 36 months of continuous service, (ii) the number of customers receiving reimbursable oxygen contents beyond the 36-month rental period and the coverage and billing requirements established by CMS for suppliers to receive payment for such content
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