Providers Uneasy About Possible Drop in Inhalation Drug Fee

BRENTWOOD, Tenn., and LAKE FOREST, Calif.–Two of the nation’s
largest providers have expressed concerns about a proposed
reduction in CMS’ dispensing fee for inhalation drugs, warning that
it could force some companies to exit the market.

If the service fee for providing the inhalation therapies drops
below the current $57 per month as CMS has suggested (see Home
Care Monday, Aug. 8), “few suppliers, if any, will be able
to afford to provide these drugs at what will amount to be a
substantial financial loss,” according to an Aug. 8 statement from
American HomePatient. The Brentwood, Tenn.-based company, which
operates 274 locations in 35 states, said providers including AHP
“could be forced to exit the inhalation drug business depending on
the magnitude of a reduction in the dispensing fee.”

Lawrence M. Higby, CEO of Lake Forest, Calif.-based Apria
Healthcare–which serves patients in all 50 states–said providers
have not even had enough time to adjust to the drugs’ 2005
reimbursement structure, which replaced the average wholesale price
formula with one based on average sales price plus 6 percent. When
the new formula took effect Jan. 1, Medicare added the dispensing
fee to compensate for the costs of providing the respiratory
medications.

“We are very concerned that after only six months, [CMS] would
contemplate a reduction to the dispensing fee when CMS has not, to
our knowledge, performed any additional studies, surveys or
pharmacy site visits that would support such a decision,” Higby
said in a statement issued Aug. 8. He added that it could take a
year on the new reimbursement structure before “reliable and
predictable data may be gleaned.”

In addition to considering the increasing costs of pharmacist
labor, fuel and delivery, the fee should be eligible for a Consumer
Price Index increase of at least 3 percent this year, which is what
other segments of the health care service industry receive, he
said.

According to Higby, the cost of caring for a Medicare
beneficiary with chronic obstructive pulmonary disease at home with
a nebulizer and inhalation therapies is estimated to be $3 to $4
per day. “Compared to inpatient costs for the COPD [Diagnostic
Related Groupings], or an emergency room visit, home-delivered
inhalation therapies are among the most cost-effective treatments
in health care,” he said.

CMS is seeking feedback on proposed changes to the 2006
physician fee schedule, which includes the dispensing fee, through
Sept. 30. To comment, click
here.