CMS: Inhalation Drug Dispensing Fees Likely to Drop in 2006

BALTIMORE–CMS announced last week the 2006 dispensing fee for
inhalation drugs will likely drop below the current $57 per month
fee, but the industry isn’t taking the news lying down. The
American Association for Homecare is campaigning to convince the
agency otherwise before the 2006 Medicare physician fee schedule is
finalized.

“This is critical,” said Kay Cox, president and CEO of
AAHomecare. “It’s a reimbursement issue that could really affect a
great number of [home care companies]. I think it will definitely
be an acute problem for the patients being served.”

Medicare payments for inhalation medications have undergone a
number of changes in the past several years. In the most recent
move, CMS replaced its average wholesale price formula with a
formula based on average sales price plus 6 percent, as required by
the Medicare Modernization Act. To compensate for the cost of
delivering these therapies, the agency added a $57 monthly
dispensing fee, or $80 per 90-day supply for 2005. Some of the
nation’s largest providers had threatened to exit the business if
CMS did not add the fee.

Proposed changes to the 2006 physician fee schedule released
Aug. 1, however, indicate CMS thinks the current service fee is too
generous, noting, “the 2005 dispensing fee substantially exceeded
some providers’ costs as reflected in a few comments on last year’s
proposed rule and the [Government Accountability Office] study.” A
2004 GAO report found that the cost of dispensing inhalation drugs
ranged from $7 to $204 among 12 companies surveyed.

Cox contends the $57 a month fee is already inadequate,
especially when factoring in inflation, rising gas prices and other
costs associated with providing respiratory medications. Last year,
a Muse & Assoc. study commissioned by AAHomecare found that the
2005 ASP-based formula would under-reimburse the actual cost of
providing two key drug therapies by $68.10 per monthly supply. Some
of the service costs cited in the study include clinical intake,
establishing and revising a care plan, care coordination, patient
education, caregiver training, compliance monitoring/refill calls,
in-home visits, delivery of services, billing/collections and other
patient management and administrative costs. The association is now
in the process of gathering additional data to support its case,
Cox said.

“We’re just puzzled why CMS would even think of going lower than
$57,” she said. “What we have to do is work through those questions
[about an appropriate dispensing fee] to make sure CMS understands
it is not too high.”

Jacki McClure, director of the National Respiratory Network for
Lubbock, Texas-based The MED Group, said she is hopeful the
industry will prevent the dispensing fee from undergoing a drastic
cut. “Any further decrease is going to threaten patient access to
care, and there’s no data to support such a cut,” she said. “When
we first faced the threat of reduction we gathered data and showed
it would affect patient access … this time there is certainly
time to come up with a plan to react to this.”

During the comment period on the proposed fee schedule
revisions, which ends Sept. 30, CMS is seeking feedback on an
appropriate dispensing fee level, including specific comments on
issues such as the potential impact on beneficiaries and providers
and the cost of providing services to inhalation drug patients. To
comment, click here.

To view the proposed revisions to payment policies under the
2006 physician fee schedule, click
here.