Rotech: New Budesonide Reimbursement Rate Will Hurt

ORLANDO, Fla.–Rotech Healthcare said CMS’ new reimbursement
rate for budesonide will reduce the company’s annual revenues by
approximately $30 million.

“The company believes that this new reimbursement rate is not
merited and is working with regulatory authorities to reverse this
change, although the final regulatory outcome of this matter cannot
be predicted,” the provider said in a press release Thursday.

At the beginning of the year, a new Medicare billing code and
payment methodology for compounded budesonide took effect. Under
the new regulation, payments are based on pharmacy invoices
submitted for individual claims.

Last week, Rotech received its first 2006 payment for compounded
budesonide from a single Medicare contractor for approximately 10
claims at the reimbursement rate of $0.29 per 0.5 milligrams. “The
company believes this payment reflects a Medicare contractor’s
determination to reimburse compounded formulations of budesonide on
a different basis than non-compounded formulations of the drug,”
Rotech said.

The reimbursement rate for non-compounded budesonide is $4.408
per 0.5mg and $4.374 per 0.5mg, respectively, for the first and
second quarters of 2006.

In response to the Rotech statement, Lake Forest, Calif.-based
Apria Healthcare stated that it is not “materially impacted by this
development” and expects a reduction of $3 million in revenue due
to the new reimbursement rate.