Inhalation Drug Dispensing Fees Likely to Drop

Baltimore

The 2006 dispensing fee for inhalation drugs will likely fall below the current $57 per month fee, CMS announced last month.

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.

Proposed changes to the 2006 physician fee schedule, released Aug. 1, 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.

Kay Cox, president and CEO of the American Association for Homecare, 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. “This is critical,” she said. “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.”

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 drug therapies by $68.10 per monthly supply.

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

CMS is seeking feedback on the proposed changes through Sept. 30. To comment, visit www.cms.hhs.gov/regulations/ecomments.