Medicare Finalizes Dispensing Fees for Respiratory Meds, Delays Ruling on Exam

Baltimore

In early November, Medicare announced $57 monthly and $80 quarterly dispensing fees for inhalation medications in 2005, erasing much uncertainty within the home respiratory industry about the reimbursement climate for inhalation therapies next year.

“We view this as a transitional fee,” said CMS Administrator Mark McClellan during a press briefing. Due to the broad range of dispensing fees the agency reviewed, he explained, CMS plans to re-evaluate the cost of dispensing the medications next year. “In the coming year, we’ll gather more data on whether care is affected under the new payment schedule,” he said.

The fee was announced as part of the Medicare 2005 Physician Fee Schedule. McClellan said the schedule represents an overall spending increase of 4 percent, from $53.1 billion in 2004 to $55.3 billion in 2005.

The schedule referenced an October General Ac-countability Office report that found the cost of dispensing inhalation drugs ranged from $7 to $204 among 12 suppliers surveyed.

CMS indicated that the wide range is due in part to the range of supplier services, some of which “may not be necessary to dispense inhalation drugs,” including marketing, overnight shipping and a 24-hour hotline to answer beneficiary questions.

McClellan said CMS based the 2005 fee on an August study commissioned by the American Association for Homecare that named a $68.10 dispensing fee. The study broke costs down into a number of components, some of which CMS’ health policy analysts thought should be incorporated into the final fee, he explained. In addition, CMS has indicated that the physician will determine whether a beneficiary requires a 30-day or 90-day supply of the drugs.

Among other specifics, the rule:

• Explains that the fee “covers all drugs shipped to a beneficiary during a month (or 90-day period) regardless of the number of times a supplier ships inhalation drugs to a beneficiary,” and that “a per-dose dispensing fee could provide an incentive to supply more drugs.”
• Bundles drug compounding into the dispensing fee, eliminating the modifier to bill for compounding separately. “The costs of compounding are included in the AAH study but are not separately identified in the direct cost line items,” the rule stated. “Because the 2005 fee is based on the AAH study, we need to avoid duplicate payment.”
• Requires only a verbal order for dispensing respiratory drugs, but does require a written order for billing.

As required by MMA, reimbursements for inhalation drugs in 2005 will be based on Average Sales Price plus 6 percent.

Final respiratory drug fees for the first quarter of 2005, expected to be announced this month, will be based on third-quarter ASP data, CMS said. adding that second-quarter ASP data showed average price increases for both albuterol and ipratropium.