Study Finds Service Fee Needed for Inhalation Drugs Reimbursement

Washington

A study of inhalation drug therapy services provided to beneficiaries in their homes found the new 2005 Medicare reimbursement formula based on average sales price (ASP) would under-reimburse the actual cost of providing two key drug therapies by $68.10 per monthly supply.

Conducted by Muse and Associates for AAHomecare, the study surveyed 109 pharmacies representing 2,448 branch locations providing inhalation drug therapy services to 337,348 Medicare beneficiaries per month — or 61 percent of all Medicare inhalation drug therapy patients. AAHomecare is sharing the study with CMS and the GAO, which is conducting its own study on the drugs.

“The objective assessment of the cost of inhalation drug therapies in the home reveals a serious gap between what will be paid under the new 2005 reimbursement formula and the reality of what it costs to deliver these therapies to Medicare beneficiaries,” said Kay Cox, AAHomecare president and CEO. “The ability to provide these therapies and patient access to these therapies will both suffer if we don’t close this reimbursement gap.

“We will file the study as part of our comments to CMS,” Cox continued, “and look forward to cooperating closely with the agency to ensure that beneficiaries continue to have access to critical inhalation therapies.”

In a Notice of Proposed Rule Making in the Aug. 5 Federal Register, CMS proposed 89 percent reimbursement cuts for albuterol sulfate and ipratropium bromide using the ASP plus-6-percent formula mandated for 2005 by MMA.

Since the proposal was published, a number of the nation’s largest home respiratory providers, including Apria Healthcare and Lincare, have said they will exit this portion of business unless a significant service-cost component is added to the new payment formula to offset patient management, pharmacy, compounding, delivery and other administrative costs necessary in providing the drugs.

Among suppliers responding to the AAHomecare survey, 89 percent said they would discontinue providing inhalation drugs to Medicare beneficiaries under the ASP formula without such a service-cost component.

A final rule is scheduled to be published Nov.1, with an effective date of Jan. 1.