Home Health & Hospice Week

Increased dispensing fee not enough to keep independents afloat. Rather than a victory, the new $57 dispensing fee for inhalation medications may be a nail in the coffin of many small, independent suppliers.
 
So say a number of small durable medical equipment and pharmacy providers that are wrestling with the decision of whether to continue furnishing unit dose medications under the punishing Medicare reimbursement cut to average sales price (ASP) plus 6 percent Jan. 1.
 
In response to the drastic 89 percent cut to respiratory medications albuterol sulfate and ipratropium bromide, the Centers for Medicare & Medicaid Services finalized a $57 per month drug dispensing fee for the medications in the final physician fee schedule published in the Nov. 15 Federal Register. CMS also set an $80 fee for a three-month supply (see Eli's HCW, Vol. XIII, No. 39, p. 307).
 
The new fee is much higher than the pre-ASP amount, which was a mere $5 per month. But it still won't be enough to make a difference to some suppliers.
 
Home Care Pharmacy Inc. based in Manas-sas, VA will be closing its doors thanks to the switch to ASP and inadequate dispensing fee, owner Wayne Stanfield tells Eli. After calculating the pharmacy's costs and the upcoming reimbursement rate including the dispensing fees, "it took me about three seconds to realize this wasn't going to work," says Stanfield, who also owns DME company Prince William Home Medical.
 
Stanfield figures the new rate will cut his net revenues 76 percent. "It's ludicrous to assume anyone is going to take a 76 percent cut in business," he fumes.
 
Suppliers will see an average reimbursement cut of 35 to 40 percent under the monthly fee and up to 70 percent under the 90-day fee, estimates Harold Davis, respiratory specialist for VGM Group's Nationwide Respiratory division.
 
Under those harsh cuts, suppliers still have a laundry list of costs to cover - rent, utilities, staff salaries, regulatory requirements like alarm systems, on-call services, insurance, etc. "The general operating expenses ... that a pharmacy incurs monthly essentially remain the same each month," points out Joseph Lewarski, president of Hytech Homecare, Pharmacy & Medical Supply in Mentor, OH. "So naturally there is going to be a minimum revenue amount required to break even each month." And for many suppliers, the new fee won't make up that amount. Larger Suppliers Are Winners Larger suppliers that can achieve economies of scale on these items will be the ones who can survive under the new reimbursement levels, predicts Jeff Wills, owner, CFO and COO of CV Medical Solutions Inc. in Oklahoma City. Providers may need to carry a respiratory medication patient load of 150 or more to break even under the new rates, predicts Jacki McClure, director [...]