Home Health & Hospice Week

Physicians to determine whether to use 30-day or 90-day prescription.

Inhalation medication suppliers are crunching numbers fast and furiously to see how they'll fare under the new dispensing fee.

Many suppliers were caught off guard by the surprisingly generous increase to the dispensing fee for albuterol sulfate and ipratropium bromide - from $5 per month to $57 per 30 days or $80 per 90 days (see Eli's HCW, Vol. XIII, No. 39, p. 307).

"It was a complete surprise," says Harold Davis, respiratory specialist for VGM Group's Nationwide Respiratory division (a network for independent respiratory providers). Before the announcement, the mood among suppliers "was doom and gloom," Davis tells Eli. Many suppliers, including national companies Lincare Holdings Inc., Apria Healthcare Group Inc. and American HomePatient Inc., were threatening to leave the Medicare program over the 89 percent cut to the medications' reimbursement rate under the average sales price (ASP)-based payment system taking effect Jan. 1.

Now that CMS has released the fee figures, suppliers are optimistic. Inhalation medication dealers can "sit down, sharpen their pencils and see what kind of profit they can make," says Davis, also director of operations for Conway, AR-based Baker Medical Inc.

Each provider will have to determine its profits based on its individual business model, notes Joseph Lewarski, president of Hytech Homecare, Pharmacy and Medical Supply based in Mentor, OH.

But for many suppliers, the monthly fee option is going to be the most favorable reimbursement rate, Davis predicts. Suppliers will receive only an extra $23 for a three-month versus one-month supply.

"Clearly the $57 per month is better than shipping quarterly," agrees Jacki McClure, director of the National Respiratory Network and government relations for The MED Group in Pittsburgh, PA.

The main cost savings in the 90-day versus 30-day supply is shipping, notes Lewarski, who is vice chair of the American Association for Homecare's Home Medical Equipment/Respiratory Therapy Advisory Council. But shipping is "only a modest percentage of the overall monthly cost associated with managing this population of patients," he points out.

Suppliers also will be able to save on the time the pharmacist takes to dispense the medication and billing, Davis says. But those savings probably won't outweigh the extra $91 suppliers would receive over three months using the 30-day fee instead of the 90-day fee ($171 versus $80).

Physicians will be the ones to decide whether patients require a monthly or three-month prescription, CMS Administrator Mark McClellan has indicated. CMS expects physicians to use "reasonableness" in making the determination, the agency says in the physician fee schedule final rule slated for publication in the Nov. 15 Federal Register.

For example, physicians should probably issue a one-month prescription for patients just starting the drugs, in case of adverse reactions or changes in the treatment regimen, CMS suggests. Another good reason for 30-day instead of 90-day prescriptions is when the beneficiary is at risk of death before the three-month timeframe, resulting in wasted medication, CMS notes in the rule.

But when the beneficiary is stable, a 90-day prescription would be appropriate for the chronic conditions being treated, CMS contends. The majority of stable COPD patients, which make up 90 percent of the Respiratory Network's patient population, will fall into this category, McClure predicts.

Physicians are giving six-month and one-year refills for such patients, and suppliers that don't interpret those prescriptions as quarterly dispensing fees will be courting fraud charges, McClure expects.

Wait a minute: Don't make any assumptions about next year's dispensing fee, CMS reminds suppliers. The agency plans research on the topic and may completely revamp the fee structure and amount.

But suppliers shouldn't panic about the looming change. "We'll take what we have this year and we'll readjust next year," Davis says. "We're adaptable," he maintains of suppliers.

Other dispensing fee issues include: