Home Health & Hospice Week

Suppliers warn of service loss if dispensing fee gets slashed.

Inhalation drug suppliers could face cuts in the dispensing fee if a new report calling the fee into question holds sway.

In the report, the HHS Office of Inspector General randomly chose 480 beneficiaries who had Medicare claims for inhalation drugs in 2003. It surveyed the 203 suppliers who provided the drugs, asking them to report on and provide supporting documentation for services provided.

Contact for drug refills accounted for 56 percent of services provided by inhalation drug suppliers, the OIG found. The next most common services--medication compliance reviews and contacting physicians' offices--accounted for 15 and 12 percent of services respectively. Beneficiaries most commonly received services by telephone, with only one in 10 getting a home visit.

"[The Centers for Medicare & Medicaid Services] set the interim dispensing fee for inhalation drugs based, in part, on an assumption that beneficiaries receive numerous, important services from their drug suppliers," the OIG concludes. "This inspection shows that beneficiaries, on average, receive little service from their inhalation drug suppliers beyond contacting them to ask if they need a drug refill."

CMS upped the dispensing fee from $5 to an interim amount of $57 for a 30-day supply after the Medicare Modernization Act cut drug payments. It did so based on a report sponsored by the American Association for Homecare, which argued that beneficiaries receive extensive services from suppliers.

Don't Cut Fee--Increase It, Industry Says

AAHomecare strongly criticizes the OIG's findings. Because the OIG did not consider core services involved in dispensing drugs such as order processing, packaging, shipping, billing, coding and administrative costs, its report is of limited value in setting an appropriate dispensing fee, AAHomecare charges.

Meanwhile, the association on Sept. 30 re-leased the findings of a follow-up survey of home care pharmacies conducted in August and September by Muse & Associates, the Washington-based research firm that also conducted the earlier study.

The new survey found that 44 percent of home care pharmacies would stop providing home inhalation drug therapy to Medicare beneficiaries if the program substantially cuts the dispensing fee. Half said they'd curtail service to Medicare beneficiaries, and 3 percent said they'd go out of business altogether.

The pharmacies surveyed report that their total dispensing costs for nebulized inhalation drugs are $66.55 for a 30-day supply and $138.80 for a 90-day supply. The survey collected responses from 82 pharmacies, which together provide inhalation drug therapy to more than half of all of the Medicare beneficiaries who receive such therapy.

"This updated Muse survey data indicates that the dispensing fee should be increased from the current $57 per monthly supply," asserts AAHomecare Presi-dent and CEO Kay Cox. "There is no data that supports a cut in the dispensing fee for 2006."

Note: The OIG's report is available at www.oig.hhs.gov/oei/reports/oei-01-05-00090.pdf.