Home Health & Hospice Week

Study shows drastic underfunding of inhalation meds under ASP system next year.

If Medicare hopes to preserve access to beneficiaries' inhalation medications in 2005, it had better be considering a steep drug dispensing fee.

That's the bottom line of a new study conducted by Muse & Associates for the American Association for Homecare. A survey of 109 home care pharmacies with thousands of locations shows next year's payment levels for inhalation drugs - average sales price plus 6 percent - will underfund the actual cost of providing those drugs by $68.11 per month.

That figure includes $31.79 in direct costs for ipratropium bromide and albuterol sulfate; $63.37 in services such as labor, storage, delivery and accreditation; and a slim 7 percent profit margin, the Muse study says.

"The study supports our contention all along that the original numbers proposed by [the Centers for Medicare & Medicaid Services] were well below our cost of providing the service," says Jacki McClure, director of the National Respiratory Network and government relations for The MED Group in Pittsburgh, PA.

If CMS fails to implement at least a $68 dispensing fee per service encounter, beneficiaries could see widespread access problems, the study implies. Nearly nine out of ten survey respondents said "they would discontinue providing inhalation drugs to Medicare beneficiaries under the ASP formula if no other Medicare reimbursement were available to offset their substantial, additional costs," AAH points out.

The study "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," Kay Cox, AAH president and CEO, warns in a release. CMS must "close that gap so that Medicare beneficiaries can continue to have access to these therapies in their homes," McClure says.

AAH plans to share the study's findings with CMS and the Government Accountability Office, which is conducting research on the matter. Providers have until Sept. 24 to submit comments on the 89 percent cut to the drugs' reimbursement rate under the ASP system (see Eli's HCW, Vol. XIII, No. 28, p. 219). 

Editor's Note: The proposed physician fee schedule, which contains the ASP rates, is at
www.access.gpo.gov/su_docs/fedreg/a040805c.html.