Medicare Compliance & Reimbursement

CMS seeks comments on appropriate fee amount.

Respiratory providers should gird for battle over possible cuts to Medicare's dispensing fee for home inhalation drug therapy.

The Centers for Medicare and Medicaid Services is considering lowering the fee, it said in announcing its proposed physician fee schedule Aug. 1.

"CMS intends to establish a dispensing fee amount for 2006 that is adequate to cover the costs of those services that appropriately fall within the scope of a dispensing fee," the agency said in its announcement. "It is likely that this fee amount will be lower than the current $57 per month."

The current fee "substantially exceeded some providers' costs as reflected in a few comments on last year's proposed rule," CMS notes in the proposed rule. For example, two retail pharmacy companies indicated that a fee of $25 - or five to six times the prior $5 dispensing fee - was adequate to cover costs, CMS says.

The agency this year reduced the amount it pays for inhalation drugs to the average sales price plus 6 percent. In doing so, it established a dispensing fee of $57 for a 30-day supply of drugs and an $80 fee for a 90-day supply.

CMS is currently seeking comments on the fee, such as what services should fall within its scope and the quality of inhalation drug services. The agency is also seeking feedback on Medicare beneficiaries' access to inhalation drugs dispensed through metered dose inhalers under the new drug benefit that will begin next year.

The day after CMS announced it might trim the dispensing fee, the American Association for Homecare released a statement opposing any cuts. "AAHomecare continues to strongly oppose any reduction in the dispensing fee for home inhalation drug therapy, which is currently under-reimbursed," says AAHomecare President and CEO Kay Cox.

No new studies have been conducted on dispensing fees, so any reduction in the seven-month-old fee would be premature, Cox observes.

"In fact, a small inflation increase to the dispensing fee is warranted and appropriate," Cox says. Hospitals, inpatient rehabilitation facilities, skilled nursing facilities and other provider sectors have received such increases, she notes.

AAHomecare last year commissioned a study by Fairfax, VA-based Muse and Associates of 109 pharmacies that found the new ASP reimbursement would shortchange the actual cost of providing two key drug therapies, albuterol sulfate and ipratropium bromide, by $68.10 per monthly supply.

Suppliers say any cuts would have a devastating impact. "I am losing money at $57, and I cannot do anything less than that," Home Care Alliance of Virginia Executive Director and pharmacy owner Wayne Stanfield tells MLR. "Basically I need $11 or $12 more a month per delivery per dispense in order to show a very miniscule positive cash flow."

The proposed rule appeared in the Aug. 8 Federal Register. CMS will accept comments on the proposals until Sept. 30 and publish a final rule later this year.