Medicare Compliance & Reimbursement

Trade group warns of access problems if no service component is added.

Durable medical equipment suppliers and pharmacies will see no service payments to make up for cut-to-the bone drug reimbursement under a proposed rule to reform Medicare drug pricing.

The proposed rule from the Centers for Medicare & Medicaid Services affects DME suppliers that have in-house pharmacies that dispense drugs for nebulizers, infusion pumps and other DME, notes Gloria Peterson with the California Association of Medical Product Suppliers. Other pharmacies that dispense inhalation drugs also will feel the pain of the cuts.

The rule, published in the Oct. 20 Federal Register, will impact vaccine prices too, CMS notes.

Physicians and suppliers long have said they use the padding on Medicare drug reimbursement rates to pay for the administrative services they provide along with the drugs. "DME providers that offer home infusion and inhalation therapies are reimbursed by Medicare for drugs and equipment only, with no Medicare payment for the services necessary to administer the drugs," notes Kay Cox of the American Association for Homecare.

In the rule, CMS proposes adding a service component payment to physician reimbursement to make up for reductions to Medicare drug prices. But there is no such similar add-on for the DME industry, points out AAH's Seth Johnson.

Medicare already pays for the DME that requires the drug, the servicing of the DME and the inhalation or infusion drug itself, CMS says in the rule. Because inhalation equipment is in the capped rental category, suppliers receive payment for the DME for up to 15 months if the beneficiary requires it that long. "Medicare's payment includes delivery of the equipment to the patient and any necessary setup and training of the beneficiary in its use," CMS maintains.

Medicare payment for DME may be above market rates too, a General Accounting Office report said in 2001, according to CMS.

But payment for DME and its servicing doesn't cover the costs of providing the drugs, AAH insists. "Both inhalation and infusion therapies require around-the-clock services of a nurse or respiratory therapist to perform a variety of functions, such as patient screening and assessment, patient training regarding the administration of the pharmaceuticals, and monitoring of patients' health," Cox says in a release.

Medicare's failure to pay for those administrative services "severely jeopardizes homecare patients' access to medically necessary inhalation and infusion drugs," she adds.

CMS hasn't handed down the final word on a DME service add-on yet, though. The agency assures in the rule that "for the drugs (for example, the inhalation drugs) where we are not currently proposing changes in payments related to the administration costs of furnishing the drugs, we are seeking comments and data supporting the appropriateness of any payment changes."

That language signals that CMS is receptive to ideas on how to reimburse DME suppliers for their drug administration costs, Johnson says.

CMS is taking comments on the proposed rule until Oct. 14. The agency plans to issue a final rule on the matter "later this year," it says.