CMS considers “reasonable” reimbursement for respiratory meds

Sunday, October 17, 2004

October 18, 2004

WASHINGTON - Respiratory med providers got a dose of good news this week when the General Accounting Office released a report that indicated CMS is considering a $55 to $64 per month dispensing fee for nebulizer medications come January 1.
The GAO report, “Appropriate Dispensing Fees Needed for Suppliers of Inhalation Therapy Drugs,” included a letter from CMS Administrator Mark McClellan that established $55 to $64 as the “reasonable range” for the fee.
The GAO found in its review of 12 national, regional and local inhalation pharmacies that costs of dispensing albuterol and ipratropium bromide ranged from a low of $7 to a high of $204.
“It was a busy day  [when the report came out] because we were notifying our customers and they were feeling pretty good about the news,” said Keith Trowbridge, president of Foley Ala.-based Respiratory Distributors. “We had thought back in August it would be around $40.
A study by Muse and Associates, in conjunction with AAHomecare, reported that the 2005 Medicare reimbursement formula based on the average sales price (ASP) plus 6% would under-reimburse the cost of providing respiratory medication by $68.10 per monthly supply.
“I think that by McClellan buying into the $55 to $64 fee range, it really validates Medicare’s commitment to respiratory as a noble part of the healthcare and medication regime of seniors with COPD,” said Trowbridge.
The news also sparked a rebound is stock prices for some national providers, who had been struggling since the ASP reimbursement model was first announced in November 2003. Lincare saw its shares rise 18% the day the GAO report was made public. Apria’s stock jumped also 4%.
Both Lincare and Apria have threatened to exit the respiratory medication business if a reasonable dispensing fee was not established.
Despite the recent optimism, providers say there are still a number of questions that remain. The much-anticipated unveiling of the fee schedule for respiratory drugs on November 1 is expected to answer some lingering concerns.
“The plot could turn and twist more times than a mystery novel at this point,” said Mickey Letson, president of the Letco Companies. “At face value this is a good twist because there was some concern about what Medicare was going to pay. What they have done here is try to ease some provider’s concerns in order to take away the access problems Medicare was facing January 1.”