Dispensing fee

Tuesday, November 30, 2004

Editor, HME News

It could have been a lot worse. The $57 monthly dispensing fee that CMS will pay providers of respiratory medication is a far cry from the $40 fee that the industry was bracing for. Although a majority of respondents to our NewsPoll don’t think $57 per month is reasonable, Wall Street took heart.

Look no further than Lincare. After the MMA revealed its plans to reduce reimbursement for respiratory medication, the company’s stock took a nosedive. Lincare (and Apria) threatened to quit delivering respiratory medicine unless CMS came up with a sufficiently remunerative dispensing fee. In October, the GAO recommended a dispensing fee of $55 to $64, and volia, Lincare bounced back big.

Lincare won’t quit delivering respiratory medicines. By implication, that means they believe the dispensing fee is reasonable. Easy for them to say, right? As Mel Brooks once said, “It’s good to be the king.”

It’d be easy to dismiss the 56% of our NewsPoll respondents as sore losers, who didn’t get as much as they wanted, as the Muse Study suggested they needed and who don’t want to concede that Medicare did them a good turn because it wouldn’t be politically expedient to do so. But their gripes are well founded nevertheless.

Wholesalers are, if mutedly, pleased by the news. They stay in business no matter what. But for the small provider it’s a different deal. Consider the guy who’s running meds for 100 patients. Used to be he was pulling in north of $12,000 reimbursement per month. Now, figuring his margin on the meds to be about a wash, he’s pulling in $5,700 in dispensing fees. Can you run a pharmacy on $12,000 per month? Maybe okay. But $5,700 per month? Probably not.

There might be a silver lining in this for the little guy. Afterall, Medicare has, pretty decisively, come out and said to the HME supplier community: We recognize the service that you do, and we’re going to pay you for it. Still, I’m guessing the guy who can’t make money on his meds anymore would prefer the silver to the lining.