Dispensing fee implosion: An industry mulls its options

Sunday, November 13, 2005

YARMOUTH, Maine - Now that the initial shock from CMS's dispensing fee implosion has subsided, a frazzled HME industry is wondering who--if anyone--will be dispensing respiratory medications next year.

One thing appears certain at this point: No one really knows.

Despite being braced for a vigorous blow, the jolt from CMS's planned fee drop in early November rattled even the steadiest nerves. Set for 2006, Medicare plans to decrease the current monthly dispensing fee from $57 to $33.

AAHomecare officials said they were "deeply disappointed" with CMS's plan, noting that even at the current $57 rate providers are under-reimbursed for the drug dispensation.

"A cut only makes it more difficult to continue providing this critical therapy to beneficiaries who need it," President Kay Cox said.

Joe Lewarski, vice president of clinical and government affairs for Santa Barbara, Calif.-based Inogen, was among those caught off guard by the force of the blow.

"Clearly the $33 number is below all our experts' estimates to the cost of dispensing those medications," he said. "It's hard to say what will happen. You can barely cover the cost of medication now, so providers will have to take a serious look at their operations and determine for themselves whether it's worth continuing."

Les DeFelice concedes that it is now a push-to-shove situation and that a tough decision has to be made.

"When you get a substantial cut, you have to decide whether it's in your best interest to be in the business--period," said DeFelice, president of Wheeling, W.Va.-based DeFeliceCare. "We are asking ourselves whether we can afford to provide a formulary of medications to our customers and still make a profit. That's the big question."

CMS reportedly justified the nose-diving fee by pointing to the ancillary services that providers bundle into respiratory medication dispensing, such as in-home visits, patient education, caregiver training and care coordination. Those extra services "do not fall within the scope of a dispensing fee," a CMS statement read, and therefore do not qualify for reimbursement.