An industry mulls its options

Wednesday, November 30, 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 (See story page 1). AAHomecare officials said they were "deeply disappointed" with the CMS plan, noting that even at the current $57 rate providers are under-reimbursed.
"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.
That rationale almost assures the discontinuation of value-added services by those providers who decide to stay in the business, said Mickey Letson, president of Decatur, Ala.-based Letco.
"Any services other than those mandated by CMS will likely be eliminated," he said. "There will be no more disease state management, patient profiling or any other ancillary services that have been provided in the past. I would also not look for any more late night deliveries, next day air shipments or provision of state-of-the-art equipment."
Still, subtracting services is a strategy of last resort and its impact could be highly detrimental, said Dan Fry, president of Windermere, Fla.-based Revlis Medical.
"If companies go that route it will translate into more hospital admissions, which is a bad thing," he said. "We all need to get more creative in how we educate and service patients."