Meds lose steam but chug along
WASHINGTON - Neb-med providers experienced a rocky 2006, but overall, the industry seems parked in neutral as the calendar opens on a new year.
A steep cut to the dispensing fee--from $57 to $33--which took effect last January, led to dire predictions of a mass exodus from the market, but so far, that hasn't happened.
"We saw some consolidation, and there's been a slight loss in the number of providers," said Mickey Letson, presdinet of Decatur, Ala.-based Letco.
Many providers are maintaining their neb-med patients, who will eventually transition to oxygen, said Tom Ryan, CEO of Farmingdale, N.Y.-based Homecare Concepts.
"The profitability has decreased tremendously, but it rounds out our bag of tricks," said Ryan. "We promote it with our marketing materials, but we're not advertising beyond that."
Les DeFelice, president of DeFelice Care in Wheeling, W.Va., said he's still making money on inhalation drugs.
"We use everything to promote it," said DeFelice. "If the reimbursement gets cut again, we just re-evaluate."
Another issue contributing to the holding pattern is a long-awaited final decision on a proposal to reimburse brand-name drugs Xopenex and DuoNeb at generic rates.
"It would mean a change in the way things are done," said Joe Lewarski, vice president of clinical and government affairs for Inogen.
New codes for compounded nebulizer drugs released in December--but with no fee schedule--could also change providers' game plan--if they only knew what rules to play by.
"No one is sure what they should be doing," said one insider. "We're in that very precarious position again."
As Medicare Part D enters its second year, the industry could see more patients switching to mail order pharmacy, said Tom Pontzius, head of VGM's Nationwide Respiratory.
"Unfortunately, it's going to be a trend," said Pontzius. "Obviously, the pharmaceutical companies have aligned themselves with companies that can purchase in larger volume."
Brent McNutt, president of Global Pharmacy in Haleyville, Ala., which rolled out a pharmacy and mail order program last March, said he crunched the numbers and saw combining Part B and D as a way to maintain profitability.
"I view Part B respiratory drugs as a crucial lead-in to the oxygen business," said McNutt. "Getting into Part D drugs allowed me to increase my average profit per respiratory customer and allows me to stay in the pharmacy business and to sell more competitively in the whole respiratory arena, including oxygen."
Despite the all the uncertainty, there is still plenty of opportunity for smart providers, insiders say.
"As a business person, just think of the people that left the respiratory med business," said DeFelice. "Ultimately, reimbursement settled in these areas and it's not such a bad thing."