Suppliers oppose RX dispensing fee cut

Sunday, August 14, 2005

LAKE FOREST, Calif -- Apria issued a lengthy rebuttal to CMS's plans to reduce the dispensing fee for respiratory medicines last week, arguing that, if anything, the current $57 fee is too low.

Wall Street didn't think much of the threat to provider revenues posed by the Aug. 1 Notice of Proposed Rulemaking, which hints at a ratcheting down of the dispensing fee. Neither Apria or Lincare's stock prices suffered even a hiccup at the suggestion that CMS may cut the fees.

But the threat is real enough. In the Notice of Proposed Rulemaking Notice that went out Aug. 1, CMS cited one respiratory pharmacy that said it could get by with a $25 dispensing fee. Apria called that example statistically invalid and questioned CMS's ability to make a sound judgment on the issue, saying CMS "may not fully understand the current community standard of medical care associated with inhalation therapies."

Not surprisingly, Lincare has remained silent on the subject, but American Homepatient issued a release, reiterating comments the company made previously to CMS.

"Without an adequate dispensing fee to offset the drastic cuts in reimbursement for the drugs that began Jan. 1, 2005, many beneficiaries would be faced with an access problem 'because few suppliers, if any, will be able to afford to provide these drugs at what will amount to a substantial financial loss,'" American HomePatient said in a statement Aug. 8.

Apria, in its public comments, seemed astonished by the CMS decision to reduce the dispensing fee "when CMS has not, to our knowledge, performed any additional studies, surveys or pharmacy site visits that would support such a decision."

As an argument against a cut, Apria held out the 2004 Muse & Associates' study of 109 pharmacies which showed that the dispensing fee should be $68.10. That number, according to Apria, should be higher today.

"Due to the nature of the services we provide, certain industry costs such
as pharmacist labor, fuel and delivery have actually increased since
2003 and accordingly, the fee should be eligible for a consumer price
index (CPI) increase of at least 3% this year, which is how CMS
addresses other segments of the healthcare service industry," Apria President Larry Higby said in the release.