CMS Rolls Out Proposal for Drug Cuts, Face-to-Face Physician Exam

Washington

In a Notice of Proposed Rule Making published in the Aug. 5 Federal Register, CMS included respiratory drug reimbursement cuts for 2005 even more drastic than originally expected. The agency also issued its long-anticipated proposed regulation requiring Medicare beneficiaries to have a face-to-face examination from a physician before receiving a power wheelchair. But in an unexpected turn, the proposal calls for face-to-face patient exams for all items of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).

Detailed following, both proposals are part of CMS' “Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule for Calendar Year 2005,” which deals with physician services.

Comments on the proposal are due by Sept. 24. The final rule is scheduled to be published Nov. 1 and will become effective Jan. 1, 2005.

Respiratory Drug Reimbursements Cut by 89 Percent

As mandated by the Medicare Modernization Act (MMA), beginning next year, Medicare reimbursement for Part B respiratory medications will be based on Average Sales Price (ASP) plus 6 percent. Analysts had predicted that the new pricing would translate to an 80 percent cut from current rates.

But as part of CMS' annual physician fee schedule proposal, cuts for albuterol sulfate and ipratropium bromide — two staple drugs of the home respiratory industry — are listed at an 89 percent drop from 2004 allowances. The proposal cuts albuterol sulfate payments from 39 cents to 4 cents per milligram, and ipratropium bromide payments from $2.82 to 30 cents per milligram. The two drugs are currently paid at 80 percent of the Average Wholesale Price (AWP).

Since CMS announced the proposed cuts, a number of the country's major home respiratory providers — including Apria Healthcare, Lincare, American HomePatient and Pediatric Services of America — have said they will be forced to exit the respiratory drug business if CMS fails to develop reasonable fees to account for drug delivery and related costs.

Sen. John Ensign, R-Nev., also threw his support to the industry in a letter to CMS Administrator Dr. Mark McClellan stating that the drugs' “dispensing fee must be meaningful (i.e., it reflects the costs incurred by home care pharmacies), so that important services to Medicare beneficiaries are not dramatically reduced.”