Respiratory Update

While respiratory manufacturers and providers face many legislative and regulatory issues, none has had as much impact as the changes included in the Medicare Modernization Act (MMA). These include changes in the payment formula for respiratory drugs; special Federal Employees Health Benefits Plan (FEHBP) pricing for certain types of durable medical equipment such as oxygen and oxygen equipment; a transitional freeze on DME rates; and competitive bidding. However, as the government implements these provisions of the law, the respiratory community has banded together to advocate against them to Congress and the Centers for Medicare and Medicaid Services (CMS).

CHANGES IN THE PAYMENT FORMULA FOR RESPIRATORY DRUGS

Beginning in 2005, the payment formula for respiratory drugs will switch from the current 80 percent of the average wholesale price (AWP) — a reduction in payment of approximately 15 percent from 2003 — to the average sales price (ASP) plus 6 percent — resulting in a further reduction by another 65 percent.

In the April 6 Federal Register, CMS sent an interim final rule with comment period on the reporting of ASP data by manufacturers. The rule, effective on April 30, applies only to reporting ASP data by manufacturers. CMS stated that it will publish another proposed rule on the ASP-based payment system later this year. Manufacturers are to begin reporting their ASP data quarterly, beginning with the first quarter of 2004, and had to make their ASP submissions within 30 days after the end of the quarter on April 30. Comments on the rule are due by June 7.

CMS intends for the rule to provide guidance to manufacturers on the requirement that they submit ASP data to CMS. However, the rule provides very little new information on how ASP will be formulated beyond what was already available under the MMA.

Physician, clinical and provider organizations are opposed to these changes and will be submitting comments to CMS. The board of directors of NAMDRC (Physician Advocacy for Excellence in the Delivery of Pulmonary Care), signed off at the association's annual meeting on opposing the use of ASP for Medicare Part B drugs. As well, both the American Association for Homecare (AAHomecare) and the home care section of the American Association for Respiratory Care (AARC) will not only be submitting comments, but also are urging their members to do so.