BRENTWOOD, Tenn., and LAKE FOREST, Calif.--Two of the nation's largest providers have expressed concerns about a proposed reduction in CMS' dispensing fee for inhalation drugs, warning that it could force some companies to exit the market.

If the service fee for providing the inhalation therapies drops below the current $57 per month as CMS has suggested (see Home Care Monday, Aug. 8), "few suppliers, if any, will be able to afford to provide these drugs at what will amount to be a substantial financial loss," according to an Aug. 8 statement from American HomePatient. The Brentwood, Tenn.-based company, which operates 274 locations in 35 states, said providers including AHP "could be forced to exit the inhalation drug business depending on the magnitude of a reduction in the dispensing fee."

Lawrence M. Higby, CEO of Lake Forest, Calif.-based Apria Healthcare--which serves patients in all 50 states--said providers have not even had enough time to adjust to the drugs' 2005 reimbursement structure, which replaced the average wholesale price formula with one based on average sales price plus 6 percent. When the new formula took effect Jan. 1, Medicare added the dispensing fee to compensate for the costs of providing the respiratory medications.

"We are very concerned that after only six months, [CMS] would contemplate a reduction to 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," Higby said in a statement issued Aug. 8. He added that it could take a year on the new reimbursement structure before "reliable and predictable data may be gleaned."

In addition to considering the increasing costs of pharmacist labor, fuel and delivery, the fee should be eligible for a Consumer Price Index increase of at least 3 percent this year, which is what other segments of the health care service industry receive, he said.

According to Higby, the cost of caring for a Medicare beneficiary with chronic obstructive pulmonary disease at home with a nebulizer and inhalation therapies is estimated to be $3 to $4 per day. "Compared to inpatient costs for the COPD [Diagnostic Related Groupings], or an emergency room visit, home-delivered inhalation therapies are among the most cost-effective treatments in health care," he said.

CMS is seeking feedback on proposed changes to the 2006 physician fee schedule, which includes the dispensing fee, through Sept. 30. To comment, click here.

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