ORLANDO, Fla.--Rotech Healthcare said CMS' new reimbursement rate for budesonide will reduce the company's annual revenues by approximately $30 million.

"The company believes that this new reimbursement rate is not merited and is working with regulatory authorities to reverse this change, although the final regulatory outcome of this matter cannot be predicted," the provider said in a press release Thursday.

At the beginning of the year, a new Medicare billing code and payment methodology for compounded budesonide took effect. Under the new regulation, payments are based on pharmacy invoices submitted for individual claims.

Last week, Rotech received its first 2006 payment for compounded budesonide from a single Medicare contractor for approximately 10 claims at the reimbursement rate of $0.29 per 0.5 milligrams. "The company believes this payment reflects a Medicare contractor's determination to reimburse compounded formulations of budesonide on a different basis than non-compounded formulations of the drug," Rotech said.

The reimbursement rate for non-compounded budesonide is $4.408 per 0.5mg and $4.374 per 0.5mg, respectively, for the first and second quarters of 2006.

In response to the Rotech statement, Lake Forest, Calif.-based Apria Healthcare stated that it is not "materially impacted by this development" and expects a reduction of $3 million in revenue due to the new reimbursement rate.