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Apria Healthcare Comments On CMS' Notice of Proposed Rule Making (NPRM) for Home Inhalation Therapy Dispensing Fee In 2006

Posted on: Monday, 8 August 2005, 21:00 CDT

Apria Healthcare Comments On CMS' Notice of Proposed Rule Making (NPRM) for Home Inhalation Therapy Dispensing Fee In 2006 Company Opposes Any Reduction in Medicare Part B Reimbursement Level

LAKE FOREST, Calif., Aug. 8, 2005 (PRIMEZONE) -- Apria Healthcare Group Inc. (NYSE:AHG), the nation's leading home healthcare company, today commented on the Centers for Medicare and Medicaid Services' (CMS) proposal to adjust the existing Medicare Part B dispensing fee paid to home inhalation pharmacy providers beginning in January 2006. Such inhalation therapies are commonly prescribed to treat people who suffer from Chronic Obstructive Pulmonary Disease (COPD), the fourth leading cause of death in the United States. In a Notice of Proposed Rule Making (NPRM) published on August 1, 2005, CMS announced that it will seek comments on the services and costs associated with the provision of inhalation therapies to Medicare beneficiaries over the next 60 days in an effort to determine an appropriate fee for 2006.

"We are encouraged that CMS recognizes there are important clinical and patient support services associated with providing inhalation therapies at home as they stated in the rule. However, we are very concerned that after only six months, the Agency 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," said Lawrence M. Higby, chief executive officer. "In the absence of new data, we believe it would be premature for CMS to adjust the fee downward when in fact all available data suggests that it should have been higher at the outset. As reported in the NPRM, a comprehensive study of 109 homecare pharmacies performed by Muse & Associates in 2004 actually suggested that the dispensing fee should be $68.10. Even the Government Accountability Office's (GAO) own study of 12 pharmacies showed that it could exceed $100. In establishing the 2005 fee of $57, CMS excluded costs that were attributable to sales and marketing, bad debt and an explicit profit margin, asserting that Medicare 'generally does not reimburse providers for such costs.' 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."

"It is clear that CMS is appropriately concerned about ensuring access to these therapies under Medicare Part B," Mr. Higby continued, "but the all-new reimbursement structure in 2005 has been in place for only two quarters, and homecare pharmacy providers have not yet felt the full negative financial effect of the volatile quarterly changes in the average sales prices (ASPs). For the same reason, CMS has not yet realized the full savings potential associated with the changes and it is likely to take at least a full year of the new structure before reliable and predictable data may be gleaned."

"At Apria, our goal is to continue caring for Medicare Part B beneficiaries who will still require nebulizer medications in 2006. The dispensing fee in question covers patient support services such as clinical intake, medication compliance, pharmacist consulting services, physician interface, 24/7 on-call availability by our staff, direct-to-home delivery, in-home patient/caregiver education and billing/administrative functions performed on the beneficiary's behalf. These services reflect the community standard of care for patients requiring inhalation therapy, and are based on numerous regulations, laws and policies. They include requirements set forth by the Medicare program's own supplier standards, as well as state pharmacy licensing boards, the United States Pharmacopoiea (USP) Section 797's concerning pharmacy clean room operation, safety and testing; the Food and Drug Administration (FDA) and independent accrediting bodies. All of these requirements contribute to our patient care and overhead costs."

Mr. Higby added, "Through surveys and interviews, we have cooperated fully with CMS, the GAO and Congress to supply accurate and objective data concerning industry costs and profitability. The Muse & Associates study is the most comprehensive study of the services involved in supporting these patients and the associated costs of each component. The NPRM published on August 1 specifically cited the amount of time it takes to support a Medicare beneficiary with inhalation therapies every month, which clearly illustrates how the business differs from a typical retail pharmacy where such services are unavailable and impractical to provide. To cite in the NPRM that one retail pharmacy suggested it could service a Medicare beneficiary for a $25 dispensing fee is statistically invalid and suggests that neither party -- the retail pharmacy that commented in 2004, or CMS -- may not fully understand the current community standard of medical care associated with inhalation therapies."

Home Inhalation Pharmacy Services Offer Medicare Program Significant Savings

In 2005, Medicare reimbursement cuts related to the durable medical equipment and homecare pharmacy industry included not only reductions for inhalation therapies, but also severe reductions in payment for the nebulizer that is used in conjunction with the therapies. Nebulizer rates were adjusted downward by over 20% in conjunction with Medicare's adoption of the Federal Employee Health Benefit Program (FEHBP) rate structure.

"Numerous studies published in peer-reviewed journals have cited the cost-effectiveness of homecare in chronically ill populations. The cost of caring for a Medicare beneficiary with COPD at home with a nebulizer and inhalation therapies is now estimated to be $3.00 to $4.00 per day, with the nebulizer being paid at a rate of $.54 per day before being 'capped,' despite our patients' ongoing service requirements," said Larry Higby. "Compared to inpatient costs for the COPD DRG, or an emergency room visit, home-delivered inhalation therapies are among the most cost-effective treatments in healthcare."

The NPRM also included commentary on the role that metered dose inhalers (MDIs) may play in the treatment of COPD once they become eligible for coverage under the new Medicare Part D prescription drug program in 2006. Most inhalation therapy patients do use metered dose inhalers (MDIs) as a first course of treatment during the mild stages of the illness, often immediately following diagnosis. As their condition worsens, however, most available studies conclude that MDIs do not provide the symptomatic relief that is provided through the nebulized medications. In the coming weeks, Apria will release a nationwide study of a statistically significant sample of Medicare beneficiaries with COPD who use MDIs and inhalation therapies. "The study clearly shows that inhalation therapies play a key role in the continuum of care as the disease worsens, and they will continue to do so in 2006 and beyond," Mr. Higby commented.

"We look forward to continuing a positive dialogue with CMS on this subject in the coming months, and hope that Agency representatives will make the time to visit an inhalation pharmacy during the critical 60-day comment period so that they may be better-informed about the value we deliver when caring for some of Medicare's most fragile, chronically ill beneficiaries. The GAO study team conducted such a tour last year and found it very helpful in completing their final report and recommendations to CMS."

Apria Healthcare operates over 500 respiratory/medical equipment branches serving patients in all 50 states, as well as 31 home infusion pharmacies. Annually, the company serves over 1.4 million patients covered by Medicare, Medicaid and managed care organizations nationwide.

This release may contain statements regarding anticipated future developments that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Results may differ materially as a result of the risk factors included in the Company's filings with the Securities and Exchange Commission and other factors over which the Company has no control.

CONTACT: Apria Healthcare Group, Inc. Lawrence M. Higby, Chief Executive Officer 949-639-4960

Amin I. Khalifa, Chief Financial Officer 949-639-4990

Copyright © 2005 PrimeZone Media Network, Inc.

Source: PrimeZone Media Network

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