LAKE FOREST, Calif., Oct. 5, 2005 (PRIMEZONE) -- Apria Healthcare Group Inc. (NYSE:AHG) commented today on a report issued on Thursday, September 29, 2005 by the Department of Health and Human Services Office of Inspector General (OIG). The report, entitled "Review of Services Provided by Inhalation Drug Suppliers," summarizes survey work performed at the request of the Centers for Medicare and Medicaid Services (CMS) in an effort to better understand the nature and extent of dispensing services provided to Medicare Part B beneficiaries in conjunction with their inhalation drug therapies.
"We are extremely disappointed that the OIG disregarded or excluded most of the services necessary to safely and effectively provide home inhalation therapy, before reaching the conclusion that inhalation patients do not receive meaningful services," said Lawrence M. Higby, chief executive officer.
"As one of the largest inhalation pharmacy providers in the U.S., we provide a broad array of clinical pharmacy, patient support, billing/collections, and other patient care services to Medicare beneficiaries and have for over a decade. They represent the commonly-accepted community standard of care for inhalation therapy patients, or are required by Medicare or the states in which we operate. At Apria Healthcare, we conduct medication compliance activities, contact patients in advance of a refill, respond to thousands of patient and physician inquiries every month, conduct in-home patient education and coordinate care plan changes with prescribing physicians. All of these services are performed in compliance with applicable laws and regulations," Mr. Higby stated.
"In May 2005 when we received the OIG survey, we were struck by the narrow list of services that the OIG considered as being 'dispensing services,'" he added. "In June, the American Association for Homecare (AAHomecare) and Apria representatives met with the OIG to seek information as to how and why the various service categories were determined. Without specifying the names of in-house experts with experience in such matters, the OIG asserted that the survey tool had been vetted within the agency, and declined to amend it. When we received the survey, we responded to it as thoroughly as possible and included clear supplemental information and service documentation that supported our view that the OIG was excluding critical services. Such services are either mandated by state or federal laws or regulations or integrally linked to the safe and efficacious provision of inhalation therapies in the home setting."
"Now that the report has been published, we estimate that the OIG excluded services that represent over 80% of the total costs providers incur to take care of beneficiaries who need this therapy. Moreover, the OIG study simply collected information about a short list of activities; it did not conduct a time and motion study or collect provider cost information - both of which would have given the agency more meaningful data on which to base a decision about any adjustment to the dispensing fee. One glaring omission was the entire cost category related to pharmacist labor, the cost of required licenses, compliance with recently-issued regulations from the United States Pharmacopeia and other costs associated with managing an inhalation pharmacy. In its final analysis, the OIG excluded certain services that providers did not document adequately through the survey process, even though Medicare or other regulatory bodies may not require those specific services to be documented. The result is that the report is fraught with inadequacies, both in terms of data collected and the study's broad-based and erroneous conclusions," Mr. Higby added.
As far back as 2001, AAHomecare engaged the services of independent consulting firms to study and document the non-drug services provided to beneficiaries and the costs associated with each service. The 2001 study, conducted by The Lewin Group and entitled "Product and Service Costs of Providing Respiratory and Infusion Therapies to Medicare Patients in the Home," and its 2003 update, were the first studies published by either the government or the industry in an effort to better quantify the non-drug costs that providers incur. The 2001 study included data from 19 homecare pharmacy companies across the U.S. that served over 164,700 Medicare respiratory drug patients, while the 2003 update included similar representation.
In 2004, AAHomecare engaged Muse & Associates, a Washington, DC-based actuarial consulting firm, to further study the services and their costs. A sample size of 109 pharmacies was examined and the study's findings emphasized that the 2005 Medicare reimbursement formula based on average sales price (ASP) would under-reimburse the actual cost of providing two key drug therapies by $68.10 per monthly supply.
Also in the fall of 2004, the Government Accountability Office (GAO) conducted numerous meetings with the industry in an effort to create a realistic survey tool that collected both service and cost data. As part of its final work product, the GAO study team conducted a field visit to a large inhalation drug pharmacy in the Northeast, and incorporated observations from that visit into the final report. "It is quite clear that the OIG conducted this survey entirely by reviewing stacks of paper, despite repeated invitations for the study team to visit home inhalation pharmacies to observe the services being delivered to patients," continued Mr. Higby.
"By contrast, despite a relatively small survey sample, the 2004 GAO study more accurately documented the services associated with these patients. In our view, it was a responsible government study. By its incompleteness, the results of the OIG study are extremely misleading and its conclusions cannot be substantiated, especially once one digs deeper into the OIG's list of services that were excluded from the survey. The OIG neglected to study some of the very services and costs required by Medicare or other regulatory bodies that we incur in the normal operation of our patient care pharmacies."
Last week, AAHomecare published the results of an updated Muse & Associates survey representing 89 pharmacies that serve over half of all Medicare beneficiaries who use inhalation drugs. The survey confirmed seven major categories that represent 117 distinct inhalation therapy services. These seven are:
-- Patient intake;
-- Compounding, dispensing and pharmacy assessment;
-- Delivery, set-up and patient education;
-- Follow-up and compliance monitoring;
-- Quality Assurance, accreditation, licensing and regulatory
compliance;
-- Medicare billing and compliance; and
-- Other direct and indirect costs and expenses such as rent and
utilities.
"To conclude that 'beneficiaries, on average, receive little service from their inhalation drug suppliers beyond contacting them to ask if they need a drug refill' -- when the OIG excluded the majority of the other higher-cost services provided -- is irresponsible. It puts the entire benefit at risk if CMS were to adjust the dispensing fee based solely on this inadequate study," Mr. Higby stated. "As CMS weighs the possibility of an adjustment to the dispensing fee, we urge the agency to responsibly incorporate data from the GAO, the Muse & Associates and Lewin Group studies from 2001-2005 and the official comments filed by providers by the September 30, 2005 deadline related to the Notice of Proposed Rule Making (NPRM) related to dispensing fees. We reiterate our standing invitation for CMS policymakers to visit one of our inhalation pharmacies at any time. To view the OIG's assertions in a vacuum would be wrong and potentially limit or eliminate access to these therapies for Medicare beneficiaries in 2006."
"Apria stands by its assertion that the Medicare program has not yet fully realized the total cost-savings brought about by the ASP reimbursement methodology for inhalation drugs," Mr. Higby said. "In 2005 -- the first year in which the ASP methodology has been applied -- fluctuations in the ASPs have been volatile, and CMS will realize additional savings in the third and fourth quarters as a result of dramatically reduced ASPs, including some that are at or below providers' drug acquisition costs. With only two quarters of data in-hand, it is premature for CMS to make any dramatic change to the dispensing fee related to these drugs. Despite certain cost-savings initiatives in our pharmacy operations, costs for fuel, delivery and pharmacist labor due to an ongoing shortage are well-documented in the national media. They have risen by higher-than-normal rates for each of the years since the 2003 base year studied by both the GAO and OIG. The current dispensing fee should be adjusted upward by a consumer price index (CPI), to which other healthcare providers' rates are already subject."
"This is not simply a provider issue -- this is ultimately a patient issue. Medicare currently spends less than $3 per day to keep a beneficiary at home with a nebulizer and typical inhalation medications. Compared to an emergency room visit or inpatient stay due to an exacerbation of chronic obstructive pulmonary disease (COPD), that is an incredible value. A significant downward adjustment to the dispensing fee in 2006 will leave Apria with no choice but to reevaluate its ability to continue serving Medicare beneficiaries," Mr. Higby concluded. "We will continue our educational and outreach efforts with CMS and Congress to ensure that they understand the full array of services we provide to patients. Any revisions to current policy should be based on a full recognition of these services rather than on an inaccurate and unduly limited description of what is involved in the provision of this life-sustaining therapy."
Apria provides home respiratory therapy, home infusion therapy and home medical equipment through more than 500 branches serving patients in 50 states. With $1.5 billion in annual revenues, it is the nation's leading homecare company.
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.