Dealer/Provider spoke with Chris Kane, vice president of government affairs for Pacific Pulmonary Services (PPS), Novato, Calif, about how he continues to please customers while keeping a healthy bottom line. PPS is a specialty provider of inhalation therapy in the home, predominantly home oxygen therapy, nebulizers, and nebulized inhalation medication.

Dealer/Provider: When it comes to reusable and disposable nebulizers, do you favor one over the other?

Kane: We definitely favor reusable. We think reusable cups are much higher quality; much more reliable, in terms of medication delivery; and although they cost us more, they’re just a much better medical device for the patient.

Dealer/Provider: You have said that you carry only top-of-the-line equipment. Does this practice cut into your reimbursement margins?

Kane: We don’t look at this business from the perspective of “how do we maximize our margins?” If we provide high-quality durable equipment to patients, it may cost us more in the short term, but we are taking care of people the way that Medicare intended them to be taken care of—and they are getting a standard of care that, quite frankly, we demand out of our organization. Quality is a silly place to cut costs.

Dealer/Provider: Almost 10 months after Federal Employees Health Benefits Program-related cuts went into effect, how has it affected PPS?

Kane: In general, with declining reimbursements. It has certainly put pressure on our organization. We are constantly forced to determine how we can do more with less and maintain our standard of service and care for the patient. We have been able to do that in the face of these declining reimbursements, but it has been an enormous challenge.

Dealer/Provider: Do you favor a jet nebulizer over an ultrasonic? If so, why?

Kane: Ultrasonic nebulizers have come a long way. They have become easier to use, and I think a little more reliable. For the type of beneficiary we serve—and because the devices have become easier to use and more reliable—they are much more appropriate. Our patient profile tends to be an elderly Medicare beneficiary with chronic obstructive pulmonary disease (COPD). Our average patient age is 75 years old.

When ultrasonic nebulizers in general, particularly the portable variety, first got on the market, they were a little tricky to use for people whose cognitive ability and dexterity were hampered or impaired—and so jet nebulizers, quite frankly, were much more foolproof and easier to clean, set up, and learn how to use. And they were very effective in delivering inhalation medications to the airway for elderly patients. They still are our default preference, but ultrasonics, particularly the portable variety, have really come a long way.

Jet nebulizers are what we have been using for years. We are familiar with them, they are reliable, and they work well. Where ultrasonics become interesting and at times applicable is for patients who are still ambulatory enough that a portable nebulizer is a good solution for them.

The other reality, which makes it challenging, is that insurance companies do not necessarily differentiate and keep up with advances in medical devices. We see a lot of ultrasonics being used for reasons that are straightforward, such as for pediatrics. Why? Because generally children have adult supervision to help them with the nebulizer, and the portability is at a premium because kids are extraordinarily ambulatory. They get more of the benefit that comes with the cost.

Tabletop jet nebulizers are great for elderly people with COPD because the device stays in the same place in the home, it is easy to use, and it is actually big enough that if they have really impaired dexterity—which a lot of elderly people do—they can still use it. The jet nebulizer cups are easy enough to open, add the medication, take a treatment, and then dissemble and clean so that they stay sanitary. And that is 99% of the value.

Almost all of these devices, the compressors and the cups, are so well designed and so effective that it is difficult to differentiate among them in terms of clinical effectiveness. They all work well.

Dealer/Provider: As a 15-state respiratory provider that serves mostly elderly patients, how does that influence the type of nebulizers you choose to carry?

Kane: As you get bigger, there are obviously benefits to standardizing equipment. Some of those benefits are operational; you find equipment that you believe is effective and reliable, and then you create policies and procedures on how to work with that equipment. You can essentially replicate that as you grow.
We provide our local field offices with some latitude, in terms of which equipment they choose to use. Our perspective is that, within reason, the decision on determining which equipment is the best is made by them. For that reason, you will find predominantly jet-based delivery nebulizers in our organization. But which brands in particular [to carry] become more of a localized preference and decision.

Dealer/Provider: What is the most important thing to remember about patient education?

Kane: Number one, make sure that the education actually takes place, and that it takes place in the home with the beneficiary. The third and really critical piece is that you can confirm that the beneficiary understands the purpose of the therapy and how to self-administer the therapy. One of the significant challenges we face with beneficiaries (because they are elderly, sick, and often with complex health issues) is that we have to constantly reeducate them on how to take their inhalation therapies.
The perspective that providers have to have on patient education, in addition to simply doing it, is that it is an ongoing process. For patients to maintain compliance, which is the most important thing, education is enormously important. The ability to coordinate with the caregiver—whether that is a physician or a nurse—is also extraordinarily helpful.

Dealer/Provider: What will the business environment for aerosol therapy look like in the next 5 to 10 years?

Kane: We are in a period of extraordinary change at the moment in this particular therapy environment. We have an ongoing and concerted effort to dialogue with CMS about what is an adequate reimbursement for home ventilation therapy, and we have Medicare Part D—the prescription drug benefit—becoming available in January 2006. Inhalation therapy was a subset of the drugs that will be available to beneficiaries.
I do not think anyone, including CMS, really has an understanding at this point about what that Part D rollout is going to look like, how beneficiaries are going to engage, if it is going to change drug utilization, and whether it covers specific drugs or drug modalities. There are far more questions today than there are answers, which actually makes it an interesting business to be in.

Dealer/Provider: In 2006 and in the coming years, do you expect a shift from one modality to another due to varying coverages?

Kane: Despite the availability of Part D in January, which will make alternative modalities available to beneficiaries under Medicare (so you will get things such as metered-dose inhalers [MDIs], dry powder inhalers, as well as the inhalation therapy under Part B), it is fortunate for beneficiaries that they are getting a broader spectrum of coverage. However, we do not believe, given what we know today, that the coverage will impact the physicians’ choice of modalities. For instance, a lot of our patients today use MDIs. They also use dry powder inhalers, particularly for steroidal drugs; and their physician has prescribed for them an inhalation therapy using a nebulizer at home.

The benefit to beneficiaries is that starting in January 2006, more of those drugs will be covered under Medicare. But we do not expect a sudden seismic shift from one modality to another simply because of coverage. DP

Danielle Cohen is associate editor of Dealer/Provider.