Medicare Changes Create Uncertainty for Diabetes Supplies

Miriam E. Tucker

June 20, 2013

A major change in US Medicare reimbursement rules beginning July 1 will save money but will drastically limit the number of vendors from which beneficiaries with diabetes can obtain glucose-testing supplies.

There are fears in some quarters that this disruption may lead to people not accessing the supplies they need, resulting in a decline in self-monitoring of glucose and subsequent adverse outcomes. However, others stress that diabetics receiving Medicare will gain financially, as their copays for their supplies will drop.

Independent retail pharmacies are also concerned: they believe the price cuts will mean many of them will drop out of providing these services, with the resulting loss of face-to-face interactions between pharmacists and patients, which can be of immeasurable benefit, they say. And patients may be forced to switch to lower-quality products, they charge.

But proponents of the changes stress that the new rules do not force beneficiaries to switch brands, although they acknowledge that not all suppliers will carry all the brands.

The American Diabetes Association (ADA), US Centers for Medicare and Medicaid Services (CMS), and Diabetes Care Club (DCC) have all posted information on their websites to help beneficiaries and physicians understand and negotiate the new program.

ADA: Ensure Glucose Self-Monitoring Not Disrupted

Part of the new plan — the nationwide Medicare National Mail Order Program — will mean that diabetic beneficiaries who receive their glucose-testing supplies delivered to their homes will need to obtain them from 1 of 18 contract suppliers chosen by Medicare via a competitive bidding process.

People who prefer to buy their supplies at retail stores can still do so, but they need to make sure that the store accepts Medicare "assignment" to avoid higher charges for the supplies.

The program applies only to enrollees in "old Medicare" and not to private Medicare Advantage plans, Claire Borelli, associate director of public policy at the ADA, told Medscape Medical News.

Testing supplies affected by the new plan are glucose strips, lancets, lancet devices, batteries, and control solution, but not the meters themselves. However, because the strips are designed to work with specific meters, the new plan could result in a change of meter for many seniors as well.

The ADA is monitoring the landscape as the program's launch nears, Ms. Borelli noted.

"If beneficiaries want to continue using their current monitor, they may need to shop around to find a mail-order contract supplier or a local store that can provide them with the supplies they need," she said.

"Our overarching concern with the national mail-order competitive bidding program is that beneficiaries with diabetes can access the testing supplies they need to manage their condition and that self-monitoring of blood glucose is not disrupted," she stressed.

New Program Intended as a Cost-Saving Measure

The program starting July 1 is "round 2" of Medicare's recent competitive bidding initiative for vendors of durable medical equipment, aimed at cost saving. "Round 1" began in January 2011 in 9 areas of the country and included high-cost, high-volume product categories such as wheelchairs, hospital beds, and portable oxygen tanks in addition to glucose-testing supplies. Round 1 ended on January 1, 2013.

Now, in round 2, beginning July 1, this process will expand to 91 regions of the country. The national mail-order program for glucose testing supplies, now a separate program, will expand to all 50 states, the District of Columbia, and US territories, Tami S. Holzman, a spokesperson for the CMS, told Medscape Medical News.

In all, Medicare is reducing reimbursement for glucose-testing equipment by 72%, with a projected saving to Medicare of $25.8 billion over the next 10 years and a saving to beneficiaries of $17.2 billion in copays.

"This is a really good-news story for beneficiaries," Ms. Holzman told Medscape Medical News.

Indeed, notes Mike Iskra, the current chief operating officer and incoming chief executive officer of Diabetes Care Club (DCC), the 72% drop in reimbursement means that Medicare will now reimburse just $10.41 for a box of 50 test strips, compared with $34 previously. The beneficiaries' 20% copay, therefore, will also be reduced proportionately.

"It's a huge cost-saving measure," said Mr. Iskra, whose company is 1 of the 18 CMS-selected contract suppliers and the largest among them devoted solely to diabetes-related products.

Potential Downsides for Independent Retail Pharmacies

While the savings of the new program may benefit Medicare and patients, it's a huge loss to many retail pharmacies, especially the smaller ones.

As part of the Taxpayer Relief Act that Congress signed into law in 2012, retail pharmacies can no longer charge more than do mail-order pharmacies for the same product. Those that contract with Medicare must accept Medicare's reimbursement as payment in full and cannot charge the beneficiary more than the 20% copay and any unmet Medicare Part B deductible for the year.

So, while most of the "big-box" drug stores are expected to be able to continue to accept Medicare reimbursement, many of the smaller independent pharmacies are expected to drop out of the program, Kevin Schweers, of the National Community Pharmacists Association (NCPA), told Medscape Medical News.

"Not only is this an enormous inconvenience, but the loss of face-to-face consultation that pharmacists provide will not ensure these blood glucose monitoring tools are being used correctly and the results are being interpreted correctly," he observed.

The new plan will also effectively prohibit independent community pharmacies from providing same-day, home delivery of diabetes testing supplies to homebound seniors.

"The banning of the delivery of [diabetic testing supplies] to homebound seniors is shortsighted. If everyone is being reimbursed at the same rate, why prevent independent community pharmacies from providing this service to vulnerable seniors in assisted-living facilities and other places?" Mr. Schweers commented.

In May, 43 members of Congress agreed with the NCPA that this might cause difficulties and sent a letter to the CMS, asking the agency to reconsider this part of the program.

"When all of the changes to Medicare Part B diabetes testing supplies are enacted, independent community pharmacies will have a difficult time participating in the program," Mr. Schweers stressed.

Beneficiaries Will Not Be Forced to Switch Testing Products

Mr. Schweers also expressed a concern voiced by some in the diabetes community that the national mail-order program could result in beneficiaries being forced to switch to lower-quality testing products.

But Mr. Iskra of the DCC says that is not likely because of 2 of the program's rules. One, dubbed the "50% rule," says that each of the 18 contract suppliers must carry at least half of all the available testing supply brands on the market. His company will offer 22 models of blood glucose monitors and test strips from 13 companies.

"After July 1, we will actually offer more product choice than we had before," he said.

He acknowledged, however, that "we predominantly will make our formulary of a large number of lower-cost products, [but] we will still have well-known brand-name companies."

Many of the companies that make lower-cost testing supplies have more significant presence in other parts of the world, he added, noting: "The US is dominated by the big companies."

And "quite frankly, many of these new products on the market are as good as some of the existing products, but the companies just haven't yet built the tremendous marketing infrastructures and have realized that this whole category is moving toward a more cost-sensitive approach."

The other rule, known as the "antiswitching rule," prohibits the contract suppliers from influencing or incentivizing beneficiaries to switch their current glucose monitor and testing supplies to a lower-cost brand. If the contract supplier does not carry the strips that work with the beneficiary's brand of meter, the beneficiary can ask the supplier about other brands and the supplier can respond. But the supplier cannot initiate the conversation.

And if the physician prescribes a particular brand of testing supplies — and documents why it is necessary to avoid an "adverse medical outcome" —the contract supplier has 3 options: furnish the specific brand as prescribed; consult with the physician to find another appropriate brand and then obtain a new prescription; or assist the beneficiary in locating another contract supplier that can provide that specific brand.

Ms. Borelli told Medscape Medical News that she had heard anecdotally that with round 1, CMS had heard from beneficiaries who were confused about the diabetes testing supply part of the program.

"We are trying to help educate the diabetes community about these upcoming changes. We're going to closely monitor as best we can how this program rolls out. It's just not entirely clear how it's all going to play out at this time," she concluded.

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