Since Medicare generally sets the stage for competitive pricing across the board, this may sound like amazing news for so many of us suffering from the “stinging cost of test strips“! However, we’ve learned that this move may not be a good thing for our community at large, in the long run…
Because this new super-low pricing requirement will likely force insurers to offer coverage on only a limited number of products — the cheapest and most “generic” — which means we PWDs will have less choice and an even harder time getting coverage for the best brands and new features we want and need. Ugh!
To understand all this, we did some quick research on the back story:
On Jan. 30, the Centers for Medicare & Medicaid Services (CMS) announced an average cut of 45% in reimbursement rates for Durable Medical Equipment (DME). The federal government agency had run a limited first round of “competitive bidding” for DME and mail-order programs in a handful of places last year, and now the agency’s expanding that program to 91 metro areas across the U.S. starting on July 1.
Diabetes Self-Management reports: “according to a fact sheet from Medicare, the new program is expected to slash the prices of mail-ordered diabetes testing supplies by 72%, with the savings shared between Medicare and participants in the program.”
A subscription-only “closer look” report from our friends at Close Concerns says this:
- As of now, a 50-count box of strips ordered through the limited mail order program costs $32.50. That reimbursement rate will be expanded to the retail area for Medicare patients starting April 1.
- In July when the mail-order plan and rates expand nationally, the allowable payment to suppliers for a 50-count box of strips will be $10.41, down 68% from the previous cost.
If you’re not hip to how Medicare works, fellow D-Blogger Stephen S wrote a nice Medicare-focused overview recently that’s worth reading. But here’s a very basic primer: The program pays 80% percent of product or service costs, and as the PWD with coverage, you pay 20%. When the rate goes down, you pay less — which is good, of course, although you’re still limited on how many strips you can get at a time.
But the flip-side to these less costly supplies is that insurers will only pay for those items provided by selected contract suppliers, whom they choose primarily for cost reasons, so D-supply availability will hinge even more on the choices of insurers, rather than patients.
Here’s what a bunch of authorities / observers have to say on the negative consequences:
A Feb. 28 story at online medical news site Diabetes In Control states:
“… Not everyone is happy with the new program. The DME industry, including manufacturers, suppliers and providers of medical equipment, believe that the new program ‘is offering fewer and lowest-cost products’ which will substantially discourage providers from offering brand name or more advanced products.”
And a Cleveland Plain Dealer story on Feb. 13 reported:
“Diabetics who must test their blood glucose levels daily, often multiple times a day, could have fewer choices of where to buy testing strips. The reason? The price drop of 72% is too low for some providers to stay in that business, they say.
“‘We are going to stop serving diabetic patients on Medicare. The pricing is below our cost,’ said Joel Marx, chairman of Cleveland-based Medical Service Co. ‘The diabetic market has just been decimated.’
“‘We’re frightened for our patients at this point,’ said Martha Rinker, chief advocacy officer for the American Association of Diabetic Educators (AADE), whose members work with patients to keep their disease under control.”
A Michigan newspaper story on March 5 paints an even more bleak picture, talking about DME suppliers potentially slashing workforces and curtailing access to test strips:
“The low payment rates—test strips will be reimbursed at $10.41 per box of 50—also have the potential to hurt providers’ referral relationships, they say. Off-brand products, even some of the better-known ones, can be a tough sell, say providers.
“’I’ve got one major endocrinologist that refuses to do business with us if we are not going to supply the brand names,’ said Dave Doubek, president of Doubek Medical Supply in Alsip, IL. ‘Referrals need to understand that, at some point, it’s impossible.’
“What does all this mean for beneficiaries? For starters, less choice and a lot less service, say providers.”
OK, maybe it could be bad if those fears are real…
Wrong. It does, and not only down the road once we get to Medicare age ourselves…
The oft-unspoken truth is that private insurers often take direction from what Medicare does. The federal coverage has long had an influence on commercial carriers, and Medicare’s physician fee schedule has long been a model of sorts for health plans to follow when setting up their own payment rates for providers across the U.S.
With massive changes coming in 2014 thanks to the Affordable Care Act, chances are even higher that those running health insurance exchanges will follow suit on the rock-bottom prices.
Think about it: 26 states opted to not run their own exchanges but rather rely on the federal government to do it for them, meaning that for the first time ever, the U.S. government will have to roll out insurance cost policies and plans for more than half the states. Another seven are working with the feds provisionally, while the rest of the states are doing their own thing with insurance commissioners… but even then, it’s quite likely they’ll decide to mimic what CMS has done so far.
This could have a profound impact on the future of diabetes devices and products. Research and innovation have the potential to see hindrances as a result of these cost changes, say industry watchers like those at Close Concerns. What companies spend on R&D to develop new products is usually based off a certain percentage of the company’s profits, so logically if less is being made, they may spend less to create innovative new D-tools.
So how ironic is that? We’ll finally be getting the lower prices we’ve been clamoring for, but it very well could hurt us in the long run.
What can we do about it?
CDE and author Gary Scheiner offers some good tips for dealing with this issue on a personal level.
On the larger lobbying front, one idea is to call our Congressional folk directly and let them know our stance. They make the final decisions on how health care policy plays out, so we can let them know that adopting these lower Medicare reimbursement rates without consumer protection in place could have some very negative consequences!
With Congress currently focused on the Sequester cuts, and both the American Diabetes Association and JDRF on Capitol Hill talking about these topics this month, this is a great time help out by calling or writing our regional lawmakers in D.C., too.
What do you think about the downsides of lower test strip prices? Let us know!