Change to mail order raises bar

Sunday, August 31, 2008

WASHINGTON--Diabetes providers who participate in future rounds of national competitive bidding won’t be able to craft bids based solely on low-cost strips and meters.

The bill passed on July 15 that delays the program also requires suppliers who bid on diabetic testing supplies to offer brands with at least 50% marketshare. That’s earning some praise from providers.

“The way the bid was set up before, they were trying to shift everybody to a different class of products,” said Tom Cronin, CEO of Wakefield, Mass.-based Neighborhood Diabetes. “We feel some of the lower cost products that people would be forced to use would have been inappropriate and had awful consequences downstream.”

Mail order diabetes products took a whopping 43% average cut in Round 1 of competitive bidding. Noticeably absent from the winning bidders were well-known national mail order companies that didn’t win bids or even participate. That led industry insiders to predict access and quality of care problems.

“I think the biggest concern was none of the major players were included,” said Tim Trysla, executive director of the Diabetes Access To Care Coalition. “Not all mail order is created equal.”

Many experienced providers say their product mix consists largely of testing supplies from the four biggest manufacturers: Lifescan, Roche, Bayer and Abbott.

“Those companies make up 99% of our business,” said Mark Gielniak, vice president of Diabetes Plus in Warren, Mich. “We stick with the name brands. That doesn’t mean other products aren’t good.”

Even though most providers feel the new requirement will keep the bid from bottoming out again, they question whether providers will still find themselves in too tight of a squeeze. The probably shouldn’t look to manufacturers for help, either.

“Are manufacturers going to step up and reduce the costs on the brand name test strips they’ve been getting very high prices for?” said Mark Libratore, president of mail order company Stuart, Fla.-based Liberator Medical. “It’s never been a pattern of theirs to discount the good stuff.”

Meanwhile, with a 9.5% cut for mail order diabetes supplies slated to begin Jan. 1, 2009, providers are already tightening their belts.

“We run a tight ship, but even a 10% hit is tough,” said Tim Cady, president of Carlsbad, Calif.-base Advanced Diabetes Supply. “But we’re moving forward.”