CMS’s mail-order program starts to show cracks

Friday, July 29, 2016

YARMOUTH, Maine – When Arriva Medical vanished from Medicare’s list of mail-order diabetes contractors recently, it raised a few eyebrows.

Arriva was rumored to have had its provider number revoked by the National Supplier Clearinghouse, but on July 21, it said the matter had been take care of.

“There was a miscommunication/misunderstanding with the NSC, but as of today it has all been cleared up,” said Jackie Lustig, senior director of corporate communications for Alere, Arriva’s parent company, in an email to HME News on July 21.

That’s good news for Arriva, but underscores the dangers of having so few providers covering such a large market, say stakeholders.

Arriva, which submitted claims for test strips for nearly 600,000 beneficiaries in 2014, is by far the largest of only nine providers to be awarded mail-order contracts in the most recent Round 2 re-compete. Those nine providers are a far cry from the approximately 1,000 providers who used to offer supplies, say stakeholders.

“When they went down to 18 suppliers (in the previous round), those suppliers supplied abut 25% fewer beneficiaries,” said Tom Milam, an industry consultant. “Does this restrict access? Absolutely. Does this disrupt self-care? Absolutely.”

And it could get worse. Ohio-based Direct Healthcare Supply, another of the nine, has cancelled its contract; three others are rumored to be on the selling block. In response to an email query, an exec at one of the three said he couldn’t comment at this time.

M&A analyst Jonathan Sadock hasn’t heard any rumors about sales, but said it wouldn’t surprise him.

“There’s a lot of people that are looking to do some sort of a transaction, whether it be a strategic type of acquisition or a recapitalization for a private equity firm,” said Sadock, managing partner with Paragon Ventures. “Just about everything is up for sale these days.”