Industry girds for battle on diabetes supplies

Friday, July 20, 2012

BALTIMORE – The message that industry stakeholders plan to send CMS at today’s public hearing: Think long and hard about the potential impacts of reducing reimbursement for retail diabetes supplies.

With payments amounts already slashed for mail-order diabetes supplies, CMS scheduled the hearing to discuss whether amounts for retail diabetes supplies are "grossly excessive" and should be adjusted using a process called inherent reasonableness (IR).

"If CMS thinks that mail-order pricing data resembles the entire marketplace they are wrong," said Eric Zimmerman, a partner with McDermott Will & Emery and counsel to the Diabetes Access to Care Coalition. "This could have profound implications for beneficiary choice and for access."

Payment amounts for mail-order diabetes test strips in Round 1 range from $13.88 to $15.62. For retail diabetes test strips, which were excluded from the program, the amount is, on average, $37.67.

If CMS’s decides to use IR, it must base its decision on data—a concern for stakeholders who fear CMS will use only data from Round 1. That’s a concern for two reasons: 1.) the low-ball pricing associated with Round 1; and 2.) CMS’s claim that there were no adverse effects of the program in affected areas.

"Diabetes is a long-term disease with a slow progression to complications," said Zimmerman. "For CMS to look at one quarter of data and say there has been no blip in ER visits and, therefore, everything is fine, is really doing a disservice to beneficiaries."

If CMS wants to reduce reimbursement, it needs to go about it differently, instead of being motivated by a deeply flawed model like competitive bidding, say stakeholders.

"People who have expertise in government procurement need to be engaged by Health and Human Services to get programs like this right instead of guessing at it on the fly," said Tom Milam, an industry consultant.

To view the slide presentation for today's meeting: