Line between vendor, provider blurs?

Wisconsin is the latest stage in the direct-to-consumer debate
Thursday, July 26, 2012

LA CROSSE, Wis. – Medline’s new contract to supply Medicaid recipients in southwestern Wisconsin with incontinence supplies may come at a cost.

Why? Because the exclusive contract puts Medline, which manufactures and distributes durable medical equipment, in the provider’s seat.

“Why would we buy anything from them again?” said Todd Cianfrocca, CEO of Minneapolis-based ActivStyle, which, until now, has served Medicaid recipients in Wisconsin for 20 years. “Medline’s basically acting as a provider and cutting out other providers. This industry can’t afford to have these players.”

Western Wisconsin Cares, part of the Wisconsin Department of Health Services, awarded the contract to Medline through an RFP process in May. The contract, which covers 3,439 recipients in eight counties, goes live in July. Its value, according to ActivStyle, which participated in the RFP process: $1 million per year for three years.

In a statement to HME News, Medline describes itself as a “long-time leading partner” to providers, but it also acknowledges that these contracts will likely become more commonplace.

“As HME News has been reporting for many years now, state healthcare budgets around the country are being severely cut, and one of the ways states and other Medicaid agencies are looking to reduce their costs is to contract directly with suppliers on products like incontinence products,” the company stated. “This was the case in Wisconsin where we—along with four other supply companies—were approached by an agency of the state to respond to an RFP for incontinence products.”

While numerous states have attempted to execute exclusive contracts for incontinence supplies, few have succeeded. In New Hampshire, one of the states that has, providers must buy their supplies from Gulf South Medical Supply, a Jacksonville, Fla.-based distributor, at a steep discount, but they can still provide them to Medicaid recipients. That’s a key difference, ActivStyle officials say.

“Providers in New Hampshire are still part of the loop,” said Yvonne Zachman Fiedler, COO of ActivStyle. “Providers in Wisconsin have been replaced by Medline.”

If manufacturers/distributors like Medline and McKesson plan to compete with providers, that’s fine, ActivStyle officials say, but they need to come out and say so and they need to play by the same rules as providers by getting accredited and meeting other requirements.

“The crux of the issue is, are we all on a level playing field?” Cianfrocca said. “I guess our fear is, if this becomes standard practice for Medline, McKesson and others, will there be this unfair competition? This is a trend in the industry that is just starting to crystallize.”

Attempts to reach Western Wisconsin Cares were unsuccessful.

McKesson did not want to comment on this story.