Maine Medicaid contracts out incontinence supplies

Tuesday, September 30, 2003

AUGUSTA, Maine - The state of Maine has hired Invacare Supply Group to be the exclusive distributor of incontinence and diabetic supplies to participating Medicaid providers.

The two-year contract comes with a three-year option and goes into effect Oct. 1. The move will save the state $750,000 over its two year budget cycle that began July 1, said Newell Augur, spokesman for the Maine Department of Human Services, which includes the Medicare program.

Maine Medicaid reimburses providers the wholesale cost of the product plus 40%. By contracting with Invacare Supply Group (ISG), the state negotiated acquisition costs that were 20% lower for incontinence supplies and 18% lower for diabetes supplies, said Augur.

In a cost-plus program, a lower acquisition cost translates into a lower gross margin per order for providers.

“The state of Maine came to us and said they wanted a program through its providers that allows the state to save money,” said Mike Perry, ISG’s vice president and general manager. “They went to a number of distributors, and we are the one they decided to go with based on the product selection and availability of services, which includes our home delivery.”

Maine spends about $10 million a year on DME, $3 million of that for incontinence supplies and $1 million for diabetes supplies.

Some Maine providers are upset that they now have no choice in who they buy their incontinence and diabetic supplies from, said Jim Greatorex, state chair for the New England Medical Equipment Dealers (NEMED) association.

Wal-Mart and other larger retail pharmacies have the same beef and have said they will no longer provide incontinence and diabetic supplies to Maine Medicaid beneficiaries. But while there’s been some grumbling from independent providers over the change, Greatorex said, he hasn’t heard of any widespread exodus from the product lines.

Maine Medicaid consulted with NEMED before farming out the supplies business. If it hadn’t, the outcome could have been worse, Greatorex said.

“Without our negotiations, there probably would have been one (provider) distributing these products throughout Maine,” he said. “For providers this means you can keep your incontinence and diabetic supply business - if you can figure out a way to make money.”