National program could leave small diabetes providers out in the cold

Thursday, August 25, 2011

BALTIMORE - When it comes to bidding in the national mail order program for diabetes supplies, the deck could be stacked against smaller providers.

For starters, the scope of the program appears to be bigger than expected. In its Aug. 19 announcement, CMS stated that the mail order program includes the entire United States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam and American Samoa, which could send shipping costs skyrocketing.

"I don't know what CMS is thinking about including all those territories," said Dan Gooch, owner of Columbia, S.C.-based Pal-Med. "By the time you buy the products and pay triple the shipping that we pay within the U.S. borders, it absolutely cannot be done. I don't expect to see those get included, ultimately."

Mail-order diabetes supplies were included in Round 1, but only in nine competitive bidding areas. The category was clobbered with an average cut of 56%, compared to an average cut of 32% across all product categories.

Providers who submit bids must also meet all licensure requirements in all parts of the United States--something that could prevent smaller providers from participating, say stakeholders.

"The concern here is that you will be eliminating good small and regional providers because of the patchwork of various state rules and regulations," said Walt Gorski, vice president of government relations for AAHomecare. "Clearly, it's going to be a challenge for any of the suppliers. An observation is that the larger providers who have more bandwidth will be much better suited for a national program because they appear to have national capacity."

Even the National Supplier Clearinghouse, which has a list of state licensure requirements on its website, can't keep track, say providers.

"We provided them with (proof) that we met the requirements on the list," said Mike Eberly, CEO of Chattanooga, Tenn.-based Care 1st Medical Solutions. "They came back and told us we needed something that wasn't on the list. I imagine a lot of bids are going to get rejected."

Despite the potential obstacles, most providers say they will consider bidding, if only to cover their bases.

"We will probably bid," said Mark Gielniak, vice president of Warren, Mich.-based Diabetes Plus. "If we don't win the bid, then we will have to convince our customers to pick up their supplies. We'll tell them, 'If you go with a mail-order company, you may or may not continue to get your name-brand products.'"