North Carolina: Diabetes contract: Winner? Roche. Loser? Providers, beneficiaries

RALEIGH, N.C. - North Carolina is sticking with a single manufacturer for diabetes supplies, but it's switching manufacturers.

On Nov. 14, state officials announced that Roche would take over the contract previously held by Charlotte-based Prodigy Diabetes Care. The two-year deal is expected to save the state $6 million through rebates. The effective date: Nov. 15, 2011.

"This could be worse than the prior contract," said Beth Bowen, executive director of the North Carolina Association of Medical Equipment Suppliers (NCAMES). "The bottom line is, the profit per box is vastly reduced from the prior contract, and providers will have to wait longer for their money."

Providers will also have more paperwork. To be paid, providers will have to bill the state for part of the reimbursement, and apply to Roche for rebates on the supplies to make up the difference. Under the Prodigy contract, the rebate was on the meters; the state reimbursed for the supplies.

"Even with a rebate back from Roche, it isn't enough," said Kim Brummett, vice president of contracting and reimbursement for Greensboro-based Advanced Home Care. "You couldn't even cover the cost of shipping."

For providers left holding inventory from Prodigy--it's not a commonly used brand--the state said it would allow providers to continue to dispense the company's products through March 14, 2012. That only goes so far, say providers.

"The state gave us a grace period, but Prodigy didn't," said Kimberly Lynn, HME operations manager for Carolina Apothecary in Reidsville.

"Prodigy cut off our rebates on Nov. 15 when the contract changed."

Ultimately, it's the beneficiaries who will suffer most, say providers. Brummett said her company planned to start transitioning its Medicaid patients to other providers in January, and Bowen has heard from several other providers who said the same thing.

"I don't know a whole lot of providers who are willing to participate," she said. "I think there is going to be huge patient access issues."