Providers look for low-cost shipping options

Sunday, September 25, 2011

When it comes to crafting a bid for mail order diabetes, providers will have to factor in a widely variable cost: shipping.

"Postage amounts go up all the time," said Mark Gielniak, vice president of Warren, Mich.-based Diabetes Plus. "Right now, an average three-month supply incurs about $5 in shipping costs."

The average price for a box of test strips in Round 1 of competitive bidding is $14.62, which most providers say doesn't even cover the cost of the product, let alone, billing, shipping and handling. Because Medicare requires delivery confirmation for payment, providers can't just drop packages in the corner mailbox. They must use the U.S. Postal Service's first class or priority mail, or a common carrier like UPS or FedEx.

Shipping costs are definitely a problem, said provider Robert Weinroth. "We use bulk shippers," said Weinroth, president of Boca Raton, Fla.-based FreedoMed. "They will take all the packages up to Orlando and get a better rate. It's a matter of trying to shave every nickel."

Provider Chris Rice--who won a mail order contract in Round 1--has been looking at shipping options to do just that.

"The Postal Service offers a flat rate, and that's something we are looking at," said Rice, director of marketing for Riverside, Calif.-based Diamond Respiratory. "If it fits, it ships."