Providers mull mail-order bid

Friday, August 1, 2014

YARMOUTH, Maine – Will providers of diabetes testing supplies submit bids in the next phase of the national mail-order program? The verdict is mixed.

“We would love to have a mail-order contract,” said Kim Lynn, HME operations manager for Carolina Apothecary in Reidsville, N.C. “We lost a lot of customers because of competitive bidding.”

For providers, the big question is, how low will the reimbursement be? The single payment amount in the current mail-order program is $10.41 per box of 50 test strips—a 72% reduction from the fee schedule amount.

“You cannot go any lower then they are now,” said Jimmy Binson, vice president at Center Line, Mich.-based Binson’s Home Health Centers, which currently holds a mail-order contract. “You can’t expect us, as suppliers, to be able to ship the product for that price and you can’t expect the manufacturers to go lower—they are as low as they can go.”

Stakeholders note that providers should base their new bids on the fee schedule amount—currently about $34 for strips—plus an adjustment for inflation, not the single payment amount.

One thing that might help boost the single payment amounts in the next phase of the mail-order program: if CMS were to enforce its own guidelines, say providers. Program rules require bidders to offer brands with at least 50% market share.

“If they enforced the 50% rule, there wouldn’t be anyone in business,” said Robert Salmon, president and founder of The Diabetic Shoppe in Charleston, Miss. “There’s no way in the world you could do this if you were supplying people with Lifescan and other major brands.”

In addition to low reimbursement, there’s another thing that might keep some providers from bidding: licensure requirements. Because it’s a national contract, bidders have to ensure they meet any and all requirements in all 50 states, as well as Guam, Puerto Rico, the U.S. Virgin Islands and American Samoa. That’s a tall order for a small company, providers say.

“When you are an independent in a small town, you want to serve people in your area,” said Lynn. “We’re not interested in mailing strips to California.”

Other providers have no desire to get back into the Medicare diabetes market, they say.

“We bid the first time and are choosing not to bid again after seeing what happened,” said Dan Gooch, owner of Pal-Med in Columbia, S.C. “We are focused on our insulin pump business."