Providers shift focus to commercial payers

Several months into Medicare's national mail-order program for diabetes, the best that can be said for some of non-contract suppliers still in business: They are hanging in there.

“We are down to three employees: me, my brother and my sister,” said Mark Gielniak, vice president of the family-owned Diabetes Plus in Warren, Mich. “I had to lay off all of my nephews, nieces and my daughter.”

One bright spot: Diabetes Plus has seen an uptick in referrals from other payers, like Medicare Plus Blue, a managed care plan in Michigan.

“We are not busy enough to bring anybody back, but I think that if nothing changes drastically we can limp our way through for a bit,” said Gielniak.

Provider Gene Ray has also begun working with a commercial payer, after initially saying “no.”

“In the beginning, we turned away a lot of people that were networked with this particular insurance company because they were offering 60% of the bid rate,” said Ray, president of Southern Diabetic in Memphis, Tenn. “They have since changed the amount they'll pay, but even at $10.41, it's difficult to make a profit for sure.”

Not all commercial payers pay bottom dollar. After “deleting our entire Medicare mail-order business,” provider Kimberly Lynn is “catering” to the commercial side—with good reason.

“They pay for the better brand name products, especially the insulin-treated customers attached to pumps,” said Lynn, HME operations manager for Carolina Apothecary in Reidsville, N.C. “We can offer better product lines with more research and development behind them.”

But not all providers have seen their Medicare business nosedive. Beneficiaries dissatisfied with mail-order are willing to pick up their supplies, says provider Steve Nelson.

“We are selling more now then ever before,” said Nelson, president/CEO Of Okeechobee Discount Drugs in Okeechobee, Fla. “A lot of people are getting tired of what's going on. They see no service from the mail-order companies. They are being pushed to products that they don't want, and they prefer to have the service.”