Remember IR? CMS sharpens price-cutting tool

Friday, June 29, 2012

BALTIMORE – CMS isn't stopping at competitive bidding to slash payments for diabetes supplies.

CMS announced June 22 that it will hold a public meeting July 23 to discuss using inherent reasonableness (IR) to adjust prices for non-mail order supplies.

"There is significant spending in that area and they believe that, based on the mail order competitive bid pricing, that this is something they need to take a closer look at," said Walt Gorski, vice president of government affairs for AAHomecare.

Through IR, CMS may adjust fee schedule amounts up to 15% per year to create what it believes to be more equitable pricing.

Round 1 of competitive bidding has already reduced reimbursement for mail order supplies by an average of 56%, and Round 2 is expected to produce similar results. Non-mail order supplies obtained at retail locations were not included in bidding.

"Think about it," said Denise Fletcher, an attorney with Brown & Fortunato. "Why would CMS pay more for somebody to have the convenience of going and picking up their stuff?"

If CMS tries to bring pricing for non-mail order supplies in line with mail order supplies in bid areas, which are lower than average wholesale costs, it's going to be much harder for beneficiaries to obtain name brand products, stakeholders say.

"Retail stores are going to have to get better prices from manufacturers, sell product at a loss to Medicare bennies, or stop carrying major brands," said Seth Lundy, a partner with King & Spalding. "That's a problem for Medicare because, in Round 1, they've redirected beneficiaries from mail order back into retail when they are unable to obtain their preferred products."

To avoid that in Round 2, CMS required providers to base their bids on products that have at least 50% of the market and will prohibit contract providers from switching beneficiaries to lower-priced products. IR offers no such protection, stakeholders point out.

"It will make access to certain supplies not possible, including the most frequently used ones that physicians are comfortable with and have integrated into their practice," said Tom Milam, an industry consultant. "I could see providers just looking at it and saying, ‘It's not even worth it to carry diabetes supplies.’"


Has anyone noticed that on the side of the box of strips, the manufacturer recommends that the strips are NOT to be stored at temperatures that are below 86 degrees. The strips are not to be refrigerated or frozen.

I live in South Texas. The temperatures during the summer months are above 100 degrees. If the diabetic supplies which include the strips are delivered by mail order companies, they are susceptible to extreme high temperatures.

I am of the opinion that the manufactrurer recommends these guidelines for the storage of the strips so that the patient can get accurate readings while managing their diabetes thus, reducing healthcare costs.

Allowing the patient to pick up their diabetic supplies at a retail store or delivered directly to their home by a supplier that will not deliver if the patient is not at home, is the best solution. This method will ensure that the patient is indeed needing the supplies because they have taken the steps to go get the supplies. Suppliers that deliver directly to the home call prior to delivering to ensure that the patient is in need of the supplies. This method will also ensure that supplies are not delivered if the patient does not need them.

Sonia M. Hernandez, BSW, CHW



Sonia, I completely agree that weather is a concern. The NCPA collected anecdotes about mail order waste and i recall one had to do with insulin getting left on a front porch in summer heat while the patient was on vacation. Thousands of dollars wasted!