Shorter bidding contract could bode bad news

Saturday, June 30, 2007

WASHINGTON - A shorter competitive bidding contract period for mail order diabetes supplies could mean CMS has bigger plans for the product category, say industry sources.
Contracts for mail order diabetes supplies will run for 20 months, from April 1, 2008, to Dec. 31, 2009. Contracts for all other product categories will run for 36 months, from April 1, 2008, to March 31, 2011.
The shorter contract for diabetes supplies may indicate that CMS wants to see how mail order works and see what providers come up with for bids, said Seth Lundy, a partner at the Washington, D.C.-based law firm Fulbright & Jaworksi.
CMS could then leverage mail order prices against non-mail order prices to make reimbursement cuts across the board for diabetes supplies, speculated Lundy.
"By (separating) a product category--mode of delivery rather than products and services--they are seeing if they can get mail-order suppliers to bid lower then they would get the broader marketplace to," he said.
That could force suppliers who don't have to bid to offer supplies at lower bid prices as early as 2010, he said.
CMS may also want to see how beneficiaries react to receiving supplies through mail order. About 60% of beneficiaries currently receive suppliers through mail order, and industry sources speculate the agency wants to shift more to that delivery model.
That may be overly optimistic, sources say.
"I think for items and services that are recurring over time, they believe that these items can be adequately provided through mail order, but anyone who is on Medicare and diabetic wants to talk to their pharmacists," said one industry source.