What happens to retail diabetes supplies under 15% cut?

Friday, August 31, 2012

YARMOUTH, Maine – There's no official timetable, but it's unlikely CMS will drag its feet on pushing forward with its plan to use inherent reasonableness (IR) to reduce reimbursement for retail diabetes supplies, industry stakeholders say.

"I would expect a proposed rule sooner rather than later because they can implement this more quickly than competitive bidding," said Cara Bachenheimer, senior vice president of government relations for Invacare. "Once you have the proposed rule, then you hear the clock in motion."

Following a public hearing in July, CMS is evaluating comments from stakeholders and deciding whether or not to issue a proposed rule. If it does issue a rule, it will provide a 60-day comment period.

With CMS eyeing a cut of at least 15%, providers are understandably concerned, stakeholders say. Right now, the price for test strips averages $37.67 for retail vs. $13.88 to $15.62 for mail-order in Round 1 areas.

"There won't be much working around that," said Robert Salmon, president and founder of the Charleston, Miss.-based The Diabetic Shoppe. "It's going to dramatically affect how much money we make. Pharmacists counsel patients and that takes time and effort."

Under such a cut, providers who want to stay in the Medicare business will have to re-evaluate their product mix, stakeholders say.

"There are strips and meters out there that you can still compete with, maybe not at the bidding price, but certainly at 15% cut," said Dave Doubek, president of Doubek Medical Supply in Alsip, Ill. "But I am not sure where that leaves the OneTouches and the Abbotts of the world."

Some providers think they could still offer some of the name brands at a 15% cut—if manufacturers work with them.

"I can't see (major brands) just letting their business go away," said Mark Gielniak, vice president of Diabetes Plus in Warren, Mich. "They are going to have to, at some point, make cuts in their pricing."