Cardinal Health will bet on scale, compliance to lead in bid process for CGMs

DUBLIN, Ohio – Cardinal Health believes its recent acquisition of Advanced Diabetes Supply (ADS), a move that further strengthens the company’s dual role as a distributor and provider, positions it well for a Medicare national competitive bidding program that could include continuous glucose monitors (CGMs). 

In a proposed rule over the summer, CMS outlined a plan to add the product category to its next round of the program. 

“We’re the only scaled distributor and provider together, so we provide that unique capability,” said Jason Hollar, CEO, during a conference call to discuss the company’s fourth quarter and fiscal year financial results. “And that’s really important to the administration, as well as to us – ensuring that access for patients to those products that are clearly creating a lot of value for them.” 

Cardinal Health finalized its acquisition of ADS earlier this year. It has combined the company with Edgepark, its existing supplies business, and housed in the at-Home Solutions segment. 

Here’s what else Hollar had to say about the potential impact of competitive bidding on CGMs and the company’s business in that product category. 

On whether there’s savings to be had through bidding 

CMS suggests reclassifying CGMs under the frequent and substantial servicing payment category and including them in a new Remote Item Delivery (RID) Competitive Bidding Program (CBP). The agency proposes a monthly capped rental model covering both the device and supply replacements, with reimbursement potentially dropping to $4.77 per month, according to industry stakeholders. 

“Overall, I think the setup for the CGMs is one where, while there's likely to be this competitive bidding process, (it) is a category that is already seeing fairly low rates relative to commercial rates,” Hollar said. “And we see it as a fairly concentrated – just (a) two manufacturer type of environment. So, the setup feels a little bit different than some of the other historical precedents.” 

On the percentage of at-Home’s business that could be impacted 

Hollar said less than 15% of total revenue for at-Home Solutions is attributable to Medicare and CGMs. 

“We feel very good about our overall product portfolio and our payer portfolio,” he said. “When you think about the payer mix, it's quite diverse. We had relatively little Medicaid type of reimbursement within the prior portfolio. It is higher with government payers within the recent acquisition. But overall, we have a very diverse product, as well as payers, that, overall, we feel quite comfortable with.” 

On CMS’s goal of using bidding to reduce fraud 

“We run a pretty tight ship,” Hollar said. “And we are very focused on compliance and running strong processes. And so, the more pressure there may be, I think the more opportunities we may have to pick up an even greater leadership role within this important category.” 

On going to bat for CGM users 

“We'll be monitoring very tightly and closely, and advocating for them with the administration, but feel pretty good about the overall setup,” Hollar said.