Home Health & Hospice Week

Real test comes in 2009.

Small suppliers of mail-order diabetic supplies say the Medicare cards are stacked against them--so much so that they're unlikely to survive if Medicare's competitive bidding program proceeds as planned.

"We've done everything we can to prepare, but the small players will be out of luck once this program rolls out nationally," predicts Kathy Fiscina of Diabetic Supply of America in Naples, FL.

Other suppliers were slightly more hopeful, at least until officials of the Centers for Medicare & Medicaid Services addressed the concern directly at the Home Health, Hospice and Durable Medical Equipment Open Door Forum on April 25.

"Will there be any protections for small suppliers of diabetic supplies once competitive bidding for mail order rolls out nationally?" queried Ron Rudderman of Diabetic Medical Supply in Coral Springs, FL, a caller to the forum.

Unfortunately, CMS doesn't promise a safety net. The CMS final rule includes a "30 percent rule" to ensure that a sufficient number of small suppliers can continue to provide DMEPOS products to their communities.

But in the mail-order diabetic supply category, the final rule stipulates that CMS need award only two competitive bidding contracts as long as those two suppliers can meet beneficiary demand.

The bottom line: That means that it's likely that just one supplier meeting the small provider definition will be awarded a contract.

Risks Just Get Bigger

Background: Mail-order suppliers are competing against drug stores and other retailers for the right to sell diabetic supplies to Medicare beneficiaries. And those sellers breathed a sigh of relief when the feds chose to exempt from competitive bidding diabetic supplies that are purchased at community pharmacies and other retail outlets.

In addition to exempting those outlets, CMS removed products including blood glucose level monitors and testing strips and lancets from the first round of competitive bidding. The program is set to go into effect in 10 competitive bidding areas (CBAs) next year.

Essential: In phase one, CMS will test the mail-order waters by including in the program nine diabetic supply items. The items will be subject to competitive bidding, but only if a beneficiary in one of the 10 phase-one CBAs chooses to purchase them via mail order. Mail-order suppliers of the diabetic supplies may choose to submit a bid to gain a chance to serve beneficiaries in the first 10 CBAs.

Hunker down: The big shake up will come soon, however, when CMS rolls out the next phase of competitive bidding. At that point, in 2009, an additional 70 CBAs will be included in the program.

Pharmacists Watching Closely

Another factor that may make waters rough for small mail-order suppliers is whether CMS will continue to exempt from competitive bidding diabetic supplies sold by retail pharmacies, as it has done for phase one.

The National Community Pharmacists Association and some advocacy groups are trying to convince CMS that diabetes monitoring equipment should be permanently exempted.

"We are concerned that CMS has indicated that it will strongly promote mail-order diabetic supplies," says NCPA's Bruce Roberts.

The fight may be far from over, however.

"I anticipate that there will one or more lawsuits against CMS that challenge the constitutionality of competitive bidding," Jeffrey Baird, an attorney with Brown & Fortunato in Amarillo, TX, tells Eli, speaking generally about the program. 

Note: The mail-order items included in competitive bidding phase one are A4233 (Alkaline battery) A4234 (J-cell battery), A4235 (Lithium battery), A4236 (Silver oxide battery), A4253 (Blood glucose/reagent strips), A4256 (Calibrator solution/chips), A4258 (Lancet device each), A4259 (Lancets per box).