Package pushes diabetes payments off a cliff

WASHINGTON - Medicare payments for all diabetes testing supplies stand to be drastically reduced this summer.

The “fiscal cliff” legislation passed by Congress on Jan. 2 included a provision that would reduce the Medicare payment amounts for diabetes testing supplies obtained at retail settings to the Round 2 rates when those rates go into effect July 1.

“I don't know that Congress knows exactly what they did,” said attorney Seth Lundy, a partner with King & Spalding. “The pricing that's going to come out under bidding could be even lower than what came out in Round 1 and, simply put, at the Round 1 pricing, retail providers wouldn't be able to furnish diabetes testing supplies without significant changes in the rate structure from manufacturers.”

The current average price for test strips is $37.67 for retail vs. $13.88 to $15.62 for mail order in Round 1 areas. Round 2 pricing is expected to be similarly low.

Retail providers won't have to bid, but it's likely that many will opt not to provide the supplies for Medicare beneficiaries, or offer lower-priced off-brand products, say stakeholders.

“You always had a safety valve when you had the retail option,” said Walt Gorski, vice president of government affairs for AAHomecare. “This could (limit) access to the most commonly prescribed supplies that are out there.”

Not everyone thinks paying for all diabetes testing supplies at the same price is a bad idea. The bifurcated system creates an uneven playing field and more potential for fraud, waste and abuse—a problem that only gets worse if it's not addressed, says Michael Iskra, a founding member of the Quality Diabetes Care Coalition.

“When you go to a national program, it becomes a much bigger problem and it's not good for anybody,” he said. “We are not saying that the lower competitive bidding pricing is the right pricing, we are saying that there shouldn't be a discrepancy.”

Meanwhile, stakeholders were already reaching out to lawmakers to share their concerns on the new legislation and lobby for change.

“For now, the question is whether there is any interest in moving forward with changing this because this is the death knell for small pharmacies providing these supplies,” said John Coster, senior vice president of government affairs for the National Community Pharmacists Association (NCPA). “We would like to take the lead on this in a future Medicare bill to try to include some sort of modification or change.”