Proposed mail-order change raises eyebrows

Thursday, July 1, 2010

BALTIMORE - CMS has taken a step closer toward establishing a national mail order bidding program for diabetes supplies with a proposal to broaden the definition of what constitutes "mail order."

Currently, mail order is defined as anything delivered via common carrier, like the U.S. Postal Service, FedEx or UPS. That means that brick-and-mortar providers that deliver diabetes supplies don't have to participate in competitive bidding--or supply the items at the lower fee schedule--even in bid areas.

But CMS has proposed expanding the definition of "mail order" to include any item shipped or delivered--by any means--to the beneficiary's home.

"It may be that CMS is looking at this as a possible fraud and abuse issue or as a way to lower payments on a wider scale," said Tom Milam, a member of the Program Advisory and Oversight Committee (PAOC) on competitive bidding.

CMS's proposal was included in the "2011 Proposed Medicare Physician Payment Rule" released on June 25 and scheduled to be published in the Federal Register July 13.

For small HME providers, offering delivered supplies lets them compete with the big guys.

"It's pretty much what distinguishes us from a mail order company," said provider Mark Gielniak, vice president of Diabetes Plus in Warren, Mich, who said about one-third of his business is delivery. "If I didn't win a (mail order) bid, I'd have to hope those customers would come to the store."

Other provisions in the proposal include a requirement that bid winners provide, at minimum, 50% of all of the different types of diabetic testing products on the market by brand and model name; and an "anti-switching" rule that would prohibit providers from influencing or providing incentives to beneficiaries to change brands.

Although the proposal focuses on diabetes supplies, that could change, said Walt Gorski, vice president of government affairs for AAHomecare.

"They have the discretion to apply a national mail order program to other items," he said. "I think we are going to see another rule from CMS on other issues such as how they apply rates nationwide."

One group of providers who got some potentially good news: pharmacies, who could be exempted from competitively bidding diabetes supplies.

"For now we view this as a nice clue as to what CMS is thinking," said Ronna Hauser, vice president of regulatory affairs and policy for the National Community Pharmacists Association (NCPA). "But we understand that CMS has retained the right to eventually apply the same fee schedules and prices from mail order in the retail setting so we still have work to do."

To read a summary of the rule, go here,

To read the rule in full, go here